Eyes on California as Lawmakers Pursue a Health-Care Deal

Californians appear ready for change. In a Field Poll released last week, 69 percent of respondents said they were dissatisfied with the health-care system, up from 44 percent in December. The state has about 6.5 million uninsured, a number equal to the population of Massachusetts.

"Not only are Californians less likely to be covered than residents of 45 other states, but those who do have coverage are concerned it's not going to be there for them when they need it," said Anthony Wright, executive director of Health Access California, a nonprofit advocacy group.

The problem is not a lack of ideas. Under both the governor's proposal and the Democrats', employers would have to spend a minimum amount on health care for workers or pay money into a state-run purchasing pool through which people could buy private insurance. But the employer's fee under the Democrats would be higher -- 7.5 percent of payroll, compared with 4 percent of payroll under Schwarzenegger's plan.

Another difference: The governor would require physicians to pay 2 percent of their revenue to the state, and hospitals 4 percent, to help finance the new system. The Democrats' plan has no such charges. The governor would require everyone to have a basic level of health insurance; the Democrats have no individual mandate.

Both plans would expand public programs and subsidized coverage for low-income families. Neither is cheap. Schwarzenegger's plan would cost $12 billion annually and cover an estimated 4.1 million people; the Democrats' would cost $8.3 billion and cover 3.4 million.

Business groups would almost certainly challenge any compromise on the ground that the new employer "fee" is actually a tax and thus requires a two-thirds vote of the legislature, said Vince Sollitto, a spokesman for the California Chamber of Commerce. "It's inconceivable that that wouldn't be challenged in court," Sollitto said.

Another potential obstacle is the federal Employee Retirement Income Security Act, which prohibits states from directly regulating employer-sponsored health plans or passing laws that have a major financial impact on them. That is what prompted a federal judge last year to strike down Maryland's "Wal-Mart Law," which would have required the retail giant to spend at least 8 percent of its payroll on health care for its workers.

Political challenges are possible, too. Three years ago, California voters overturned a 2003 law that would have required employers to provide health coverage to workers or pay a fee to the state.

Getting something done will be difficult, analysts said. In Massachusetts, business groups, consumer advocates and politicians worked together to craft the new law, a sharp contrast to the fractious atmosphere in California. And getting permission from the Bush administration to expand the state's Children's Health Insurance Program is no sure thing.

"What's going to happen next? I really think it's anybody's guess," said Marian Mulkey, senior program officer with the California HealthCare Foundation, a nonprofit group that has been closely tracking the debate. "The next few weeks will be critical."

Wright, the consumer advocate, remains optimistic. "We recognize that there are at least 15 different ways that this can all blow up," he said, "but it seems like the public is there, the political will is there and the policy is close to being there."