The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

The Governor’s Health Care Reform Plan and the Goldilocks Factor

Posted by Alan on September 18, 2007

Whether it was intentional or not, Assembly Speaker Fabian Nunez and Senate President Pro Temp Don Perata did Governor Arnold Schwarzenegger a huge favor in pushing Assembly Bill 8 through the Legislature last week. They positioned the Governor’s health care reform plan as both more the more moderate and more comprehensive alternative. The result increases the Governor’s political momentum and his negotiating leverage.

Supporters of AB 8 claim the legislation will bring nearly 70 percent of the state’s current uninsured into the system. It’s primary source of funding is a fee on every business in the state equal to 7.5 percent of their Social Security-adjusted payroll. It gives an unelected state agency the ability to raise this fee by any amount once a year (yes, by any amount). Many in Sacramento believe the agency would need to invoke that power almost immediately.

Speaker Nunez and Senator Perata claimed there’s was the reasonable compromise between the Governor’s proposal and the single-payer approach championed by Senator Sheila Keuhl. However, their context was political. Yes, the Governor’s plan needs a two-thirds majority and with Republicans holding back support that was not going to happen. Yes, the Governor vetoed Senator Keuhl’s bill, SB 840, last year and he’d do it again. Yes AB 8 only requires a majority of Legislators to pass. All of this positions AB 8 as the politically viable alternative.

Yet politics is not positioning. Consider things from Goldilocks point of view. Like most Californians outside Sacramento County and a few newsrooms scattered across the state, Goldilocks doesn’t think politically. She does, however, instinctively understood positioning. SB 840, the Papa Bear of reform, represents a government takeover of health care. That sounds scary (or too hot as Goldi would say). AB 8, the Mama Bear, fails to deliver on universal coverage and is expensive to boot. Too cold.

Then there’s the Governor’s plan. Universal coverage and no government takeover. It even spreads the cost of expanding health care beyond business which seems just right.  Meet the Baby Bear.

With this kind of positioning it’s not surprising that the Governor’s proposal is gaining support. For example, last Friday a broad coalition representing business, labor, doctors, insurers, hospitals and consumers endorsed the Governor’s plan. Yesterday the Los Angeles Chamber of Commerce lined up behind it. While possible, it is unlikely the Chamber would have endorsed a plan imposing a four percent tax on their members if it were not for the specter of AB 8’s 7.5 percent tax looming in the background, especially since AB 8 accomplishes less. No doubt more supporters will be joining the Governor in front of the cameras in the next few weeks.

As in the fairy tale, there is a danger here for health care reform Goldilocks. Governor Schwarzenegger’s health care reform plan is just that: a plan. It’s not legislation yet. The coalition forming behind it are endorsing a concept. In the next few weeks as the details emerge in that devilish way details do, some members of the coalition may start squirming. After publicly standing beside the Governor of the California it’s tough to walk away. The last thing anyone wants is the Governor publicly calling them  or their group “lying, backstabbing cowards,” or, in more politically acceptable language, “undependable and disappointing.” This is especially true if you’re a business, labor, doctor, insurer, hosptial or consumer who needs something from the state government in the next two years or so.

The Governor, whose political skills should never be underestimated, got a double win from the Legislature’s passage of AB 8. His health care reform plan looks moderate — even post-partisan. And he gains substantial negotiating leverage across a broad spectrum of stakeholders.  Which means he’s another step closer to living happily ever after.


3 Responses to “The Governor’s Health Care Reform Plan and the Goldilocks Factor”

  1. Anne Kelly said

    Hey Alan:

    Excellent article and well put. I couldn’t have put this better myself. Very glad to have you on our team as always. Looks like this thing is coming our way whether we like it or not, and as usual I suspect our politicians are more concerned with a win for themselves rather than acting in the publics best interest.

    Coming from Ireland which has an atrocious Government controlled healthcare system funded by employer/employee tax, I can truly attest to how undesirable it would be to be reliant upon any government controlled healthcare system to deliver care when needed.

    Of course once they (Government)get any control on the money (funding) I think we will be hard pressed to eventually prevent a gradual move towards a state healthcare system. It’s only a matter of time.

    Good luck,


  2. Alan said

    Rich: thanks for the kind words. As far as your questions are concerned:
    1. As you point out, insurance reform is dominating the debate. To be fair the various proposals have health care cost containment features in them. However, they’re not very controversial nor far reaching. The insurance reforms are very controversial and could be very far reaching. Thus that’s what folks are talking about. But it’s a fair point, we’re not getting to the root of the issue which is controlling skyrocketing health care costs.

    2. Not sure what you’re looking for in the provider competition. Certain hospitals do hold some communities hostage, being the only game in town. But again, your right, it isn’t part of the current debate.

    3. About the only examples anyone has of the government doing a better job than private enterprise is fire and police protection. It’s not a long discussion.

    Your frustration in having the debate focus on health insurance as opposed to other meaningful topics is understandable. Part of the reason this happened is that it’s easier to figure out how to “fix” the insurance system than to deal with more complicated issues of rising health care costs and lack of competition among providers in some communities. Part of the reason is that carriers, agents, hospitals and others have done things they shouldn’t have. There’s certainly little sympathy for insurers and HMOs. Finally, insurance premiums are a proxy for everything that’s wrong with the current system. They’re easy to understand and they are highly visible. All this makes it to focus on insurance than on other aspects of the system which need fixing.

  3. Rich MacKirdy said

    Alan, you have a fine skill, expressing thoughts into words.

    I have some basic questions:

    When do we stop using the term “Health Care Reform” to mean “Insurance Reform”?

    When do we get to start debating how to increase the health care provider availability (aka competition in the provider networks)?

    It seems the current debate is about how to increase the size of government, how to structure new “fees” to avoid bringing it to a vote in the people’s forum, and how to reduce freedom of choice.

    Can ANYONE show me an example where government has been more responsive and sensitive to the needs of individuals and families than the individuals themselves?

    Can ANYONE show me an example where government can do anything related to individuals, more efficiently and at less cost than a competitive business environment?

    Why are we wasting our time talking about “fees” meaning taxation; government plans, meaning rationing; and, well, you get the idea.

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