This proposal does not lack merit.

What it lacks is common sense.

Achieving a workable solution first requires that we understand the problem.  For 4.8 million uninsured Californians, no explanation is necessary (the often-cited figure of 6.5 million refers to those uninsured “at some point” during the prior year, including many who are currently covered). 

But for the rest of us, here is some background:

• Health insurance premiums have risen at an unsustainable rate for consumers over the past decade, peaking at a 10.5% increase in 2002.  Faced with rising costs, employers have been unable to maintain coverage, leaving workers with limited or no employer-based health insurance.

• The cost of providing medical care has skyrocketed over the same period.  Increasingly expensive medical equipment, office supplies, staff salaries, Malpractice/Worker’s Comp/Liability insurance premiums—all squeeze the bottom line for doctors trying to keep their doors open for patients.  Federal and State taxes excise an additional share of shrinking revenue.

• Reimbursement for physicians has lagged far behind inflation.  Medicare, after years of pay declines and freezes, has committed to a 10% pay cut for doctors in 2008, to be followed by a 5% cut for each of the successive six years.  Doctors who care for Medicare recipients will pay a price for it.  Given that private health insurance plans base their reimbursement on the Medicare-fixed prices, the cuts are magnified.

• The situation is worst for doctors who accept Medi-Cal, California’s version of Medicaid.  This top-heavy State program, subsidized by the Federal Government and run by nearly 6,000 Sacramento-based bureaucrats, spends nearly $7,500 yearly per patient. 

This money could fund a private Blue Cross-type plan for every man, woman and child that Medi-Cal currently covers.  However, unlike Blue Cross, California physician participation in Medi-Cal is the lowest of any state sponsored program in the country.  Medi-Cal payments to California physicians rank 49^th in the U.S.  Based on 1969 data, with only a single increase in 20 years, Medi-Cal reimbursement often does not even cover the cost of keeping a doctor’s office open during the patient’s visit.   

Accepting Medi-Cal is the surest way to destroy the viability of a California medical practice.

With this information in mind, let me now review the provisions in the Governor’s proposal:

• Medi-Cal and similarly inefficient programs would be expanded.  Because the root dysfunctions of the programs are not addressed, including a shortage of providers for the current number of patients enrolled, patients will have no greater access to treatment. 

• The $12 Billion proposal supposedly addresses the problem of low reimbursement for doctors who care for Medi-Cal patients. Despite the fact that the Governor’s 2006-07 budget included ZERO increases in Medi-Cal reimbursement (and faced a court battle when he attempted to force a 10% CUT to doctors who accept Medi-Cal), the proposal promises to increase rates “significantly” for providers, hospitals and health plans.

This “carrot and stick” approach defies logic. 

Portable, universal, affordable HIT that adequately safeguards patient privacy currently DOES NOT exist.  So the conditions mandated by Governor’s Medi-Cal reimbursement plan are like requiring the paving of a road that is not yet on the map.

While claiming to create “more efficient health care delivery,” the governor’s plan includes the “expansion of lower-cost models.”  This language actually means that patients will be treated by independently practicing Physician Assistants and Nurse Practitioners instead of doctors—a violation of current State and Federal statutes.  While this practice may provide cost savings, it is certainly not Universal Coverage.

Limiting Californians’ care to “Physician Extenders” without adequate Physician supervision contradicts the stated goals of improving patient safety.  While Physician Assistants and Nurse Practitioners play a valuable role in caring for patients, there is no evidence that using them to replace doctors reduces medical errors.

• In order to fund the expansion of the troubled and expensive programs now in place, the Governor proposes that all hospitals and doctors pay a new tax.  According to the Governor’s healthcare team’s “State Fiscal Impact Summary,” the tax will generate $3.5 Billion. The same report reveals that the projected Medi-Cal reimbursement increase is $2.2 Billion.  Therefore, as the reward for caring for uninsured and underinsured Californians, doctors and hospitals will be forced to finance $1.3 Billion in new taxes.  This is in addition to the Governor’s proposed “Pay or Play” 4% payroll tax on California employers.