Passage of bill seen as election-year test for Schwarzenegger.

The Democratic-controlled Legislature is on the verge of sending Gov. Arnold Schwarzenegger a bill that would create a state-run universal health care system, testing him on an issue that voters rate as one of their top concerns in this election year. 

On a largely party-line 43-30 vote, the Assembly approved a bill by state Sen. Sheila Kuehl, D-Santa Monica, that would eliminate private medical insurance plans and establish a statewide health insurance system that would provide coverage to all Californians. The state Senate has already approved the plan once and is expected this week to approve changes that the Assembly made to the bill. 

Schwarzenegger has said he opposes a single-payer plan like the one Kuehl's bill would create, but the governor has not offered his own alternatives for fixing the state's health care system. As many as 7 million people are uninsured in the state, and spiraling costs have put pressure on business and consumers. 

"We know the health care in place today is teetering on collapse," said Assembly Speaker Fabian Núñez, D-Los Angeles. "We need to do something to improve it, to reform it, and this is what we are bringing to the table." 

Schwarzenegger's office said it had no official position on the bill. The governor has said he would propose solutions to the state's health care crisis in his State of the State address next January if he is re-elected. 

"I don't believe that government should be getting in there and should start running a health care system that is kind of done and worked on by government," Schwarzenegger said in July at a speech at the Commonwealth Club. "I think that what we should do is be a facilitator, to make the health care costs come down. The sad story in America is that our health care costs are too high, that everyone cannot afford health care." 

The governor hosted a health care summit earlier this year, but no concrete proposals came from the meeting. 

If he vetoes SB840, the governor will be reminded of his decision come election day in November, Kuehl said. 

"I hope that the people of California will hang the albatross of bad health care around the governor's neck," she said. 

Núñez said that while the governor has worked with Democrats on many issues this year, he is on the wrong side of this one. 

"The biggest issue facing California today is health care," Núñez said. "This legislation represents yet another and the most important opportunity we have to say to the governor that he needs to embrace the Democratic agenda, just as he has done on prescription drugs and minimum wage." 

Labor unions and Democrats will take part in a rally on Wednesday to urge Schwarzenegger to sign the bill. 

Democratic gubernatorial candidate Phil Angelides is not supporting the Kuehl bill. 

"He supports moving toward universal health care by first covering all children and then requiring businesses to cover their employees," said Angelides spokesman Nick Pappas. 

Kuehl called the passage of the bill historic because it was the first time both houses of the Legislature have passed a universal health care bill. SB840 must return to the Senate, which approved it once, 25-13, for concurrence before going to Schwarzenegger's desk. 

"Every advance you can make for any cause is important," Kuehl said. "Most important, it gives hope for the people of California that this can be done." 

SB840 would provide comprehensive medical, dental, vision, hospitalization and prescription drug coverage to every California resident. Anyone could see any doctor or go to any hospital. 

"SB840 creates a system of comprehensive health insurance benefits for all Californians that guarantees free choice of doctors and hospitals," Kuehl said. "It creates access for all Californians by steeply reducing administrative overhead and emphasizing preventative and primary care instead of endlessly cutting coverage and access to care or increasing consumer spending." 

Republicans and insurance groups oppose the bill, saying it will create an inefficient government bureaucracy. 

"This takes us in the wrong direction," said Assemblyman Greg Aghazarian, R-Stockton. "This creates a government-run system akin to the Department of Motor Vehicles. Do we want health care taken care of by another bloated bureaucracy?" 

The bill does not account for the costs of the program since it would take several years before any plan was up and running. The plan would create a commissioner and a blue-ribbon commission to examine how the structure would work. An analysis by the Lewin Group, an independent health care consulting firm, said the plan could be paid for with all of the money now being spent on health care. 

That would mean combining all state and federal funds, along with business contributions and participant payments and co-payments. The report suggests that funding could come through an 8 percent payroll tax and a 3 percent individual income tax. 

SB840 allows California to use its purchasing power to negotiate bulk rates for prescription drugs and durable medical equipment, such as wheelchairs, thus realizing an additional $2 billion in savings, Kuehl's office said. 

But eliminating health care insurance plans would eradicate the groups that have the most experience with getting people insured and to doctors, said Chris Ohman, president and CEO of the California Association of Health Plans. 

Ohman said other places that are trying universal health care - such as Massachusetts and San Francisco - are using health care plans to help facilitate the implementation. He said the insurance companies are in the best position to manage costs. 

"If there isn't the focus and drive for advancing preventative programs, the sky's the limit in terms of what the costs will be," he said. "That's what health plans do." 

A Public Policy Institute poll from September 2004 showed that 71 percent of likely voters said they are at least somewhat concerned about being able to afford health care. A slim majority of Californians, 53 percent, said they would be willing to pay more - either through higher health insurance premiums or higher taxes - to increase the number of people who have health insurance. 

The Plan 

The health care measure would: 

Eliminate private health insurance plans and create the California Health Insurance System. 

Provide health care insurance for all Californians. 

Guarantee patients the ability to choose their own doctors and hospitals. 

Pool funds now being spent on health insurance and save money by reducing overhead and using leveraged buying power for things like prescription drugs. 

Require separate legislation to establish financing of the system.