The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Health Care Reform Blast from the Past

Posted by Alan on June 13, 2007

Back in April 1993 I was a member of the California Commission on Economic Development and a partner of a small group general agency, West Coast Multiple Services (later renamed Centerstone and then, a few year’s later, rebranded as Benefitmall). Small group health care reform, known as AB 1672, was to take effect on July 1st of that year and promised to reconfigure the small group health insurance marketplace. As president of CAHU at the time, I represented agents during negotiations over the legislation. And West Coast Multiple Services had made educating agents, carriers, the public — and sometimes even the regulators — a major priority.

So on April 12th of that year, West Coast Multiple Services, the Economic Development Commission, the Los Angeles Business Journal, the Small Business Times and California Broker Magazine sponsored a “Summit on Health Insurance Reform: AB 1672” at the Biltmore Hotel in Los Angeles. I was googling some things the other day and came across an article in the Business Journal describing the event.

Reading it was a bit spooky. Not only were some of the issues and arguments similar to what’s happening in Sacramento today, but so were some of the players. For example, one of the speakers was Kim Belshe, then Deputy Secretary of the California Health and Welfare Agency; today Secretary of the Health and Human Services Agency where she helps spearhead Governor Arnold Schwarzenegger’s health care reform efforts.

What follows are some excerpts from the article:

Lieutenant Governor Leo McCarthy, chair of the California Commission for Economic Development opened the event noting the importance of containing the underlying cost of health care and the need for providing affordable health care for the state’s six million uninsured.

Kim Belshe focused her remarks on the purchasing pool created by AB 1672, the Health Insurance Plan of California (“HIPC”) as a significant test of the validity of “Managed Competition.” (14 years later the results are in and the HIPC is out of business. Ironically, however, purchasing pools, now renamed “Exchanges” or “Connectors” are a central component of the health care reform plans offered by Governor Schwarzenegger, Speaker Fabian Nunez and Speaker Pro Tempore Don Perata.)  

Martyn Hopper, California State Director of the National Federation of Independent Businesses, commented on various “pay or play” proposals being debated in Washington. Hopper claimed such plans “not only makes no economic sense, but would spell economic ruin for California.” (Today “pay or play” is a key element of the major health care reform plans.)

Dr. Richard Corlin, Immediate Past President of the California Medical Association emphasized the importance of wellness programs and cost containment. (Health care costs, of course, have not been contained, and is too often overlooked in the health care reform debate).

In my presentation I identified three elements of comprehensive reform: creating a stable and fair marketplace; effectively containing health care costs; and achieving universal access to coverage. (CAHU’s Healthy Solutions health care reform plan continues to focus on these elements.) Among the cost containment efforts I described was what’s now known as experience-based medicine — a topic that’s still on the table.

As for universal access, I predicted that, once a fair and stable market was in place, an employer or individual mandate “or, more likely, a combination of the two” would be required. But I warned that imposing mandates to buy without first controlling underlying health care costs would unfairly require consumers to “sign blank checks for ever-more expensive coverage.” (I’m not sure we have a fair and stable market, but the mandates are coming).

I also warned against requiring small employers to buy exclusively through government run purchasing pools. I emphasized consumers desire for choice, not only in selecting their doctors and insurers, but as to how they purchase their coverage, as well.

Stumbling across this article prompted a pleasant jaunt down Memory Lane. It also was a reminder that the challenges we’re tackling have been around for a long time. And we’ve known equally as long what’s required: cost containment; a fair market that preserves choice; and tough decisions.

We’ve made some progress: AB 1672 has been extremely effective in eliminating many of the market abuses in the small group market prevalent at the time. There’s a lot more to do, however. Hopefully we’ll build on the process which generated AB 1672. Assemblyman Burt Margolin, who chaired the conference committee which produced the small group health reform bill, worked tirelessly to make the process an inclusive one that took all perspectives taken into account. Most significantly, he kept the negotiations focused on addressing problems, not on scoring political points.

Reading the article made clear the current debate could use the kind of leadership Burt Margolin displayed 14 years ago. Whether such leadership exists in Sacramento today remains to be seen.


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