Wednesday, January 18, 2012

The Health Care Leviathan: How to Stop Out-of-Control Health Care Cost


by Michael Monasky
Special To EGN


The California Senate Appropriations Committee met yesterday to discuss Senate Bill 810, written by Senator Mark Leno of San Francisco. It's a continuation of nearly identical legislation shepherded by former Senator Sheila James Kuehl in 2006 and 2008. Both times it was passed by both houses, only to be vetoed by then-governor Arnold Schwarzenegger.

Leno noted that health care costs are way out of line. In 1960, health care costs constituted five percent of the Gross Domestic Product; today, it represents over 14 percent. If left to itself, costs will spiral upwards to 20 percent of GDP by 2015 and 30 percent by 2025.

Meanwhile, five million kids miss school each year due to dental problems. The US ranks 37th in health care delivery, behind Cuba, which has lower infant mortality. One-third of the California budget goes to health care costs, so something must be done to improve outcomes in public health.

SB 810 imposes two important controls on health care spending. First, simplicity: insurance policies are a convoluted maze of language and exceptions. Single-payer regulations eliminate this puzzle of exceptions. Second, orchestrated restraint: also known as cost control, SB 810 requires health care providers to eliminate unnecessary procedures and services, avoid duplication, reduce the cost of drugs, and minimize administrative interference. SB 810 emphasizes allocation of services through primary care providers and the practice of preventive medicine, Leno said.

A litany of organizations supports SB 810 including nearly one hundred individuals from labor, government, social services, small business and human rights advocacy groups crowded Room 4203 at the Capitol to give their names, affiliations, and reasons for supporting the bill.

A handful of opposition, from the California Chamber of Commerce, the Association of Health Plans, National Federation of Independent Businesses, the California Association of Insurance Companies, the California Farm Bureau Federation, and hotel, lodging, insurance agents, and Pharma came to make their case. Opponents claim that government cannot do what business does, that the Affordable Care Act destroys markets, and that SB 810 will drive small businesses to bankruptcy.

Because the bill will affect the $200-250 billion health care industry in California, the committee chair referred the bill to the suspense file for later consideration.


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