Business for Shared Prosperity

By John Arensmeyer and Michael Russo
San Francisco Chronicle, 11/9/07

Almost two months into the special session on health care reform, it has seemed at times as if hopes for change this year were slim, as Gov. Arnold Schwarzenegger and the state Legislature put out different proposals, and critics concentrated on figuring out whom to blame for slow progress. But while the public controversy has thrown out lots of heat, it has shed little light. Now, California's legislative leaders have offered a significant compromise proposal - one that demands a thoughtful response from the governor.

What has been obscured in the debate so far is that the proponents of the two competing proposals agree on the keystones of reform.

Everyone agrees that the bill will have to contain the skyrocketing costs of health care, for individuals and employers. That means policing insurer inefficiency, and prioritizing preventive care to keep people healthy and costs down.

Everyone agrees that it's imperative to cover the 6.7 million uninsured Californians. Expanding coverage will also lower costs, by decreasing expensive emergency-room-only medicine.

Everyone agrees that reform will only be possible if consumers and small business owners can get a fair shake when buying insurance and afford useful coverage. All proposals would limit the ability of insurers to discriminate against the sick, and guarantee that everyone be offered coverage.

And, everyone agrees that the solution will require shared responsibility among businesses, consumers, the health care industry and government.

This very real agreement doesn't mean that there aren't still areas of contention. There are two areas of disagreement, but neither is insurmountable.

First, in both proposals, employers would be required to cover their employees or pay a fee to the state. Under both, the fee would increase depending on the size of the business, with the governor's sliding scale topping off at 4 percent and the Legislature's going up to 6.5 percent - with the Legislature's accompanied by a guarantee that employees of fee-paying firms have access to subsidized insurance.

The governor's sliding scale up to 4 percent of payroll is not likely to bring in enough money. For California businesses that offer coverage, health care currently costs 11 percent of the payroll of covered employees. In fact, a recent poll of California small business owners found that 80 percent of those who expressed an opinion thought employers should contribute to their employees' health care - with a plurality of 43 percent even backing a fee of more than 4 percent of total payroll.

With their compromise proposal, the legislative leaders have gone a long way to satisfy the governor's concerns that the burden of reform not be too great on California's businesses. The governor now has an obligation to work with the legislative leaders to balance this goal with the need to adequately fund the system.

Second, both proposals now include some form of mandate requiring individuals to have insurance. The governor's mandate is universally applicable, while the Legislature's new proposal exempts those who would have to pay more than 6.5 percent of their income on health care. The governor is correct to push for truly universal coverage; the Legislature is correct to insist that the coverage be affordable. Both goals must be satisfied, if we are to have a workable system.

Compromises will be necessary to bridge these last few divides. Now that the Legislature has made concessions, the ball is in the governor's court. But, as the final details are worked out, it's important to realize that a reform that caters to one group at the expense of another will ultimately be unsustainable. While it is certainly unfair to place too large a burden on California's businesses, a level of business contribution above the 4 percent of payroll that the governor has proposed need not be too onerous if it is coupled with access to subsidized insurance for contributing businesses' employees - something that remains in the legislative plan. And, it will help to fund the subsidies that are necessary to ensure affordability for consumers and the large number of one-person businesses who must obtain insurance in the individual market. This sort of "win-win" approach is the touchstone for agreement.

California can't afford to miss this golden opportunity for reform. Doing so would mean another year of businesses struggling with an ever-expanding health care burden, emergency rooms closing because they can't afford to treat the uninsured, and too many Californians unable to take care of their own basic health care needs.

It's time for everyone to sit down together, reaffirm their shared goals, and work out their disagreements in good faith. That's harder work than stoking the fires of public recrimination - but it's the only way to light the path to reform.

John Arensmeyer is founder and CEO of Small Business Majority, a California-based national small business advocacy organization. Michael Russo is a health care advocate and staff attorney at the California Public Interest Research Group (CALPIRG).

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