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California weighs health insurance experiments

By Lou Dobbs
CNN

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Lou Dobbs
California
Health Insurance

(CNN) -- Californians in November defeated a ballot initiative that would have required employers to provide health care coverage for their workers. Some state lawmakers are now attempting the opposite approach to ease the state's soaring emergency-care debt and 6 million uninsured citizens: requiring citizens to buy their own health insurance.

The so-called "individual mandate" is often compared to car insurance. And the idea may be gaining national interest as President Bush promotes an ownership society, a plan that so far encompasses tax reform, health savings accounts and Social Security overhaul.

While the California lawmakers who are promoting individual mandates recognize that such a system would require generous subsidies for the poor, they're confident that the system wouldn't require employers to make contributions. But many experts say that any system of mandatory individual health coverage, in order to be affordable to citizens and states, would still necessitate some funds from employers in addition to those from individuals and government.

Proponents of the individual mandate laud the proposal as a business-friendly alternative to employer-based coverage, which has been declining nationally. The number of uninsured people in the United States has increased by 5 million over the past few years, and that increase is largely due to the loss of employer coverage, according to a recent Economic Policy Institute study. The nation now has an estimated 45 million uninsured.

Even the California Medical Association, a long-time champion of employer-based coverage, has turned to proposing individual mandates as a possible cure. The CMA supported Proposition 72, the failed ballot measure that would have required employers to provide coverage. But California can't afford either another voting-booth debacle or the $900 million a year in unpaid emergency-room costs, said Dr. Jack Lewin, the CMA's chief executive.

"We're concerned that the status quo -- doing nothing -- will bring the entire house of cards down in California," he said. An individual mandate wouldn't be ideal, "but it might be politically viable," Lewin said.

The California governor's office has expressed interest in a national plan for mandatory health insurance devised by The New America Foundation, a Washington, D.C., think tank. While the plan focuses on the individual, it retains Medicaid and compels employers to either offer coverage or contribute to community insurance pools, said Cindy Zeldin, senior program associate at the New America Foundation. Zeldin admits a fairly large percentage of people would need some sort of subsidy, and based on the Foundation's most recent estimate, the plan would cost $80 billion a year to implement nationally.

California's share of that cost could be daunting, given the state's $8 billion budget gap this year. Lewin acknowledged that implementing a statewide individual-mandate plan could necessitate a sales tax, one of several reasons voters may not find the idea palatable. For the system to work, insurance companies would also have to offer reasonably priced plans for high-deductible and prevention coverage, Lewin said. And like the New America Foundation plan, the CMA proposal would likely involve some sort of employer contribution.

Many individual-based plans still haven't answered the question of who pays for the subsidies, and could even provide fewer people with coverage if implemented, said Ron Pollack, founding executive director of Families USA, a nonprofit organization that promotes affordable health care.

"I have not seen a system proposed that realistically provides the subsidies necessary to make an individual mandate work," Pollack said. "I'm not crazy about employer-based systems, but that's what we've got, and I would like to strengthen rather than weaken it."

Pollack added that, rather than create a new system, government should build on current public programs to increase health coverage without additional bureaucracy.


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