Golden State Leader Proposes Employer Insurance Mandate

California Gov. Arnold Schwarzenegger wants to use the tax system to encourage employers to provide health coverage and to use a new health care tax to subsidize expansion of Medi-Cal, the state’s Medicaid program.

The fact that 6.5 million California residents now lack health coverage hurts all state residents, not simply the uninsured, Schwarzenegger said today at an event held to announce the governor’s health finance proposals.

“More than 60 emergency rooms have closed over the past decade because they didn’t want to keep treating people without insurance,” Schwarzenegger said. “Unpaid medical bills mean billions of dollars in hidden taxes for the rest of us because those services all have to be paid for.”

Schwarzenegger, a Republican, pleased health insurers and brokers in 2004 when he vetoed a “universal health insurance” bill that year. That bill would have applied mainly to large and midsize employers. Schwarzenegger said at the time that the state should tackle the problem of the uninsured with a comprehensive plan, instead of putting most of the responsibility for fixing the health finance system on larger employers.

The Schwarzenegger proposal released today would create new responsibilities for individuals, doctors, hospitals and most small employers as well as for larger employers.

Schwarzenegger’s plan calls for:

- Increasing the rates Medi-Cal pays doctors and hospitals, to eliminate the burden Medi-Cal now imposes on providers.

- Requiring all Californians to have health coverage that is substantial enough to protect against catastrophic risks.

- Expanding access to coverage by requiring insurers to issue individual insurance on a “guaranteed issue” basis and limiting the difference between the rates insurers can charge sicker individuals and healthier individuals.