Universal Healthcare for Californians

Jan. 29 (Bloomberg) — California lawmakers said they must contend with the state’s growing budget crisis before they reconsider Governor Arnold Schwarzenegger’s plan to provide health insurance for everyone in the most populous U.S. state.

The Senate Health Committee yesterday voted to block a universal health insurance bill supported by Schwarzenegger. Lawmakers said they were concerned taxpayers would end up subsidizing the program at a time when the state faces a $14 billion deficit. Senate and Assembly leaders said they had no immediate plans to reintroduce the bill.

Schwarzenegger’s proposal is the latest casualty of a weakening California economy that has sapped revenue and forced the governor to call for across-the-board cuts that would include closing state parks and releasing inmates early. He declared a fiscal emergency this month after seeing an expected surplus dissolve into a deficit amid the worst housing market slump in 16 years.

“Our attention will soon be turned exclusively to how we can make sure the state doesn’t go insolvent,” Senate President Pro Tem Don Perata, an Oakland Democrat, told reporters after the vote yesterday. “None of us came to Sacramento to shred services to the people who need them most, and yet that’s what we’re faced with.”

The bill passed out of the Democratic-controlled Assembly along party lines in a 45-31 vote in December.

The program would have required businesses to spend as much as 6.5 percent of payroll costs on health care for workers or pay the same amount into a state program. It also would have asked voters to raise the tax on a pack of cigarettes by at least $1.50 from the current 87 cents and force all residents to buy insurance if they can afford it.

`One Setback’

Schwarzenegger, a 60-year-old Republican, insisted the plan would fund itself through the higher taxes on cigarettes and new fees on businesses, doctors and hospitals. He vowed to continue to press for legislation to expand insurance to the more than 6 million residents who can’t afford it.

“I am someone who does not give up, especially when there is a problem as big and as serious as health care that needs to be fixed,” Schwarzenegger said in a statement. “One setback is just that — a setback.”

Democrats on the Senate Health Committee said yesterday they were concerned that the provision requiring everyone to buy insurance would force some people to purchase coverage they couldn’t afford. They also were concerned the plan didn’t include enough fail-safes to ensure that costs could be kept down.

Only Massachusetts, Maine and Vermont have passed laws to expand health care to the uninsured. Maryland in 2006 became the first state to require large companies of more than 10,000 workers to pay a set amount for employee health-care benefits. Employers successfully fought the law in federal court.

“When you’re negotiating something as complex as health care, you’ve got to be ready for defeat,” said Speaker of the Assembly Fabian Nunez, a Los Angeles Democrat who wrote the bill in a comprise with Schwarzenegger.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net