Recissions, the LA City Attorney, and the Three Laws of Politics

The debate over health care plans cancelling policies for members who incur significant claims on the grounds that they omitted or misstated information on their original applications for coverage (a practice called “rescission”) is instructive. Few defend the right of consumers to lie on their applications. In addition, few maintain the carriers haven’t overreached in defending themselves from fraudulent applications. And no one claims the carriers have done a good job of presenting their case to the public on this issue.

In some of my speeches I talk about the three laws of politics I’ve developed over (too many) years dealing with campaigns, the press and politics in general:

• Law #1: The Law of Political Reality: Political Reality trumps Real Reality for all political parties at all times.
• Law #2: The Law of Political Activity: Politicians are paid to address perceptions and that’s what they do
• Law #3: The Law of Political Reporting: The media is paid to report on what politicians do and that’s what they do

The application of these three laws can lead to an echo chamber of surreal proportions. It often begins with the press reporting on a study or action by a company — let’s say questionable rescission practices by a major carrier. That’s what the press is supposed to do. Politicians read the article, perceive a problem and hold a press conference promising to address the problem. That’s what politicians are supposed to do. The press then reports on the press conference held in response to the press’ earlier article. Other politicians see that story, hold their own press conference and so on and so forth. After awhile it doesn’t matter what the original problem was, how widespread it is, or how nuanced it might be. The Laws of Politics do not suffer nuances.

This is the way issues become a part of the public’s consciousness. When real problem (and the problems surrounding abusive rescissions are real) and addressed by sincere politicians (there are more of them than you’d think), the process works great.

Some politicians, however, are more adept at applying the laws than others. Few would suggest that Los Angeles City Attorney Rocky Delgadillo is in the running for most adroit politician of the decade. He’s had several self-inflicted political mishaps that have shaken his credibility and weakened his future electoral prospects.

The City Attorney is astute enough to know the rescission issue has hit a chord with the public. And he’s clever enough to get his office engaged in the battle. Let’s give him the benefit of the doubt: he’s seen a problem, is sincerely concerned, and is seeking to address it.

Last week he sued Health Net for “engaging in unlawful and deceptive business practices” according to his office’s press release announcing the civil action (He is also initiating a criminal investigation against certain individuals at Health Net). The suit alleges health Net engaged in “unlawful, unfair and fraudulent business practices and unfair, deceptive , untrue and misleading advertising.” City Attorney Delgadillo claims he brought this action against Health Net because “[c]ountless Californians who believe they have insurance actually have policies that aren’t worth the paper they’re printed on.” I’m not sure what the legal definition of countless is, but it’s a lot. Never mind that less than one percent of health insurance policies are ever rescinded.

Using the unfair advertising laws in this context is an interesting legal theory. It’s awfully broad and, taken to extremes, could be abused. But there’s nothing wrong with a prosecutor — elected or otherwise — testing out a theory like this.

And testing it he is. Now City Attorney Delgadillo is turning his attention to Blue Cross of California. This time it’s not for the carrier’s rescission practices, but because the company issued a press release describing changes to its rescission practices. The City Attorney doesn’t believe Blue Cross, apparently because press releases are tools for burnishing a company’s public image and because, well, Blue Cross is an insurance company.

“In all of our dealings with the health insurance industry, our experience would lead me to have little or no confidence that the claims made by Blue Cross … are accurate,” he’s quoted as saying in an interview with the Associated Press. 

Leave aside the irony of an elected official whose official home page is not much more than a listing of the numerous press releases put out by his office publicly criticizing a company for issuing a press release. What’s more disturbing is that in the City Attorney’s mind, insurance company’s are incapable of telling the truth. City Attorney Delgadillo doesn’t claim his office has received complaints about Blue Cross not living up to the promises it made in the press release. It’s that, as an insurance company, the presumption is they’re lying.

That’s a sad statement about both, the low public standing the insurance industry has brought upon itself and the standards of fairness in the City Attorney’s office.

None of this should be taken as a call for the City Attorney to stop investigating insurance companies. But it does underscore that by adhering too closely — and inartfully — to the Law of Politics, the Los Angeles City Attorney is undermining the credibility of the office’s legitimate legal undertakings.

The State’s Role in Health Insurance Rate Increases

The first part of the year is when the cost of most health insurance policies increase. Most medical plans in most places are seeing rate increases far greater than general inflation. This raises legitimate questions about the sustainability of private health insurance pricing. Increasing faster than other prices means health insurance costs represent a larger percentage of overall spending. This, in turn, impacts the competitive position of American firms and the spending power of American families. That’s one of the reasons comprehensive health care reform needs to be high on the nation’s agenda.

In fashioning reforms, it’s important policy makers look at the complete picture. For example, comparing the rate of rising health insurance premiums inflation to general inflation is misleading. What drives health insurance costs is a complex mix of new technologies, an aging population, increased consumer demand and expectations, greater utilization of medical treatment, the cost of prescriptions in this country and a horde of other factors. Those required to defend health insurance rate increases (no one volunteers for the job) usually point to medical care inflation as a more appropriate benchmark than using general inflation. The problem with this defense is that, recently, premiums have increased at rates higher than medical inflation. This discrepancy was pounced upon by some legislators during hearings on health care reform in California this year. Clearly, the lawmakers implied, this is evidence of the industry’s lust for profits. What’s required, they say, is a governmental smack down. (OK, they didn’t actually use the word “smack down,” but premium regulation amounts to the same thing).

Before lawmakers get too carried away, however, they should look at their contribution to rising health insurance costs. Leave aside the costs related to mandated benefits, regulatory compliance and the like. Those are significant, but obvious. What’s less apparent is the government’s use of private insurance to subsidize public programs.

Medicare and Medicaid make up 55-to-60 percent of the average hospital’s revenues according to Richard Umbdenstock, president and chief executive of the American Hospital Association. As reported by the Todelo Blade, Mr. Umbdenstock said this would require providers to shift more costs to private insurance. In other words, when government budgets get tight, they cut back on what they pay doctors and hospitals to provide care to Medicare and Medicaid enrollees. Some of those providers reduce the number of such patients they’re willing to see — or stop serving them all together. That’s bad enough.

Others, however, shift the cost to those with private coverage. With more than half their income generated by government programs, it means a disproportionate amount of increase on private plans is required to make up for public cutbacks. If 60 percent of a hospital’s income flows from public programs, a 10 percent reduction in reimbursement rates requires increasing charges to private insurers by 15 percent. And that’s before increases based on medical cost inflation, general inflation or any other factors. It’s a rate increase entirely generated by governmental action.

This system actually works well for politicians. They get to cut government spending by undercompensating medical providers treating public program patients and they get to complain about “indefensible” rate increases by greedy private health plans. In other words, they get to pitch the problem, avoid having to catch it, and they can criticize the people that do.

Politicians who want to control both sides of the equation — cut back on public program funding and regulate private health insurance premiums – should be careful about what they wish for. Their own contribution to skyrocketing medical insurance premiums will be much more obvious. They’ll have to catch the problems they create  and they’ll be on the receiving end of the criticism, too.

2008 To Be A Busy Health Care Reform Year in California

With the demise of comprehensive health care reform and the arrival of a horrendous budget deficit, California lawmakers are busy looking for ways to fix what they perceive to be the state’s broken health care system on the cheap. After all, the concerns are still there: too many uninsured, ever increasing health care costs, bad behavior by carriers. And lawmakers can’t spend all their time haggling over budget cuts. So health care reform will be an important part of this legislative session. The issue will no longer be front and center, but it’s still on stage.

Several health care reform bills were passed before the legislative deadline. They focus on specific aspects of health care. Indeed, several are repackaged nuggets from Governor Arnold Schwarzenegger’s and Assembly Speaker Fabian Nunez’s comprehensive health care reform package, Assembly Bill x1-1.

One issue the legislature will no doubt act upon this year deal with how carriers cancel the coverage of customers who failed to honestly or completely complete their original applications. Because these rescissions are retroactive to the original date of coverage, the customer and health providers are often left with substantial financial exposure. This is an area that cries out for legislative attention. Carriers have been fined millions of dollars for the practice by state regulators. Consumers are terrified that the coverage they’ve been paying for won’t be there when they need it most. Everyone realizes there needs to be a balance between protecting those who make innocent errors in their applications without rewarding those who purposefully game the system. If there is to be an imbalance, however, most lawmakers understandably would rather err on the side of protecting their constituents rather than insurance company profits.

AB 1945, by Assemblyman Hector De La Torre, would require state regulators to sign off on such rescissions before they take effect. AB 1150 by Assemblyman Ted Lieu aims to prevent carriers from setting targets for cancelling policies or awarding bonuses to their employees based on the number of policies they rescind. It’s unclear whether state regulators want or can handle the responsibilities imposed on them by AB 1945. The bill may simply be impractical. AB 1150, on the other hand, is likely to pass without much controversy.

One of the key features of ABX1-1 was its requirement that carriers spend 85 percent of the premiums they receive on medical care. According to the San Jose Mercury News, this Medical Loss Ratio requirement is reappearing in legislation sponsored by Senate Health Committee Chair Shiela Kuehl. I haven’t been able to find the legislative language advocated by Senator Kuehl. The compromise approach contained in ABX1-1 was widely supported, including by many carriers. It’s unclear whether the new legislation will simply accept that language, in which case it is highly likely to pass, or veer off into new, more controversial directions.

Senate President Pro Tem To-Be Darrell Steinberg is pushing another element of ABX1-1. His bill, SB 1522, would require the Department of Managed Health Care and Department of Insurance to establish five categories of individual plans. Carriers participating in that market would be required to offer at least one health plan in each of those categories. As currently drafted, it appears insurers could offer additional plans, too. This flexibility would preserve consumer choice and allow carriers to continue to innovate new plan designs. If, however, this flexibility is diminished, the results could be harsh for California consumers. 

These are just some of the bills introduced prior to the legislature’s submission deadline. Keep in mind, however, that any bill can be amended in virtually any way, so the filing deadline doesn’t have a lot of teeth. The number of bills seeking to reform the health care system is likely to increase before the weeding out process begins. This could be a good thing. It would be nice to see, for example, more focus on controlling health care costs, which is the real root of problems in the health care system.

In any event, 2008 is going to be a busy year for health care reform advocates. It won’t make as many headlines as 2007’s efforts, but that doesn’t mean this year won’t be even more significant than last year.

Speaker Nunez on Health Care Reform 2008

According to Assembly Speaker Fabian Nunez, there’s no chance of California passing comprehensive health care reform before 2009 — if then. But that won’t stop the legislature from pursuing more narrowly focused  changes to the state’s health care system.

Frank Russo, who publishes the California Progress Report blog, was among those who talked to the Speaker following a press conference on Tuesday at the Sacramento Press Club.  Mr. Russo describes Speaker Nunez as being “quite animated” discussing the headlines that day concerning Blue Cross of California asking physicians to confirm the disclosure of pre-existing conditions on members’ applications (a practice Blue Cross has now discontinued). He quotes the Speaker as blasting the carrier and then promising, “No comprehensive health care package, but reforms to help improve the current health care system—absolutely.”

This is further evidence Senate Bill 840, Senator Shiela Kuehl’s legislation to establish a single payer system in California, is going nowhere this year. The Speaker again promised to subject the measure to the same level of scrutiny Senator Kuehl, as chair of the Senate Health Committee, gave to the Speaker’s comprehensive health care reform package, Assembly Bill ABX1-1. And if by some miracle — or political calculation — SB 840 were to be passed by the legislature, Governor Arnold Schwarzenegger would be certain to veto it.

Instead of comprehensive reform, I expect lawmakers to introduce several elements of ABX1-1. Setting a medical loss ratio target was an aspect of ABX1-1 that resonated with lawmakers — and will be looked at even more favorably in an election year. Bills addressing rescissions and establishing premium rate regulation mechanisms are also certain to emerge. There will be others. Few of these bills, however, are likely to become law. First, not all will pass. If money is a bill’s chances fall to near zero. Second, Governor Arnold Schwarzenegger will look closely at those that do make it through the legislature. During the health care reform negotiations that led to ABX1-1, he demonstrated a firm understanding of how the elements of ABX1-1 related to one another. He will likely be skeptical of a modular approach to reform, reasoning that without the checks and balances contained in ABX1-1, the consequences of a specific reform could do more harm than good.

There’s a good chance California won’t take another shot at comprehensive health care reform even in 2009. The timing will depend a great deal on who wins the White House in November. If a Democratic becomes president, California lawmakers will likely wait to see what progress on health care reform the new Administration can make. If a Republican wins, however, Democrats won’t wait. They’ll assume whatever reforms come out of Washington will be insufficient. The wild card in the timing? Governor Schwarzenegger. He’s termed out of office in 2010. He may want to finish what he started in 2007 while he can.

In either case, health care reform is not going away. Only the location may change.

A Short History of California’s “Year of Health Care Reform”

Over the past several months this blog has attempted to track the trajectory of health care reform in California. I had thought about combing through the various posts and summarizing the history of what happened. Now I don’t have to.  Daniel Weintraub of the Sacramento Bee has written a concise and insightful history of the rise and fall of California’s health care reform efforts. 

No doubt there will be people who disagree with his analysis. Assembly Bill ABX1-1, the compromise legislation that emerged from negotiations between Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez, was a complicated bill that went through a convoluted process. But Mr. Weintraub does a good job of touching on the highlights.

Some already have objected to his conclusion, that the bill died in a liberal/conservative crossfire. Yet there’s a lot of truth in this observation. Conservatives locked themselves out of the negotiations by refusing to even talk about potential tax increases. Several liberal groups refused to accept any compromise short of single payer while others on the left refused to accept anything short of premium price controls. Their objections created the framework in which negotiators had to operate. It narrowed their options and flexibility. It led directly to the creation of a bill that was financially unworkable.

California needs to move forward now. It’s first task is to get it’s financial house in order in a manner that does as little harm to existing health care programs as possible. That will be a herculean task. Personally I think any meaningful comprehensive health care reform has to, and will, come from Washington. But if legislators in Sacramento are going to move forward with their pet reforms, they’d do well to read Mr. Weintraub’s short history of the Year of Health Care Reform.

Budget Vote Will Test Commitment to Health Care Reform

The Senate Budget Committee heard testimony on $1.6 billion in cuts to California’s health care system as part of the legislature’s efforts to overcome the state’s $14.5 billion deficit. Only days earlier, Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez committed to pursuing comprehensive health care reform. Several legislators have also pledged to continue pushing for such reforms. How lawmakers treat health care spending in the budget process will be a strong indication of whether that commitment is for real.

The Senate Budget Committee hearing showed how desperate the state’s financial situation has become. Some of the cuts being considered are counterproductive (cutting back on early medical intervention is no way to reduce overall costs). Some of the cuts were so small as to be rounding errors for the state, but devastating to the recipients of those services. On February 4th the folks at Health Access posted a helpful summary of the Committee hearing on their blog that is well worth reading.

The Administration and the legislature face an extremely difficult task. Finding $14.5 billion in the best of times would not be easy. Now, during the state’s economic troubles and with both chambers facing substantial leadership changes, it will be even more challenging. The solution may require raising taxes, at least temporarily, or at least eliminating some current deductions that don’t make sense. At the very least, Sacramento will need to articulate priorities and then stick to them. That’s a leadership skill state government displays all too rarely.

But the fact is, if they really want to expand health care to more Californians, they’ve got to prove they can deliver health care to those they’ve already promised it to. I don’t envy them the task, but that’s the job they took on when they ran for office in the first place. Now it’s time to deliver.

Will Defeat of Term Limit Initiative Setback Health Care Reform?

Tomorrow, California voters will decide the fate of 42 legislators. Under the state’s current term limits law, these members of the Assembly and State Senate are scheduled to be in the job market at the end of this year. If Proposition 93 were to pass, however, they’d all be able to continue in their current positions — and most (but not all) have indicated they’d do so. If Proposition 93 fails — as it’s almost certain to do — they’ll need to seek out other offices or find something else to do.

There’s a lot of issues swirling around Proposition 93, but this post deals with only with its impact on health care reform. When I first started exploring this my presumption was that the defeat of the term limits initiative would make passing any health care reform measures this year more difficult. Now I’m not so sure.

If Proposition 93 were to pass, most of the lawmakers who had worked on health care reform in the past would be staying put for a few more years. Their accumulated expertise on the issue would, presumably, help them move proposals through the complicated and convoluted policy thicket that is health care reform more quickly than neophytes. They also would not be distracted by the need to campaign for a new office (running for reelection, thanks to the gerrymandered districts California endures, is pretty much a walk in the park for incumbents). This would free them up to deal with making policy.

In theory. In reality, another matter came up that will be a distraction for legislators whether they’re being termed out or not: the state’s ballooning deficit. At last count, the state was $14.5 billion in the hole, but that’s before the over $1.2 billion required to address unfunded retirement health care costs is factored in. And that’s just the start of additional spending and shortfalls that seem to be looming. Addressing this kind of financial disaster will take up most of lawmakers’ time, even if they don’t have to face tough elections.

Whether the current crop of lawmakers is the most capable of passing health care reform is also an open question. It’s similar to the point Senators Barack Obama made in their recent debate to Hillary Clinton’s experience: it’s not enough to be ready on day one, it’s important to be right from day one. An argument could be made that some fresh eyes looking at health care reform could be useful.

Then there’s the reality that nothing the state does on this issue may matter much. If the Democrats take the White House in November, health care reform will be near the top of their agenda. As I’ve written about before, federal reforms could preempt anything California develops. Which diminishes the importance of state lawmakers addressing the problem.

In the end, I think we’ll see a flurry of health care reform proposals being kicked around Sacramento. Most will be incremental reforms. Some would be beneficial to pass; others harmful. The budget deficit will slow their passage through the legislature and most will ultimately fail.

In other words, 2008 is likely to be a typical year as far as health care reform is concerned in California. That’s probably not a good thing, but it is the likely thing.

Speaker Nunez to Put Single Payer Under ABX1-1 Microscope

Few pieces of major legislation in recent years have been subjected to the scrutiny Assembly Bill X1-1 received last week. ABX1-1, the compromise health care reform bill proposed by Governor Arnold Schwarzenegger and Speaker Fabian Nunez, was the topic of an 11 hour hearing by the Senate Health Committee on January 23rd and a thorough analysis of its finances by the Legislative Analyst’s Office. Indeed, it was the LAO report that opponents on the committee cited most in justifying their position.

Now other health care reform proposals are about to go under the same microscope. Speaker Nunez has promised nothing less. And first in line is likely to be the single-payer legislation, Senate Bill 840, championed by Senate Health Committee Chair Sheila Kuehl.

Supporters of ABX1-1 held a press conference on Tuesday to affirm their commitment to enacting comprehensive health care reform for California. During his turn at the microphone, Speaker Nunez referred to ABX1-1 as a “road map to getting the right type of health care that we need, to be a bridge between those who want government run health to those who want the private market to dictate the pace of how health care is delivered.” He pledged to continue to pursue this type of reform.

At the same time, he made clear his intent to hold proponents of competing systems — and specifically single-payer proposals — to the high degree of scrutiny to which ABX1-1 was subjected. It’s worth noting that among ABX1-1’s most vehement opponents was the California Nurses Association. They insist the only health care reform worth enacting is one that eliminates the health insurance industry and turns health care over to the government.

“I think it’s time … to have an honest conversation about single payer,” the Speaker said. “We cannot create the false sense of hope that we can do something better if it hasn’t been tested, vetted and put through the same type of scrutiny that our effort has been put through. And I intend to put each and every proposal that seeks to cover health care for everybody through that same process, because I think it’s only fair. And because I also believe that we need to be comparing any proposal not to some wishful thinking of what we might be able to do two decades from now, but to the world we live in today.”

In the past Speaker Nunez has supported SB 840. In introducing his own reform package early last year, Assembly Bill 8, he commented that while he preferred a single-payer solution he accepted Governor Schwarzenegger’s promise to veto it. Yet now he seems intent on demonstrating that SB 840 presents an even greater financial risk for the state than did ABX1-1. And that shouldn’t be hard to do.

Sacramento Bee columnist Daniel Weintraub recently commented on similarities in the risks posed by SB 840 and ABX1-1.  “[T]he single payer plan, to be financed primarily by a 12 percent payroll tax, would have run up a deficit unless its managers could have slowed the growth in health care costs to below the level of the growth in wages — an extremely unlikely prospect. To control those deficits, the commission to be put in charge of health care would have been empowered to cut benefits and levy co-payments on consumers. Hardly a risk-free undertaking.”

ABX1-1 was subjected to extraordinary scrutiny. What’s surprising is that such vetting is extraordinary. Major legislative initiatives — especially on issues that touch the lives of Californians as profoundly as health care reform — should be put under an ABX1-1-like microscope. This kind of detailed evaluation is, after all, what legislators are supposed to do. If some popular proposals are found to offer nothing more than a false sense of hope, so be it. Better to learn that now than after it’s enacted.

More significantly, it’s this approach that will help lawmakers find responsible ways to address challenging and complex issues. Ways that few might consider perfect, but that the majority can conclude with confidence, is an improvement to the status quo.

Let the scrutiny begin.

ABX1-1 Postmortems

For those distracted by — oh, let’s face it — no one could have been so distracted as tp not know Assembly Bill X1-1 died in the Senate Health Committee on Monday. The compromise health care reform package hammered out by Governor Arnold Schwarzenegger and Speaker Fabian Nunez received a single “aye” vote. Seven Senators, including all four Republicans, voted against it. Three of the committee’s seven Democrats abstained.

ABX1-1 was deeply flawed, but it also was creative and forward-looking. Many aspects of the legislation will be part of the health care reform debate — here in California and nationally — for years to come. Here’s a round-up of what folks are saying now that the year of health care reform is officially ended.

The Sacramento Bee’s Daniel Weintraub has a blunt, and on point, analysis of why ABX1-1 failed.

Frank Russo, who publishes the California Progress Report blog laments the liberal-against-liberal infighting that surrounded ABX1-1 and reminds all sides that “politics is the art of the possible.”

A sampling of California newspaper coverage from San Jose Mercury News, the Los Angeles Times, and the San Diego Union and an editorial from the San Francisco Chronicle.

And here’s how out-of-towners reported on the demise of ABX1-1 in the New York Times, the Wall Street Journal, and, from way out of town, a Chinese news outlet (why not?)

Here’s what Governor Schwarzenegger, Speaker Nunez and Senate President Pro Tem Don Perata had to say (the legislative leader’s statements were made prior to the Senate Health Committee vote). A video of a press conference held by the Governor and Speaker after the vote is on the Administration’s web site (right now it’s on the home page, I don’t know where it will be moved to later). And here’s where you can listen to Senator Perata’s press conference after the vote.

Finally, here’s a thorough review of what happened, and why, posted by the California Healthcare Foundation on its California’s Healthline web site. 

Some Lessons Learned from California’s Year of Health Care Reform

With the demise of Assembly Bill X1-1, the compromise health care reform package proposed by Governor Arnold Schwarzenegger and Speaker Fabian Nunez, California has demonstrated how difficult it is to pass comprehensive changes. The bill was attacked, sometimes viciously and not always fairly, by the right and the left. In the end, it lacked a cohesive constituency of the center to push it forward. Given the Legislative Analyst’s study showing the legislation was likely to cost the state billions of dollars more than the $14.4 billion acknowledged by its supporters, it’s doubtful any constituency could push it through.

ABX1-1 failed, but the health care reform debate that started in December 2006 did not. Governor Schwarzenegger declared 2007 to be the Year of Health Care Reform., It wasn’t, but it wasn’t a wasted effort either. California’s health care reform effort produced many innovative ideas and brought to light valuable lessons. Here’s just a few:

1. Compromise requires participation from all parties.California’s politics are unique. We’re a three party state: Democrats; Republicans; and Post-Partisans. OK, there’s only one member of the Post-Partisan party, but he’s the Governor so he counts as much as the others. Only two of the three were engaged in the negotiations that led to ABX1-1. The Republicans were excluded (whether for good reasons or bad isn’t relevant for this discussion). The result: complicated and distracting legislative and political gymnastics and a winnowing of available support for the bill.

2. It’s tough for a state to go it alone.California is a big state. A really big state, but in the end, just one state. It’s revenue raising options are few and it can’t print money. In the end, printing money was was about the only thing that could have saved ABX1-1. Without the flexibility and power inherent in the federal government, ABX1-1 lacked a credible safety net if things didn’t turn out as the authors planned. In fact, to date, no state has successfully implemented universal coverage. Some argue no state can. Health care reform may require a national solution.

3. Balancing access and affordability is key. Health care reform in California nearly died in November of last year. Negotiators had reached an impasse. Governor Schwarzenegger insisted on requiring all residents to buy coverage; Democrats argued this would could impose a financial hardship on low- and middle-income Californians.  The Administration was focused on access; the legislature on affordability.

What bridged the gap was the introduction into the dialogue of an “affordability exemption.”  Every Californian would be required to have coverage unless the cost was too great a percentage of their household income. That at least was the theory. As defined in the bill it may not have been the case. But more important than the details was the concept and how it bridged what had seemed like an insurmountable gap. It wasn’t wholly original, Massachusetts has a similar provision in its health care plan. The lesson is that until the tension between access and affordability is resolved, reforms can’t move forward. (Maybe someone should tell the Democratic presidential candidates about it — but then what would they have to argue about?)

4. It’s better to vet complicated public policy early. The Governor, Legislative Leaders and their staffs devoted thousands of hours to working through the complex issues that make up health care reform. They spoke with stakeholders of every stripe — if they had charged admission to all the meetings and conference calls they held they could have financed the bill. If you ask these insiders, the drafting of ABX1-1 was an open and inclusive process.

Only, it wasn’t. There was talk, but not always dialogue. When there was dialogue, a limited number of parties were in the smoke filled tent. In fact, the final version of the 200+ page bill was published just hours before the Assembly passed it, few if any lawmakers actually read it first.  It was only last week that the legislation got the close examination required. The Legislative Analyst’s Office (LAO) study was incredibly important and Senate President Pro Tem Don Perata was right to have demanded it before the Senate considered the bill. And the Senate Health Committee’s 11 hour meeting made sure all sides were heard on every element of the legislation. Would opening the process up in this manner months earlier have assured the bill’s passage? No one can really say, but I believe it would have inspired negotiators to fashion a more solid proposal.

5. The process worked. In their opening statements today, Speaker Nunez and Secretary of Health and Human Services Kim Belshe, gave heartfelt eulogies for ABX1-1. It was better than the status quo, they claimed. Millions without coverage would get it; millions with coverage would be more secure. Maybe. I’m sure the folks who advocated Tennessee’s ill-fated (and ill-designed) TennesseeCare felt the same way. As did the policy makers in Washington State before they had to unravel much of the reforms.

We’ll never know if ABX1-1 would have improved California’s health care system or just replaced current problems with new and potentially more devastating ones. The package was held together by optimistic assumptions and hopeful visions of how independent actors (businesses and consumers) would behave. As the LAO analysis proved, if those fragile assumptions and hopes were wrong, the resulting plan would crumble.

Concern about the risks created by the plan wasn’t the fear mongering some of ABX1-1’s supporters claimed it to be. These risks were likely and perhaps inevitable. In the end, the process allowed lawmakers to evaluate the risk and benefits of ABX1-1. And that’s what the legislative process is supposed to do.

6. It’s a marathon, not a sprint. Improving California’s health care system will take time. As flawed as it was, ABX1-1 is a good starting point for the next stage of that effort. Indeed, it’s a worthy starting point for a national health care reform effort. The legislation may have failed, but it’s legacy is likely to continue.