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The San Francisco Chronicle
Jan 10, 2007 - 01:00 AM

by Tom Chorneau & Victoria Colliver

Concerns on governor's health care plan;

Some advocates fear rising costs could be shifted to consumers
Sacramento, CA -- First-time students enrolling in public school might be asked in the near future not only for birth certificates, immunization and residency records -- but also proof of health insurance.

A mandate that all Californians have health care coverage -- and sanctions for those who don't -- are perhaps the most controversial aspects of Gov. Arnold Schwarzenegger's plan for extending health care to 6.5 million uninsured residents.

Administration officials said Tuesday that the mandate is needed to make sure insurance carriers have as big a pool as possible to spread the risk -- and the cost -- of care.

But consumers, labor unions and some leading Democrats in the state Legislature are concerned that the governor's plan puts too much of the risk for the rising cost of health care on the backs of individuals -- some of whom can least afford it.

"It still sounds like some sort of blackmail," said Dan Seneres, 42, a freelance graphic artist from Oakland. "I don't know what this 'affordable' health care will be."

But Schwarzenegger's grand plan for bringing down the cost of care begins with the mandate that everyone in the state has coverage.

Studies show that when people without health insurance get sick, they usually end up at hospital emergency rooms, where the most expensive care in the health care system is dispensed.

Studies also show that people with insurance get more preventive care and often have less complication when they do get sick, which translates into lower costs.

Key to Schwarzenegger's plan for extending coverage is redirecting billions of dollars that are now spent subsidizing the care of the uninsured. Once all Californians are covered and getting regular care, he believes costs for everyone will fall.

"Without an individual mandate, people will continue to forgo coverage and thus continue to shift the costs of unpaid bills to insured individuals," said Kim Belshe, the governor's secretary of Health and Human Services. "And that perpetuates the hidden tax that the governor has spoken so forcefully about."

The governor's plan is to ask employers of 10 workers or more to provide coverage or pay into a state pool that would be used to provide insurance.

Families earning less than $50,000 per year would be eligible for free of subsidized care through existing government programs. But families earning more would be required to pay for their own coverage, which could cost more than $10,000 per year.

Some consumer groups object to requirements that individuals have insurance without putting some cost controls on health care and ensuring that the coverage is meaningful.

"(Consumers) don't want to be forced to buy something that doesn't give them something worth having," said Jerry Flanagan, health policy advocate for the Foundation for Taxpayer and Consumer Rights. "If consumers felt they would really get an affordable product that would provide some real coverage, they would be willing to support a mandate that stabilizes the system."

Belshe said she expects debate on whether the subsidy threshold has been set too high or too low -- but getting everyone into coverage is still the goal.

"Right now, these people have absolutely no coverage, their exposure is totally open-ended and provider exposure is totally open-ended," she said. "Oneof the goals is to create a more functional market where everyone is insured, providers are more fairly compensated -- hidden tax no longer needs to be imposed."

Richard Brown, director of the UCLA Center for Health Policy Research, said that under the governor's plan some families earning just above the subsidy level could be required to spend as much as 1 out of 6 dollars in gross earning on health insurance. "That's not catastrophic coverage, that's catastrophic expense," he said.

Another issue with the mandate is enforcement. Belshe said that Schwarzenegger's intent is not to "criminalize health care," but she acknowledged that there would have to be some way to make sure people were complying and some form of sanction.

Massachusetts has adopted a similar mandate, although enforcement will not begin until later this year. Failure to enroll in an insurance plan there would result in the state taking away a personal exemption on the tax return -- worth roughly $200; but penalties would increase to as much as $150 a month beginning in 2008.

Schwarzenegger's plan contemplates a variety of ways for the state to monitor compliance -- such as requiring employers to check insurance status before hiring a new worker or getting schools to ask before a new student is allowed to enroll.

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