The New York Times-20080129-California Senate Panel Rejects Health Coverage Proposal

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California Senate Panel Rejects Health Coverage Proposal

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In a blow to universal health care coverage in California and possibly to its prospects nationwide, a State Senate committee on Monday rejected a sweeping plan by Gov. Arnold Schwarzenegger that would have offered insurance to millions of uninsured residents.

The Senate Health Committee defeated the plan 7 to 1, with three abstentions, as Democrats and Republicans alike said they found it too nebulous and potentially too costly for a state facing a $14.5 billion deficit.

This bill is not only not perfect, it is flawed, said State Senator Sheila James Kuehl, Democrat of Los Angeles and chairwoman of the committee, who voted against it.

Mr. Schwarzenegger, who had seemed resigned to the plan's defeat in recent days, sounded a determined note on what he had viewed as a major policy initiative of his second term.

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, Mr. Schwarzenegger, a Republican, said. One setback is just that -- a setback.

The loss in California, the nation's most populous state and often its most influential, bodes poorly for universal health coverage, an issue that just a year ago appeared to have found its moment. Besides Mr. Schwarzenegger, the governors of two other populous states, Pennsylvania and Illinois, proposed ambitious health care plans in 2007. But in the end, nothing of national significance was passed.

Drew E. Altman, president of the Kaiser Family Foundation, which studies health policy, said the vote in California reinforced the need for action in Washington.

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, Mr. Altman said. Thus the need for a national solution.

Mr. Schwarzenegger's proposal was modeled largely on a Massachusetts plan, which requires individuals to have insurance, prohibits insurers from denying coverage on the basis of age or health, and uses government subsidies to make insurance affordable for low-income workers.

But last Wednesday, as the California Senate committee heard testimony on the bill, Massachusetts announced that spending on its health care plan would increase by $400 million in 2008, a cost expected to be borne largely by taxpayers.

Shortly after the vote, Assemblyman Michael N. Villines of Fresno, the chamber's Republican leader, praised it as a rejection of a massive government-run health care scheme.

On the Democratic side, there were concerns about the so-called individual mandate, which would have required all Californians to carry and pay for insurance, except those in economic hardship.

The vote comes as Mr. Schwarzenegger faces a dire financial situation and has proposed a spending cut of 10 percent for most state agencies.

Jonathan Gruber, a health economist at the Massachusetts Institute of Technology who was commissioned to advise Mr. Schwarzenegger and the Legislature on the health proposal, said it was pretty clearly doomed by the larger fiscal deficit.

How the California vote affects the issue's national profile remains to be seen. A New York Times/CBS News poll taken this month showed that 7 percent of those questioned thought health care was the country's most pressing problem. Over all, it ranked third after the economy and the war in Iraq.

The California bill looked to have a chance when it passed the Assembly in December. But it faltered badly in the Senate, particularly after a report from the state legislative analyst last Tuesday raised questions about its long-term financing.

Senator Darrell Steinberg, Democrat of Sacramento, was one of several to express frustration that the Legislature had failed to draft a passable bill.

When this bill fails, said Mr. Steinberg, who abstained, what's next?