Arnold's health plan to stir debate

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SACRAMENTO, Calif. (AP) -- To succeed with his plan to extend health care to 6.5 million uninsured Californians, Gov. Arnold Schwarzenegger will have to find common ground between groups that often are at odds.

Union leaders quickly balked at a requirement that all Californians have insurance, calling it a tax on the middle class. A demand that all but the smallest businesses offer their workers insurance upset many of Mr. Schwarzenegger's business allies.

"I look forward to everyone now having those debates," Mr. Schwarzenegger said via video link to a panel of health care stakeholders who assembled Monday to hear his plan. "There are a lot of people around the table."

Under the proposal, all Californians must have insurance, although the poorest would be subsidized. Those who go uncovered would be subject to tax penalties.

Businesses with 10 or more employees would have to offer insurance to their workers or pay 4 percent of their payroll into a state fund. Smaller firms, which the governor's office said make up 80 percent of California businesses, would be exempt.

Insurers would no longer be allowed to deny coverage to people because of their medical problems. All children, regardless of their immigration status, would be covered through an expansion of the state and federal Healthy Families program.

"If you can't afford it, the state will help you buy it. But you must be insured," said the governor, who presides over a state with more uninsured people than any other. "That is number one."

Mr. Schwarzenegger said his plan would save $10 billion a year by cutting costs and redirecting money already in the health care system.

Many applauded the breadth and ambition of the Republican governor's plan, which a special team of advisers spent six months developing in secret.

Several analysts said it went even further than Massachusetts, which last year became the first state to require everyone to have health insurance.

"This plan one-ups Massachusetts," said Peter Harbage, a health care consultant with the New America Foundation. "The governor has gone further and added doctors, hospitals and health plans" to those who must help pay.

The state would subsidize the estimated 1.2 million low-income people who do not qualify for coverage. They would be able to buy insurance through a state-run pool and be required to make a small contribution toward their premiums.

Kim Belshe, Mr. Schwarzenegger's health secretary, said an additional $10 billion to $15 billion would go to health care providers under Mr. Schwarzenegger's plan. The state would increase reimbursement rates to help doctors and hospitals.

But, in turn, they would have to pay into the new system. Hospitals would be assessed 4 percent of their revenue, while doctors would pay 2 percent.

Insurers, seeing the possibility of 4 million to 5 million new customers, praised the proposal, despite the new restrictions it places on them, such as limiting administrative costs.

"The governor's plan is bold, comprehensive and visionary," said Bruce Bodaken, chairman of Blue Cross of California. "Taking each part separately, there's something for everyone to hate. But taken as a whole, there's a lot to like."