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October 07, 2007

California's Health Care Dreams

While Obama, Clinton and Edwards trot out their plans for giving all Americans access to health insurance, a working blueprint for universal health care may be unfolding far from Capitol Hill.

The state of California--where 6.6 million people, or 19% of the population (the highest of any state), are uninsured--is wrestling with that issue right now. Earlier this month, Gov. Arnold Schwarzenegger called a special legislative session to hammer out a palatable universal health care bill. Lawmakers could draft a proposal in the next few weeks.

One deeply interested party is California's small business lobby. While small companies provide over half of America's private sector jobs, many of them can't afford to offer health benefits--which means they can't attract the talent they need to compete and grow.

The rest of the country is watching too: If passed, the bill could set the stage for policy battles in other states and Washington.

"If California demonstrates that it's possible to get something done, everyone will take notice," says Larry Levitt, a vice president with the Kaiser Foundation, a national health care research foundation.

With health care costs through the roof and climbing, no one doubts that something has to give--but who's going to pay for all that care?

Whatever plan lawmakers gin up, entrepreneurs in California will likely feel a sting in the form of stiffer taxes. The incentive for small businesses to sign on: In theory, those dollars would help make health care more affordable for potential employees, thus leveling the playing field in the struggle to hire talent away from larger competitors that can afford to offer insurance. Second-order result: A healthier population puts a smaller strain on the overall health care system (emergency rooms and so forth) and ultimately reduces overall health care costs--again, in theory.

In the past, small businesses have bristled at health care-related tax hikes. But with health care costs rising 10% or more a year, they too are starting to listen.

"There's a sense that something is going to happen," says Scott Hauge, president of Cal Insure, a health insurance firm, and president of Small Business California, a nonprofit advocacy group. "There's a pressure that wasn't there five years ago."

Two key proposals are at the center of the California debate. Both are "play-or-pay"--meaning that either small businesses offer insurance, or they pay a tax penalty.

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Posted by healthinsurance at October 7, 2007 10:03 PM