Tuesday, September 11, 2007

Votes and Vetos: AB8 Passes


All eyes in California are focused on Sacramento.

From the San Francisco Chronicle:

The state Legislature approved an overhaul of California's health care system Monday, but even before the votes were tallied Gov. Arnold Schwarzenegger vowed to veto the bill and call lawmakers into a special session after the current session ends this week.

Schwarzenegger said he would reject AB8, by Speaker Fabian Núñez, D-Los Angeles, because it puts too great a financial burden on employers and does not address the needs of 2.8 million of California's estimated 6.8 million uninsured residents.

Despite the vote's outcome, there is still a long road ahead for reformers. Schwarzenegger's veto will bring a return to the ongoing debate, while the special session will keep it in the public eye.

Jordan Rau at the Los Angeles Times speculates on the content of possible resolutions:

An agreement would be likely to include a requirement that employers provide health coverage for workers or pay a fee to the state, which would then arrange for insurance for those workers. That proposal forms the heart of the Democratic bill.

The deal probably would also incorporate a tax on hospitals that would help California capture an extra $2 billion in federal aid. The California Hospital Assn. endorsed such a tax last week after Schwarzenegger lobbied hospital executives.


SOURCE: "Health Care Bill Passes Legislature, But Governor Says He'll Veto It" 09/11/07
SOURCE: "Governor Plans Health Care Veto, Talks" 09/11/07
photo courtesy of Fronco Folini on Flickr remixed and used under this Creative Commons license


5 comments:

  1. Let’s all put on our collective thinking hats and work up a solution for California health care.

    I will start out this new line of thinking (we can give it a try when AB 8 does not get sufficient support to pass) and we can “round robin” it until we have an effective solution. Sound like fun? Okay, maybe not as much fun as taking over a small Latin American country and declaring yourself El Presidente but it is worth a try.

    Let it begin:

    Fact: In 2007-2008 the Health and Human Services related organizations will receive $38 billion dollars from the budget.

    Question: Is there a way to create and run a state hospital to enable a system whereby there is no or low cost health services?

    Answer: Yes.

    Discussion: In 2005 there were 355 hospitals in California with a combined bed space of 75,517 total beds and 36 million people or 0.48 beds per 1,000 population. There are several new hospitals bring constructed, expanded or replaced in California, an average price for a complete hospital with ICU, ER and 250 beds is about $200 million. Based on a 2001 budget from Natividad Medical Center a 163 bed facility with several satellite clinics, surgery center, ICU, and ER can be run for $113 million. Giving a double increase over the last six years puts the cost at $226 million.

    If California took 25% of the Health and Human Services budget for the year or $9.5 billion and moved the money to a fund setup for the creation of a self funded health care system, all of California would have access to health care within a few short years. If we took this years budget as an example the following would be an optimum situation:

     Year 1 = $9.5 billion budget
    o Building new California State Hospitals with 75% of the $9.5 billion budget would create 35.6 new hospitals and 8,900 new beds.
     Each hospital would take 1.5 to 2 years to complete for building.
    o $2.375 billion would go to the first 8 hospitals open for staffing.
     Year 2 = $9.5 billion budget
    o $7.8 billion spent on staff for 75% of the new hospitals. 26 open and running.
    o $1.7 billion reserve.
     Year 3 = $9.5 billion budget
    o All new construction finished with 36 new hospitals and 9,000 new beds available.
    o $10.8 billion for staff and operations on all of the hospitals.
    o Based on current ratios of 0.48 beds per 1,000 population it is conceivable that the new hospitals could provide free services to 18 million people in California. This means that half of the Californian population would be able to receive free health care.
     Year 4 = $13.3 billion or 35% of the 2007-2008 budget for Health and Human Services.
    o Transition from traditional Health and Human Services to total system health care.
     Families earning $50,000-110,000 per year can buy into system for $150 per family per month. Projected that 2.5 million families may signup for additional revenues of $4.5 billion.
    o $11 billion staff and operations on all of the hospitals.
    o $2.5 billion new hospital construction cost or 10 new hospitals under fast track program for 1.5 year build-out.
    o $4 billion surplus.
     Year 5 = $19 billion or 50% of the 2007-2008 budget for Health and Human Services.
    o Transition from traditional Health and Human Services to total system health care.
     $150 per family per month for $50-110k families. Projected 2.5 million families for additional revenues of $4.5 billion.
    o $14 billion staff and operations on all of the hospitals (46).
    o $2.5 billion new hospital construction cost or 10 new hospitals under fast track program for 1.5 year build-out.
    o $7 billion surplus.
     Year 6 = $19 billion or 50% of the 2007-2008 budget for Health and Human Services max amount under budget law with 2%-5% cost increase.
    o Transition from traditional Health and Human Services completed, department ended.
     $150 per family per month for $50-110k families. Projected 2.5 million families for additional revenues of $4.5 billion.
    o $17 billion staff and operations on all of the hospitals (56).
    o $2.5 billion new hospital construction cost or 10 new hospitals under fast track program for 1.5 year build-out.
    o $4 billion surplus.
     Year 7 = $19 billion
    o $150 per family per month for $50-110k families. Projected 2.5 million families for additional revenues of $4.5 billion.
    o $20 billion staff and operations on all of the hospitals (66).
    o $2.5 billion new hospital construction cost or 10 new hospitals under fast track program for 1.5 year build-out.
    o $1 billion surplus.
     Year 8 = $19 billion
    o $150 per family per month for $50-110k families. Projected 2.5 million families for additional revenues of $4.5 billion.
    o $23 billion staff and operations on all of the hospitals (76).
     19,000 beds
     New better ratio of beds to population and still serve 18 million population under plan.
    o $.5 billion surplus with extra cash of $16.5 billion.


    So, as you can see, moving to another system, like AB 8, in which the government is subsidizing a for profit corporation or a non-profit (that is not really a non-profit) is not the best system to move towards. As outlined above the system would be best suited for a corporate structure with state employees left out of the mix. After all, if the state of California is going to act socialist it might as well practice sustainable socialism.



    I agree that politicians left to their own devices will over spend any amount of funding they receive and bring little in return for it. So, let us develop this idea a bit more.

    Same situation as about with little governmental oversight but rather a private corporation setup just for the purpose of running the system described above. The corporation is allowed to “profit” by charging maximum of 15% admin fee on top of the budget they receive. This 15% can go down depending upon the “satisfaction” of the insured public.

    How we measure this I have not developed just yet.

    Example:

    In year one I list that the budget is $9.5 billion and as such the fee for the private corporation would be $1.4 billion if all time points and cost were met with great results. If however they did not build, open, and run efficiently the set number of hospitals, say they only got 80% of the job done, then they would be dropped to 10% or $900 million.

    In year 4, the total best they could do is $2.67 billion in profit if they did everything perfectly. If however they only hit a 50% satisfaction point then they would get 7% or about $1.2 billion.

    We could play with the numbers to come up with something that gives incentive to the corporation to make the consumer happy and make the program work.


    Tell me what you think and add to the business model.

    Yours truly,

    Michael Kassing, JD
    SizeMonkey.com

    ReplyDelete
  2. Well, I had hoped that something good would come from California, guess I was wrong. Even the Governor seems to have a half baked plan.

    The Governor’s staff never looked at the reality of the financial situation when they wrote the latest health care document. Let me give you an example of how this bill would affect a family, mine:

    I graduated law school and am waiting for my bar card, I earn about $4,000 per month as an independent contractor and support myself, my wife Asha, daughter Erika, daughter Bryce, and baby boy Ryan. I have an adjustable rate mortgage that is sitting at $1,800 per month on a house that is too small, $800 per month on $120,000 worth of student loans, $250 per month on one car (the other is paid off), $200 per month on auto insurance, $250 per month on utilities and cable, $200 per month to help with taxes at the end of the year leaving $500 for food, gas, health insurance for the children, and mad money.

    The Governor’s bill would make me pay 48% of my “discretionary income” or $240 per month on redundant (the kids are covered) health insurance that I would purchase now if I could afford it.

    Does the Governor think I go to sleep every night thinking how lucky I am that I don’t have health insurance? No, I go to sleep every night and think how lucky my son and daughters are to have their mother at home being a mother. I go to sleep every night and think that things will be better for my family and we have to make some sacrifices now that will lead to well adjusted children that will someday turn into well adjusted adults. I go to sleep every night and tell myself that now is not the time to get sick or injured, that can come in the future when we are covered.

    This letter comes from the many Californians that are in my situation, working hard to get by. We do not have health care because we can not afford it without extreme sacrifice, in my case sending my wife, the children’s mother, back to work. The Governor’s bill does nothing to address the problem for people like me, rather it creates a larger problem; creating another tax burden for me to cover, 6% of my gross income or 48% of my net after living expenses.

    I urge everyone to not support the Governor’s bill and if you do I would like you to meet the family you are going to burden with a 48% tax.

    Yours truly,

    Michael Kassing, JD

    ReplyDelete
  3. Michael, thank you so much for sharing your perspective on this issue. It is the personal perspectives of everyday Americans like you and your family that will help us continue to zero in on an applicable solution. I am sure that many of our readers will be most appreciative of your detailed breakdown of the situation.

    Thank you reading, and thank you for contributing to the dialogue on this issue!

    ReplyDelete
  4. Thanks George! Although I must say that my ramblings are crap. There is a solution out there that make both the Governor and Nunez look like 2nd grade musings. It is a 1% increase in sales tax that goes directly to health care. I do not know the break down for the programs or how insurance would get to the masses but I do know that I and everyone I know would support that.

    Wish I had thought it up!

    Michael

    ReplyDelete

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