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A transfusion in healthcare funds

The governor should support a fee on hospitals that would open the spigot to billions in federal money to repay providers for the service they render to low-income patients.

October 09, 2009

In this era of revenue shortfalls and program cuts, California should jump at the chance to get billions of dollars in federal money to repay hospitals and other health providers for the service they render to low-income patients. The money is there, just waiting to be picked up. The only catch: The state has to put up some funding as well. We have long had the nation's lowest rate of federal Medicaid reimbursement, even though we have the nation's largest number of patients eligible for the program -- all because we didn't want to pay the state portion.

A solution is at hand in the form of AB 1383 by Assemblyman Dave Jones (D-Sacramento), which would impose a provider fee on hospitals and use the money to draw down the federal funds. Now it's up to Gov. Arnold Schwarzenegger to sign it and shore up our healthcare system.

Hospitals that serve large populations eligible for Medi-Cal -- California's program to access Medicaid money -- recognize that the fee they'll be required to pay will be more than offset by the federal reimbursements. Other hospitals have now signed on in support, or dropped earlier opposition because they see the value in protecting the state's health network.

Anti-tax activists oppose the bill, but the principle they claim is at stake -- that a tax shouldn't be relabeled a fee simply to avoid the two-thirds vote requirement in each house of the Legislature -- doesn't apply in this case. This fee really is a fee, having been carefully crafted in consultation with attorneys in the legislative counsel's office so that it could avoid the fate of Schwarzenegger's innovative but ultimately unsuccessful health reform proposal. That plan would also have charged health providers, but the legislative counsel, in parsing through the legal definitions of taxes and fees, concluded that it would be likely ruled a tax. Now the governor has a chance to get hospital fees -- and billions in federal money -- back into the system.

Another health-related bill Schwarzenegger should sign is AB 2 by Assemblyman Hector De La Torre (D-South Gate), which would deter insurance companies from retroactively canceling policies after their customers make costly claims. The bill would forbid such "rescissions" except for policyholders who deceived the insurer when applying for coverage. But the administration, echoing criticism from health insurers and the Chamber of Commerce, has complained that the measure would encourage lawsuits by those whose policies were rescinded. That's a red herring. Schwarzenegger has worked admirably, if not successfully, to extend healthcare coverage to more Californians during his years in Sacramento, and recently he threw his support behind the White House's goals for comprehensive healthcare reform. Vetoing AB 2 would make a mockery of those efforts.

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