Hospitals back gov.'s healthcare plan - The industry agrees to a $1.7-billion tax on itself to help provide health insurance for all state residents. The levy requires voter approval.
SACRAMENTO -- Gov. Arnold Schwarzenegger won an important ally Thursday in his effort to overhaul the state's healthcare system, as California's private hospital industry agreed to a $1.7 billion tax on itself.
The tax, which would require voter approval, would help cover the cost of providing health insurance for all Californians, which the governor said was his goal for the year.
The tax money, along with federal funds and a $600-million tax on public hospitals, would create a $4-billion pot of money that would then be returned to hospitals based on how many poor people they treat.
Hospital tax: An article in Friday's California section about Gov. Arnold Schwarzenegger's proposal to tax hospitals said, incorrectly, that Kaiser Permanente would lose money under the plan because its hospitals do not treat uninsured patients or accept walk-ins. Kaiser's emergency rooms do both. Kaiser would lose money under the plan because it treats proportionately fewer Medi-Cal patients than other major California hospitals. So Kaiser would not benefit as others would from the increase in Medi-Cal rates that Schwarzenegger's plan assumes.
Most hospitals would end up with more money than they paid in the tax, although some would end up with less.
"It's a very significant deal," said Peter Harbage, a senior program associate with the New America Foundation, a think tank with offices in Washington, D.C., and Sacramento. Schwarzenegger based his proposal on some of the ideas endorsed by the foundation.
The hospitals' backing removes one major obstacle to the ballot initiative Schwarzenegger is trying to write with Democratic legislative leaders to embody part of his healthcare changes. But many hurdles remain, including business opposition to another central part of Schwarzenegger's proposal: a requirement that employers provide health insurance for workers or pay a fee to the state.
Labor also has major reservations about the idea of mandatory insurance, and Blue Cross of California, one of the state's largest insurers, is spending $2 million to fight his proposal to require insurers to accept all customers.
Republican lawmakers have also opposed his plan, making it almost certain that the governor and Democrats will need to place large sections of whatever agreement they work out on the ballot. Sen. George Runner (R-Lancaster) said that although the hospital tax sounded like "a smart strategy" for hospitals to "double their money," Republicans would not support it on its own.
"But it's got to be within the context of what the total plan is," he said. For instance, he said, GOP lawmakers would not support it if some of the money went toward healthcare for illegal immigrants.
With any deal between Schwarzenegger and Democrats appearing increasingly unlikely before the Legislature adjourns for the year next week, there is growing talk that Schwarzenegger may call lawmakers back to Sacramento for a special session if he reaches a deal with Democratic leaders.
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