MOORLACH UPDATE — Health Care Agenda — January 27, 2019

As someone who has reviewed disappointing audit reports on the Department of Motor Vehicles (DMV) and the Department of Transportation (Caltrans), I am understandably not a big fan of having government run the health care industry in California.

I am sincerely concerned about those who cannot afford health care. I’m happy to report that the County of Orange has a robust infrastructure to provide a safety net for these individuals through its independent health clinics (Coalition of Orange County Community Health Centers) and its county operated health system (COHS), CalOptima. I had the privilege of serving on the CalOptima board for four years, during the Great Recession, and assisted in keeping this critical organization financially sound.

I prefer the COHS model. And replicating it around the state would be my recommendation for addressing the health care needs of those who are under-insured.

As an immigrant, I’m also concerned about providing services to those who are not residents in proper standing. With that, Politico provides an overview of Governor Newsom’s current proposed strategy on California’s health care front. My politely stated concerns are included in the piece below.

During my first few months in office as a Senator, the major health care debate was the managed care organization (MCO) tax increase (see MOORLACH UPDATE — SB 1273 and MCO Tax — February 27, 2016). It looks like we’re in for similar technical and financial debates in the coming months on this very complex topic of health care.


Newsom makes health care the centerpiece of California’s resistance to Trump

If his health care innovations work, Newsom could emerge as a hero of the Democratic Party.


For California under Gov. Gavin Newsom, the resistance to President Donald Trump is about health care.

Much as his predecessor Jerry Brown made climate change the state’s big challenge to Trump, Newsom has embarked on a health agenda that includes extending care to undocumented adults and direct government negotiation of drug prices.

Unlike the other 2020 candidates pushing universal health care, Newsom’s policies aren’t just theoretical Washington talk, so there’s much more at risk. If his innovations in expanding Obamacare, extending Medicaid to undocumented immigrants — itself a jab at Trump’s hard-line immigration policies — and negotiating lower drug prices work, he could emerge as a hero of the Democratic Party. His policies could be templates for candidates pushing ahead on universal health care — an aspiration shared by Democrats even if they are still divided on what specific policies to pursue and how quickly to pursue them.

“In his first day in office, Gov. Newsom established himself as a major force on health care among Democrats and in the states, and that was never true of Gov. Brown,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation.

But the strategy carries lots of peril. The push to extend care will cost the state hundreds of millions of dollars and could stress health systems by attracting more undocumented immigrants. Meanwhile, Newsom’s reluctance to make single-payer health care his top priority after campaigning on it could antagonize the political left, including the California Nurses Association, which has thwarted past health legislation it deemed too timid.

The emerging 2020 Democratic field as well as governors of other states will be watching.

"He’s among the first to try to do some of these things," said Chris Jennings, who served as a health policy adviser in both the Clinton and Obama administrations. Even though California’s size offers more resources and leverage, "many of the policies he’s pursuing can be replicated through individual states or collaborations, and a number of states are starting to think about those things."

Newsom at his Jan. 7 inauguration announced he wants California to be the first state to extend Medicaid coverage to undocumented adults, building on Brown’s 2016 move to cover undocumented kids through age 18. Newsom also wants to install an Obamacare-style individual mandate, which Congress effectively wiped out nationwide in the 2017 tax law. And he wants the state to harness its buying power to bring down drug prices by eventually creating the largest single direct purchaser of prescription drugs in the country.

The 51-year-old former San Francisco mayor and lieutenant governor is tapping into an issue that resonates with Californians. A new poll from the Kaiser Family Foundation and the California Health Care Foundation found 45 percent of residents surveyed ranked making health care more affordable as “extremely important” — just behind education and ahead of affordable housing as priorities for the governor and Legislature.

Newsom isn’t the first California governor to elevate the issue. Arnold Schwarzenegger a decade ago launched an ambitious bipartisan effort to reshape the state’s health system based on a model pioneered by Massachusetts that later became the basis of the Affordable Care Act. It crashed after encountering resistance from conservatives and single-payer advocates on the left who didn’t think it went far enough.

Newsom’s Medicaid expansion, which will cost the state about $260 million a year, has already prompted pushback from Republicans in Congress, where a group of senators led by Bill Cassidy (R-La) has introduced legislation that would strip a portion of California’s federal Medicaid funding if it’s determined federal dollars are paying for Medi-Cal services for undocumented adults. But California says that’s moot because it’s using its own funds — which also means it doesn’t require the Trump administration’s approval.

Though the response to Newsom’s plan within the state has been more positive, with interest groups eager not to antagonize the new administration, state Republican legislators have questioned the long-term cost of such an open-ended entitlement expansion — and the wisdom of wading into a high-profile immigration debate.

State Sen. John Moorlach, a Republican from Orange County who was born in the Netherlands, said after Newsom unveiled his budget that he’s troubled the Medi-Cal expansion may benefit those “who didn’t come through the front door like my folks and I did.”

“I’m just concerned with how do we pay for it, how does it work and is it fair?” he said.

The governor’s in-your-face start is “vintage Newsom,” according to Ben Tulchin, a Democratic strategist and pollster, who called it a “clear push-off on the Trump administration’s priorities on taking people’s health care away from them and taking on immigrants.”

Tulchin said Newsom, who implemented San Francisco’s landmark universal health access program while he was mayor and issued marriage licenses to same-sex couples just weeks after he was inaugurated, has a “much stronger track record on social services and caring for people" than the frugal Brown, who blocked a number of costly health care initiatives in his last years in office, including legislation to enact a single-payer health system. "It’s how he campaigned and is coming through in how he’s governing.”

"It’s almost impossible to do anything in health care and not ruffle feathers,” added Kaiser’s Levitt. “The governor is walking quite a tightrope so far successfully in not bringing on significant opposition.”

That could yet change.

Newsom’s plan to lower drug prices by having the state negotiate with drug companies on behalf of all state agencies, as well as leverage the power of its Medicaid drug purchasing, is sure to draw strong industry opposition, and possibly litigation. Many details still need to be fleshed out, such as whether the state will need a federal waiver to increase its negotiating might for drugs purchased through Medi-Cal.

Newsom also is proposing to reinstate the Obamacare mandate to buy insurance after Congress zeroed out the penalty for noncompliance. Vermont, New Jersey and Washington, D.C., have weighed similar moves, despite the lingering unpopularity of the penalty. In California’s case, Newsom is wagering the requirement will prod more middle-class residents into the state’s Obamacare exchange, Covered California. Penalties for non-compliance could help subsidize coverage for people with incomes that are 400 to 600 percent of the federal poverty level.

Peter Lee, head of Covered California, said Newsom’s announcement on the mandate demonstrated courage. “Penalties aren’t fun,” the state exchange director told POLITICO. “It really is an act of courage, which was one of the taglines of his campaign.”

Anthony Wright, executive director of Health Access California, said the mandate shouldn’t be the only source of that funding. “Our ideal world is when nobody pays the individual mandate penalty because everybody is signing up for coverage,” he said.

Newsom is also likely to face continued pressure from the California Nurses Associations and other supporters of a "Medicare for All"-style system. Though he supports the concept, Newsom has adopted a go-slow approach that could yet antagonize supporters on the left who want it to remain a signature goal. Rep. Ro Khanna (D-Calif.), said California should pass single-payer legislation before the 2020 election, to establish a model if Democrats pull off a sweep and gain control of the White House and both houses of Congress.

David McCuan, a political analyst and professor at Sonoma State University, said Newsom’s early actions on health appear calculated largely to draw a contrast with Trump and the climate in Washington. “It not only marks Newsom as a progressive champion," McCuan said, "it also sends a shot across the bow to Washington D.C."


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