Adoption of Gov. Arnold Schwarzenegger’s revised healthcare reform plan is unlikely before next year, those familiar with the debate in Sacramento say.
“Apparently, the governor and the Legislature are at a logjam,” said Larry Higby, chief executive of Lake Forest-based Apria Health- care Group Inc. who heads up healthcare issues for the New Majority, a moderate Republican group. “My guess is that nothing will happen this year (and) they’ll be back in negotiations next year.”
Others speculate the issue could wind up going before voters if the Republican governor can’t come to terms with the Democratic led Legislature.
For now, Schwarzenegger hopes to sell Democrats on his $14 billion proposal, which is based on many of the same ideas he put forth back in January, including a tax on businesses and a requirement that everyone have health coverage with government aid for the poor.
In any event, voters are likely to weigh in on at least one part of the proposal,taxes to fund expanded healthcare.
Few see the governor getting the two-thirds vote needed for the Legislature to enact taxes on employers and hospitals as a way to fund his reform, since few Republicans are likely to back the levies.
Instead, Democrats could pass the bulk of the plan on a majority vote and take the taxes to voters to approve.
But if a deal can’t be reached with legislators, some Sacramento watchers think voters could end up deciding on the entire reform package.
The governor would have to decide to pursue an initiative by early next year at the latest to get the issue on the November 2008 ballot, sources said.
Whether the issue will come down to a ballot battle is unclear, according to Higby.
“I think (Schwarzenegger) probably has some more negotiating with the Legislature to do before he commits to any specific plan,” he said.
Higby, a former Nixon White House aide, and other New Majority members take part in meetings and briefings on healthcare reform because of their relationship with Schwarzenegger.
The group was an early backer of Schwarzenegger and is a consistent source of money for the governor.
Members have been “invited as insiders (to meet) with the governor and his team on healthcare to provide him feedback,” said Paul Folino, New Majority’s chairman and executive chairman of Emulex Corp., a Costa Mesa maker of networking gear.
There’s momentum on both sides to get some kind of healthcare reform passed, according to Higby.
“I know it’s a project the governor feels deeply and very strongly about. The Legislature’s also passionate,I just don’t think their feelings on how to get there are on the same page,” he said.
Democrats who control the state Assembly and Senate may be less willing to compromise after the governor vetoed a bill written by their own on Oct. 12. Assembly Speaker Fabian N & #250; & #324;ez and Sen. President Pro Tem Don Perata called for a steeper tax than what Schwarzenegger has proposed.
For Democrats, healthcare reform is a key issue going into the presidential election year in 2008.
Schwarzenegger could have the upper hand as negotiations heat up. The governor’s popularity has rebounded since 2005, when his special-election ballot initiatives went down in flames.
His recent approval ratings have been in the 60% range, versus 29% for the Legislature, which is about as popular as President Bush.
Schwarzenegger’s track record of taking issues to voters is mixed.
In 2004, voters sided with the governor on most ballot initiatives, including rejecting measures on Indian casinos and healthcare reform and approving $3 billion for stem cell research.
In another case, Schwarzenegger’s threat to go to voters was enough to get the Legislature to pass workers’ compensation insurance reform in 2004, over the objections of labor and lawyers.
Then in 2005, the tide turned as voters rejected four special election initiatives that Schwarzenegger proposed to reform teacher tenure, union dues, state spending limits and redistricting.
Taking the governor’s healthcare reform plan to voters could be a tough sell, said Paul Feldstein, a professor and director of the Center for Health Care Management at the University of California, Irvine’s Paul Merage School of Business.
“I hope something occurs (legislatively) because it’s sort of the best chance now, otherwise I guess there will be more ballot initiatives,” he said. “You know, that’s always tricky, too, because people are going to raise money, everybody’s going to get confused and the easiest thing is to vote no.”
The focus of Schwarzenegger’s plan is a requirement that all Californians have healthcare coverage, either on an individual basis or through their employer.
Health insurance subsidies would be available for families of four earning $51,625 a year or less or people who earn $25,525 or less.
Schwarzenegger’s plan also creates a tax credit for individuals and families with incomes slightly higher than those amounts, a move seen as an attempt to appease critics who charge that middle-income Californians wouldn’t be able to pay for insurance.
Schwarzenegger made some other modifications from his original proposal as an attempt to move toward the center in order to get healthcare reform passed by the Legislature.
He cut a proposed tax on revenue at doctors’ offices, something designed to win support from the California Medical Association. The governor’s earlier proposal called for doctors and hospitals to be assessed with what was alternatively called a fee or tax based on their revenue.
Hospitals still are on the hook for a tax equal to 4% of their revenue in the governor’s new plan.
Employers that don’t offer coverage would pay nothing or up to 4% of their payroll under the governor’s new plan. Businesses with less than $100,000 in total payroll would be exempt from the tax. Others would pay based on size.
Early on, Schwarzenegger proposed all employers with 10 or more workers offer health insurance or pay 4% of their payroll into a statewide pool to provide coverage.
Schwarzenegger has proposed tapping the California Lottery to pay for the rest of his plan.
Some labor unions and consumer groups said last week that they would oppose the governor’s plan, calling it unaffordable for middle-class families and planning to call it “Arnold’s middle class gouge.”
That campaign, which is set to include television ads, news conferences and trailing rebuttals to the governor, is an about-face from labor’s previous stance of trying to gently nudge Schwarzenegger toward its view on healthcare reform.
“You have groups out there like the (California Nurses’ Association) and others who don’t want to compromise,they want a single payer,” Feldstein said. “The question is whether enough people would get behind (Schwarzenegger) to do something.”
