Legislators Watching California Carefully on Healthcare Reform

A battle over healthcare legislation in California could determine the direction other states move on the issue.

Earlier this week, the California legislature passed a comprehensive healthcare reform bill but Gov. Arnold Schwarzenegger announced he would veto it and call a special session this fall to work out a compromise. The impasse came as a result of the legislature dismissing a proposal from Schwarzenegger earlier in the year.

Schwarzenegger intended to reform healthcare in the country’s largest state along similar lines as Massachusetts, where legislators passed a bill that required all residents to have health insurance, similar to mandates on car insurance. Massachusetts would provide coverage for residents without employer-provided healthcare coverage or funds necessary to self-pay for coverage.

But the California legislature wanted a bolder approach. The bill passed this week required employers to provide health coverage for workers or pay a fee to the state, which would then arrange for insurance for those workers. In addition, the bill permitted more routine testing for HIV, made it easier for police to trace bullets to the guns that fired them and required fast food chains to list the nutritional content of their menu items.

Schwarzenegger has pledged to veto the bill and focus instead on a compromise this fall. Hospitals, small businesses, and members of both political parties have already signaled willingness to cooperate on a compromise deal. The Los Angeles Times reported that a compromise could include a special tax on hospitals, which has been approved by the California Hospital Association, as well as a state sales tax increase, a measure proposed by small business leaders.

Many are looking to California as the pacesetter on healthcare reform, according to a recent story in The Washington Post. "If a breakthrough could occur in California, it would really be an earthquake in terms of health reform," Drew Altman, president of the Henry J. Kaiser Family Foundation, told The Post. "A lot turns on whether it succeeds or fails…Candidates will look at that when they decide how hard to push this. The Congress in 2009 will look at it. It will affect the whole psychology of the health reform movement that’s building.”

Presidential candidates Sen. Barrack Obama (D-Ill.) and John Edwards have already laid out plans to overhaul the health system on a national level, and Sen. Hillary Clinton (D-N.Y.) may release a plan soon, according to news reports.