California Closes In on Universal Health-Care Plan

California State Assembly Speaker Fabian N¿¿ez (D) said that he expects a sales tax increase to be part of health-care reform.
California State Assembly Speaker Fabian N¿¿ez (D) said that he expects a sales tax increase to be part of health-care reform. (By Rich Pedroncelli -- Associated Press)
By Karl Vick
Washington Post Staff Writer
Monday, September 24, 2007

LOS ANGELES -- With his own party sidelined, California Gov. Arnold Schwarzenegger (R) is working with Democrats to produce a bill that would extend health insurance to everyone in the nation's largest state if voters approve new taxes to pay for it.

"We hope to have a bill very, very soon," the governor's press secretary, Aaron McLear, said Friday. "It's just a matter of closing the last few inches."

Schwarzenegger has invested mightily in the issue, saying California can set a national example on health insurance as it has on energy conservation and other areas. Last week, he called lawmakers back for a special session to find common ground between a Democratic bill and his own proposal to cover about 5 million uninsured Californians.

"The main sticking point, as it always is, is the funding formula, and where is the revenue stream?" said Fabian N¿¿ez, the Democratic speaker of the State Assembly. "When you rely on a free-market health system, and you want everyone to participate, the key issue is affordability."

The governor's effort gained momentum last week with endorsements from the state hospital association and the Los Angeles Area Chamber of Commerce. A new poll showed 72 percent of residents favor his $12 billion plan, which resembles the system put in place in Massachusetts and proposed by several Democratic presidential candidates.

Schwarzenegger's program would require everyone to buy insurance and fund a pool for subsidized coverage through taxes on doctors and hospitals. Employers that do not provide insurance would give 4 percent of their payroll to the pool. The Democrats' version calls for 7.5 percent.

"I think I see light at the end of the tunnel," N¿¿ez said of the negotiations. "I think the insurance industry has got to take a haircut. The hospitals pay a fee. Employers pay a fee. Workers pay a share. And then we're going to have to go out and hustle the voters for a sales tax to make up for the difference."

Voters would likely face the question on the November 2008 ballot. A direct public vote is the only way to raise taxes in California absent a two-thirds majority of the legislature. And Republicans are out of the picture, calling the emerging health insurance plan "a one-way road to disaster," said GOP Assembly leader Michael Villines.

"They have to own it, not the Republicans," said Villines of Schwarzenegger and the Democrats. "They have to convince Californians that they are not taxed enough now."

The rift reflects Schwarzenegger's outsize ambition and the structure of California's politics.

State lawmakers are elected from districts so gerrymandered that most contests are decided at the primary level. "So if you're a Democrat, you run far to the left. If you're a Republican, you run hard to the right," said Allan Hoffenblum, a GOP analyst who publishes the California Target Book, which handicaps state races.

"These Republicans ran on no tax increases. And Arnold is trying to govern as a centrist."

Schwarzenegger, who after a shaky first term now enjoys high approval ratings, warned a state GOP convention this month, "Our party has lost the middle."

"In movie terms, we are dying at the box office," he said. "We are not filling the seats."

Villines noted that the former movie star also likes to operate on the largest scale possible. Schwarzenegger was to be in New York on Monday to address 75 world leaders at the United Nations about global warming.

"He does big things, and he does them fast," Villines said. "He's done this his whole career. He says if you do it incrementally, it won't get done. You have to do it all at once."

Villines said the problem is that health care "isn't a simple issue. If you do it in one fell swoop, you're going to -- while well-intentioned -- create a failed program which ultimately will become a much larger burden on the taxpayer."

© 2007 The Washington Post Company