Calif.'s healthcare plan looks familiar

Governor Arnold Schwarzenegger's ambitious plan to expand health insurance coverage in California draws heavily on Massachusetts' healthcare law in both philosophy and details, according to lawmakers and policy advocates from both states.

Several policy advocates who shaped the sweeping Massachusetts plan enacted into law last year recently briefed lawmakers and business groups in California. What they said is reflected in Schwarzenegger's proposal, which he detailed Monday, and in competing plans unveiled by the California Legislature in December.

"It's not a coincidence that both states' plans look the same," said Crystal Hayling , president and chief executive of the Blue Shield of California Foundation , which organized several meetings with Massachusetts healthcare policy advocates.

"One of the things that's very impressive about what you achieved in Massachusetts is there's a little something for everyone to like and a little something for everyone not to like," Hayling said. "Our plan is the same."

Timothy Murphy , former Massachusetts secretary of health and human services, spoke at a July healthcare affordability summit organized by Schwarzenegger.

"Those ideas were shared and examined as potential ideas for the development of California policy," said Sabrina Lockhart , a spokeswoman for the governor.

The similarities extend beyond general policy to some of the plans' details. In Massachusetts, residents who don't purchase healthcare insurance face the loss of their individual state income tax exemption. The California plans include a similar penalty.

Former Massachusetts Governor Mitt Romney is touting the expansion of healthcare coverage in Massachusetts during his travels around the country to garner support for an expected 2008 presidential run.

"The Massachusetts law has really blazed a trail for the national discussion on healthcare reform," said Michael J. Widmer , president of the Massachusetts Taxpayers Foundation. Like Murphy, Widmer has gone to California to discuss the Massachusetts plan.

"Until Massachusetts passed its law, the common wisdom was that no state could do this alone. Now, everywhere our traveling troupe goes, the mantra is that if Massachusetts can do it, so can we," Widmer said.

But there are some striking differences between California and Massachusetts. For example, before healthcare reform was implemented, the uninsured population here was a relatively modest 460,000, or 7.2 percent. But a staggering 7.2 million Californians lack healthcare coverage -- one in five residents. And the Massachusetts law is expected to cost $1.3 billion annually, compared with a $12 billion price tag for California.

Massachusetts also had a funding advantage: It already had an annual pool of more than $500 million used to compensate hospitals for free care given to the uninsured. That money goes a long way toward paying for free and subsidized care to newly insured residents.

Meantime, a local economist who created a theoretical model of the Massachusetts healthcare market to make sure the reform plan was viable has already done something similar for Schwarzenegger, who wants universal healthcare to become law this year. Jonathan Gruber of the Massachusetts Institute of Technology worked from Thanksgiving through the announcement on Monday "crunching all the numbers so it would all come together." Gruber said he will continue to provide Schwarzenegger and the California Legislature with data and projections.

In some ways, Schwarzenegger's proposal goes further than the Massachusetts law. In Massachusetts, businesses with more than 10 employees must pay an annual fee of $295 per worker if they don't offer a basic health plan. In California, businesses would pay 4 percent of their payroll, up to a cap. For most, that would be much more costly.

California also is targeting powerful interest groups that were relatively unscathed by the Massachusetts law. For example, doctors will be required to pay 2 percent of their revenue, and hospitals 4 percent, to help pay for treatment of those using Medi-Cal, the state's Medicaid program for low-income and disabled residents. In addition, insurance companies could not refuse coverage to residents who have pre existing conditions.

"We looked seriously at the Massachusetts effort and wanted to see what was applicable to California," said Assemblyman Hector De La Torre , a Democrat representing southeast Los Angeles County. "One of the key components is the pay-or-play concept, in which businesses have to provide healthcare coverage or have to pay."

De La Torre cited his experience in the 1990s working for Massachusetts Senator Edward M. Kennedy , a leader in healthcare policy, as well as long-standing discussions with John E. McDonough , executive director of Health Care For All, an advocacy group that helped champion the Massachusetts law.

McDonough said he is impressed by the scope of Schwarzenegger's vision.

"This is gutsy and ambitious and a little breathtaking in the number of interests it takes on all at once. It requires real sacrifice from powerful groups," he said.

As in Massachusetts, the California proposals must be reconciled to come up with hybrid legislation that the Legislature will pass and the governor will sign. And as happened here, the grand ambitions for healthcare coverage are likely to be tempered by reality.

Gruber said passing a version in California will be a greater challenge than in Massachusetts.

"They have the same health coverage goodies we do but more costs and more opponents," he said. "It will be quite a struggle."

Jeffrey Krasner can be reached at krasner@globe.com.