Wyatt Buchanan, Chronicle Sacramento Bureau

Friday, January 22, 2010

(01-22) 04:00 PST Sacramento - --

As national health care reform grew more uncertain, the California Legislature on Thursday pushed forward a controversial proposal to create a single-payer health system in the state.

The Senate Appropriations Committee voted 6-3 along party lines, with Democrats in favor of the proposal, which will be considered by the full Senate next week.

The vote came two days after Massachusetts voters elected a Republican U.S. senator to fill the seat long held by Democratic Sen. Ted Kennedy - putting President Obama's national health bill in jeopardy. Backers of the California plan said the timing was coincidental and due to legislative timelines.

But political observers said the vote could come back to hurt state Democrats in November and viewed the move as motivated by the turmoil in Washington, D.C. Similar incarnations of the California plan have twice been passed by the Legislature and both were vetoed by Gov. Arnold Schwarzenegger. A spokeswoman for the Republican governor said Thursday he would veto this bill if it comes to his desk.

Sen. Mark Leno, D-San Francisco, is sponsoring the bill, and said states will have to act to create single-payer systems. The public option, a form of single-payer insurance, appears unlikely to be part of the final national bill, if there is a final bill.

"We always wished there would be single-payer reform in Washington, but given the political reality that that's not going to happen, it's not going to deter us from the pursuit of single-payer in this state," Leno said.

The proposal, which is estimated to cost $200 billion, would eliminate private health insurance in California and replace it with a state-run system, which would be provided to every California resident. That system would be overseen by a new state agency that also would ultimately decide what services the coverage would entail.

The price tag would be paid by pooling all state and federal money currently spent on health services, which would require federal approval, along with a payroll tax that would be paid by both employees and workers. In a previous incarnation of the bill, that tax was set at 16 percent. The financing is not part of the latest version. Backers also think the single-payer system will greatly reduce administrative costs, which also would help pay for the system.

Republicans in the Legislature said they were dumbfounded that the bill would move forward given the climate toward health reform nationwide.

"I believe the Democrats in Sacramento just don't get it," said Sen. Tony Strickland, R-Thousand Oaks (Ventura County). "This was literally 48 hours after the most liberal state in the country voted down Obamacare. They are not listening to people in the state or the country."

Steven Maviglio, a Democratic consultant, supports a single-payer plan but said flatly, "this is not the time to do it."

"Anyone who has read a newspaper in the last 24 hours knows this will not help the Democrats in November and it could hurt them," Maviglio said. He said the timing would be right "when the state isn't billions in debt."

Advocacy groups that support the bill disagreed, however. Deborah Burger, president of the California Nurses Association, called the timing of California's action "perfect."

"The national bill really is not addressing the needs of Americans and they really want us to go forward with something that meets our needs instead of imposing taxes on people who already have health care benefits," Burger said.

Opponents, though, said the proposal would not address the underlying cost-drivers in health care.

"It is just reorganizing care and having the government take over health care decisions," said Charles Bacchi, executive vice president of the California Association of Health Plans.

Sen. Christine Kehoe, D-San Diego, is chairwoman of the committee that approved the proposal and voted in favor of it. She said the cost, if passed, would be about $1 million in the first year to do initial administrative planning. She said it would not hurt the state's budget, which is facing a $20 billion deficit through June 2011, and said she thinks Californians approve of the effort.

"If it's not going to happen at the federal level, it's important for us to keep the discussion alive and see if this is a viable option," Kehoe said.

But Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, said he thought the vote was more of a symbolic move by lawmakers to get the attention of big-money organizations pushing for single-payer insurance.

"An organization involved in health care nationally is probably feeling pretty bruised this week. This is the perfect opportunity for state legislators to remind that organization that they still have friends in Sacramento," Schnur said.