Major Health Coverage for 5 Million Approved : Bill Sent to Deukmejian Would Set Up Agency to Aid Those Who Can’t Get Medical Insurance

SACRAMENTO —  Catastrophic health insurance would be made available to more than 5 million uninsured Californians under age 65--including those considered to be high risks because of serious health problems--under legislation sent Wednesday to Gov. George Deukmejian.

The bill, which sailed out of the Senate on a 37-0 vote on the last day of the Legislature’s 1988 session, would set up a nonprofit agency to offer subsidized health coverage to all those who presently are unable to obtain it, including those with such life-threatening diseases as AIDS, diabetes and cancer.

Passage of the measure caps six years of failed efforts in the Legislature to deal with the growing percentage of the population that has been turned down for coverage or is not provided with health insurance by employers.

Major Support Cited

Sen. Alan Robbins (D-Van Nuys), the measure’s author, credited a “tremendous letter-writing campaign” by health advocates for beating back opposition in the Legislature, where the program had been criticized as potentially too costly for the state.

“There is a massive constituency behind this,” Robbins said.

Deukmejian has given no indication whether he intends to sign or veto the bill. Two years ago the Republican governor vetoed similar legislation because it sought to finance catastrophic coverage through a payroll tax on workers.

The Robbins bill, by contrast, would be financed primarily from premiums charged to policyholders. If premiums do not cover the costs--and many experts believe they would not--subsidies would come from expected savings to the state’s Medi-Cal program, which presently serves as the insurer of last resort.

People already covered by Medi-Cal would not be eligible for the state insurance program. Those 65 and older already receive coverage under the federal Medicare program.

To finance the new state program, the Legislature also could appropriate money that would be available if voters approve Proposition 99 on the November ballot, an initiative to increase taxes on tobacco products.

Although his measure would not require a tax increase, Robbins predicted that it would be a “close call” for Deukmejian. “This involves a major commitment by the state to move into this area,” Robbins said.

Lobbying Efforts

The bill is supported by an estimated 100 health-related groups, including the California Medical Assn. and the insurance industry, which are expected to lobby Deukmejian to sign the bill.

“We do feel this is a key area that needs to be dealt with by the Legislature and the governor,” said Carol A. Lee, who lobbied the bill on behalf of the medical association.

A major drawback to the plan is the projected size of the premiums.

Since the program would appeal to many with serious illnesses who have been turned down for coverage, the premiums would be high--about $200 monthly, which is about 50% more than the average cost of a private health policy in the state. As a result, those who are uninsured because they cannot afford coverage are likely to remain so.

Additionally, policyholders would have to pay for the first $1,000 of medical costs before the policy would begin paying 80% of subsequent medical bills. However, the co-payments would be limited to $3,000 per individual and $5,000 per family, after which 100% of medical expenses would be covered.

Beyond Reach of Some

“There are those who can’t afford it. We may not be able to reach them and we recognize that,” said Sal Bianco, consultant to the Senate Insurance Committee, who was credited with negotiating the final bill.

Another potential problem involves the estimated 3 million California workers who are not offered health insurance by their employers. Many of those earn too little to afford the premiums that would be charged by the state.

In an effort to help that group, the Legislature also passed a bill, currently pending on the governor’s desk, that would offer tax credits to employers who provide workers with health coverage.

The tax credit would apply only to firms with fewer than 25 employees and would take effect after 1990 only if the state has a sufficient budget reserve. Sen. Barry Keene (D-Benicia), the measure’s author, estimated that half of the companies that do not provide workers with insurance would qualify for the credits.

Despite its shortcomings, supporters of the Robbins bill predicted that the state health insurance program would quickly become the largest health insurer in California, providing coverage for 500,000 to 750,000 individuals.

Many Lack Coverage

A UCLA study released earlier this month showed that as of 1986, there were 5.1 million Californians without any kind of coverage, a 50% increase in seven years. Half the increase was attributed to population growth, but the remainder was believed to result from a decline in employers offering health coverage.

Moreover, an earlier UCLA study suggested that Californians were less likely than other Americans to have health insurance of any kind, with the lowest percentage among those living in Los Angeles and San Diego. Fourteen other states already have enacted similar catastrophic health insurance measures.

If signed into law, the state would begin taking applications for coverage Jan. 1, but the state could delay issuing policies for a year. Also, while the program could not turn applicants down because of a pre-existing medical condition, coverage for such a condition would be excluded for the first six months of the policy.