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Calif. lawmakers reject health care bill

SACRAMENTO Calif. In what was widely seen as a test of state-level health insurance mandates, a California Senate committee voted yesterday to kill Gov. Arnold Schwarzenegger’s proposal for extending coverage to all Californians. The measure, already approved by the state Assembly, would have been funded in part by imposing payroll fees on restaurants and other employers.

Observers said the 7-1 vote by the Health Committee underscores the need to address universal health insurance on a national rather than a state-by-state basis. “California’s failure, after coming so close, underscores the lesson that too many states don’t have the political will or resources to reform health care on their own,” Drew Altman, head of the California-based Kaiser Family Foundation think tank, told The New York Times.

The measure was defeated on the same day President Bush proposed extending health insurance coverage by allowing the uninsured to buy a policy with dollars that would be exempt from income taxes. Companies that provide coverage, and employees who share in the cost, use pre-tax dollars to pay for the insurance.

“So I have proposed ending the bias in the tax code against those who do not get their health insurance through their employer,” Bush said in last night’s State of the Union address. “This one reform would put private coverage within reach for millions, and I call on the Congress to pass it this year.”

The president also called on Congress to create association health plans, or AHPs, a strategy supported by the National Restaurant Association and other industry groups. Association health plans pool the buying power of small businesses to buy health insurance at prices that reflect the economy of scale. But the nation’s regulatory setup currently prohibits AHPs from bringing together businesses from outside one state.

News reports say that the members of California’s Senate Health Committee voted down Schwarzenegger’s universal coverage plan in part because the cost would have been crippling for a state facing a projected budget deficit of more than $14 billion.

Schwarzenegger's plan was patterned after the program that was adopted by Massachusetts. In that state, residents are required by law to obtain insurance. The cost is subsidized through a so-called play-or-pay requirement on restaurateurs and other employers. Businesses of a certain size are obligated to pay a per-employee fee if they do not offer health insurance coverage as a benefit.

Schwarzenegger’s measure would have similarly assessed a fee on employers. The money would have been paid into a pool, which would have been formed by Jan. 1, 2009.

All three major contenders for the Democratic Party’s presidential nomination — Sen. Hillary Clinton, Sen. Barack Obama and John Edwards — have said they would pursue universal health insurance on the federal level if they were elected. All have called for funding the extension of coverage in part through employer contributions.

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