The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Governor’s New Health Care Reform Ally

Posted by Alan on September 6, 2007

Governor Arnold Schwarzenegger won new support for his health care reform plan today, again demonstrating that it is dangerous to underestimate his political savvy.  According to the Sacramento Bee, the California Hospital Association came out in support of Governor Schwarzenegger’s health care plan, including its fee of four percent on gross hospital revenue (Hospitals back Governor’s plan).

Yes, there are some critical caveats to the deal. For instance, the fee on private hospitals’ revenue would be permanently capped at four percent. The fee itself would be contingent on passage of an initiative, which, according to the Bee is currently planned for the November 2008 ballot. That initiative would assure the fees raised from hospitals would be put in a trust along with federal matching funds. The trust would be kept separate from the general fund. First dibs on the trust money would be to raise Medi-Cal fees paid to hospitals.  The initiative would also have to provide for mandatory cost-of-living increases on hospital Medi-Cal reimbursements.  Any money left would be required to be spent on reducing the number of uninsured in the state. Added 9/7/07: At the same time, the CHA Board voted to put a stop to charging pateients for the disputed difference between their hospital bill and their health plans’ coverage, a practice known as “balance billing.”

This is a great deal for the hospitals. By getting their state Medi-Cal fees increased, the amount the hospitals receive from the federal government increases. This mitigates some of the financial impact of the fee. Locking in the fee at four percent helps insulate them from future political decisions. And the fewer uninsured, the less uncompensated care they need to provide. So while there’s some pain in the deal for the hospitals, there’s a lot of gain, too.

For the Governor, the deal is a major political boost. Hospitals are very critical centers of influence in their communities. Which is one reason the Governor has reportedly been personally on the phone calling hospital heads across the state — especially in the districts of Republican lawmakers. Additionally, having an interest group subject to one of the Governor’s taxes endorse the plan is a major coup. Expect to hear it mentioned every time doctor and business groups complain about the fee the Governor would impose on them. Added 9/7/07: Finally, the elimination of balance billing is a very pro-consumer victory for the Governor.

The Governor’s and Legislative Leadership’s staffs continue to try to hammer out a compromise on health care reform which could be voted on before the September 14th scheduled adjournment. The support of the hospital association will strengthen the Governor’s hand in those discussions. First, he now has another ally who can put significant pressure on lawmakers where it counts — in their districts. Second, it builds momentum towards the Governor’s viewpoint. And third, it again demonstrates his strong political skills, reminding Speaker Fabian Nunez and Senate President Pro Temp Don Perata that while Governor Schwarzenegger is still relatively new to the game, he’s very good at it.


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