HomeMy WebLinkAboutMINUTES - 10011996 - D5 TO: BOARD OF SUPERVISORS Contra
FROM: PHIL BATCHELOR, COUNTY AdMINISTRATORJ Costa
County
DATE: September 23, 1996
sT'� PUi1N'�
SUBJECT: ANALYSIS OF PROPOSITIONS 214 AND 216
SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1. CONSIDER taking a position on Proposition 214, an initiative statute on the
November 5, 1996 ballot, titled the "Health Care Patient Protection Act of
1996", which would provide additional regulations on the health care industry
in an effort to protect patients from actions by HMO's and health care insurers
which may limit access to needed health care, and which would add additional
reporting requirements by health care businesses.
2. CONSIDER taking a position on Proposition 216, an initiative statute on the
November 5, 1996 ballot, titled the "Patient Protection Act," which would
provide additional regulations on the health care industry in an effort to protect
patients from actions by HMO's and health care insurers which may limit
access to needed health care, which would add additional reporting
requirements by health care businesses, establish a nonprofit public
corporation for consumer advocacy, and assess taxes for certain corporate
structure changes.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S): �'�L"tf�[O Z 'L-�L7 IJ�t
NO ACTION OF BOARD ON October 1, 1996 APPROVED AS RECOMMENDED OTHER X
The following persons addressed the Board of Supervisors on this matter: Jeanne Walker-Johnson, CNA,
116 Windhover Way, Martinez; Lynn Baskett, Hospital Council, 44 Barbara Road, Orinda; Kevin Reilly, R.N.,
CNA, 8393 Capwell Drive #200, Oakland; Valerie Gonzales, 2314 Peachtree Circle, Antioch; Michael Lighty, CNA,
1145 Market Street #1100, San Francisco; Shirley Coleman, 1292 A 63rd Street, Emeryville; Deborah Bayer, CNA,
5706 Sacramento, Richmond; and Nancy Casazza, CNA, 2690 Sonoma Way, Pinole.
Following public comment, the Board members discussed the recommendations. At the conclusion of the
discussion, NO ACTION WAS TAKEN.
THIS IS A MATTER FOR RECORD PURPOSES ONLY
NO BOARD ACTION TAKEN
cc: County Administrator
BACKGROUND:
On September 10, 1996, Supervisor Rogers presented to the Board a report calling
for a support position on Proposition 214. The Board referred this report back to
staff and requested that the County Administrator and Health Services Director
return to the Board with a staff analysis on both Propositions 214 and 216, which are
similar in many respects. This report responds to that request from the Board of
Supervisors.
Background on Health Care Spendin.
The Legislative Analyst, in her analysis of both Proposition 214 and Proposition 216,
provides the following background summary of health care spending.
"Annual spending on health care in California totals more than $100 billion.
About two-thirds of this cost is covered by various forms of health insurance,
with the remainder paid by other sources. Roughly 80 percent of all
Californians are covered by health insurance. Specifically:
• About half receive health insurance through their employer or the
employer of a family member.
• Roughly 20 percent are covered by two major government-funded health
insurance programs: the federal Medicare Program, primarily serving
persons aged 65 and older, and the Medi-Cal Program,jointly funded by
the federal and state governments, serving eligible low-income persons.
• About 10 percent of Californians directly purchase health insurance.
"Until recently, spending on health care had been growing much faster than
inflation and population changes. During the 1980s, for example, average
health care spending in the United States grew by almost 11 percent annually
after adjusting for inflation and population. Since 1990, however, this rate of
growth has slowed to about 4 percent annually."
The Legislative Analyst goes on to comment on the role Health Maintenance
Organizations (HMO's) have played in reducing health care costs through capitation
and other incentives, utilization review, and by moving more procedures from an
inpatient to an outpatient venue. The Legislative Analyst also comments on the role
of the State in regulating health care facilities, health plans and health insurance
providers.
Attorney General's Description of Proposition 214:
The Attorney General's summary of Proposition 214 notes that the measure does the
following:
• Prohibits health care businesses from: discouraging health care professionals
from informing patients or advocating for treatment; offering incentives for
withholding care; refusing services recommended by licensed caregivers
without examination by the business's own professional.
• Requires health care businesses to: make tax returns and other financial
information public; disclose certain financial information to consumers
including administrative costs; establish criteria for authorizing or denying
payment for care; provide for minimum safe and adequate staffing of health
care facilities.
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• Authorizes public/private enforcement actions. Provides penalties for
repeated violations. Defines "health insurer."
Attorney General's Description of Proposition 216:
The Attorney General's summary of Proposition 216 notes that the measure does the
following:
• Prohibits health care businesses from: discouraging health care professionals
from informing patients/advocating .for treatment; offering incentives for
withholding care; refusing services recommended by licensed caregiver
without examination by business's own professional; increasing charges
without filing a required statement; conditioning coverage on arbitration
agreement.
• Requires health care businesses to: make tax returns public; establish criteria
written by licensed health professionals for denying payment for care;
establish staffing standards for health care facilities.
• Authorizes public/private enforcement actions.
• Establishes nonprofit public corporation for consumer advocacy.
• Assesses taxes for certain corporate structure changes.
Legislative Analyst's Description of Proposition 214:
The Legislative Analyst describes the major provisions of Proposition 214 as follows:
"This measure establishes additional requirements for the operation of health
care businesses. The measure:
• Prohibits health care businesses from denying recommended care
without a physical examination.
• Requires the state to set more comprehensive staffing standards for
more types of health care facilities.
• Prohibits health care businesses from using financial incentives to
withhold medically appropriate care.
• Increases protections for certain health care employees and contractors.
• Requires health care businesses to make various types of information
available to the public.
"The measure's provisions would affect both public and private health facilities.
However, it is not clear whether the state's Medi-Cal Program would be
considered a `health care business' subject to the requirements of this
measure."
Legislative Analyst's Description of Proposition 216:
The Legislative Analyst describes the major provisions of Proposition 216 as follows:
"This measure imposes new taxes on some health care businesses and
individuals, with the revenue dedicated to financing a variety of health care
services. It also establishes additional requirements for the operation of health
care businesses. The measure:
• Imposes new taxes on health care businesses for bed reductions,
mergers, acquisitions, and restructurings; and on certain individuals
who receive stock distributions from health care businesses. Provides
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D
that revenue from these taxes be spent to administer the measure and
to fund specified health care services.
• Prohibits health care businesses from denying recommended care
without a physical examination.
• Requires the state to set more comprehensive staffing standards for all
health care facilities within six months.
• Prohibits health care businesses from using financial incentives to
withhold safe, adequate, and appropriate care.
• Increases protections for certain health care employees and contractors.
• Requires health care businesses to make various types of information
available to the public.
• Creates a new public corporation - the Health Care Consumer
Association. The association, supported by voluntary contributions
deposited in a new Health Care Consumer Protection Fund, would
advocate for the interests of health care consumers.
"The measure's provisions would affect both public and private health facilities.
However, it is not clear whether the state's Medi-Cal Program would be
considered a 'health care business' subject to the requirements of this
measure."
Cost to Implement Proposition 214:
In regard to the cost of implementing Proposition 214, the Legislative Analyst makes
the following comments relating to local governments:
"This measure would result in unknown additional costs, probably in the range
of tens of millions to hundreds of millions of dollars annually, due to the
measure's effects on the state's and local governments' costs of directly
operating health programs as well as purchasing health care services.
"Counties operate health care programs for people in need who do not qualify
for other health care programs such as Medicare or Medi-Cal. These programs
also would experience some increase in costs to provide additional
examinations and for additional costs of care. These costs are unknown, but
probably less than the potential costs to the Medi-Cal Program.
"The staffing requirements in this measure could increase the costs of health
facilities operated by state and local governments, including . . . county
hospitals and clinics. . . . The amount of this potential increase is unknown and
could range from minor to significant, depending on the actual staffing
standards that are adopted.
"Counties spend over$2 billion annually to provide health care to indigents. In
addition to services that they provide directly, counties contract to purchase a
significant amount of services. The potential county cost increases could be
up to tens of millions of dollars annually, due to the measure's effects on health
care costs generally.
"The state currently spends about $900 million annually for health benefits of
employees and retirees, and the amount spent by local governments is greater.
By increasing health care costs generally, the measure could increase benefit
costs to the state and local governments by an unknown amount, potentially in
the tens of millions of dollars annually. However, the disclosure of financial
information as a result of this measure could assist in negotiating lower rates
with health plans, offsetting some portion of these costs."
The full text of the Legislative Analyst's analysis of Proposition 214 is attached.
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Cost to Implement Proposition 216:
In regard to the cost of implementing Proposition 216, the Legislative Analyst makes
the following comments relating to local governments:
"Summary. The most significant fiscal effects of this measure on the state and
local governments are summarized below and then discussed in more detail:
• Revenues. The measure would result in unknown additional revenues,
potentially in the hundreds of millions of dollars annually, from the new
taxes on health care businesses, and certain individuals. These
revenues would be used to cover the administrative costs of the
measure and for expenditure on specified health care services. The
measure would also result in a state General Fund revenue loss of up to
tens of millions of dollars annually, due to the effect on income taxes.
• Costs. In addition to the increased spending funded by the new tax
revenues, the measure would result in unknown additional costs,
probably in the range of tens of millions of dollars annually. This is due
to the measure's effects on the state's and local government's costs of
directly operating health programs as well as purchasing health care
services.
"Counties operate health care programs for people in need who do not qualify
for other health care programs such as Medicare or Medi-Cal. These programs
also would experience some increase in costs to provide additional
examinations and for additional costs of care. These costs are unknown, but
probably less than the potential costs to the Medi-Cal Program.
"The staffing requirements in this measure could increase the costs of health
facilities operated by state and local governments, including . . . county
hospitals and clinics . . . The amount of this potential increase is unknown and
could range from minor to significant, depending on the actual staffing
standards that are adopted.
"Counties spend over$2 billion annually to provide health care to indigents. In
addition to services that they provide directly, counties contract to purchase.a
significant amount of services. The potential county cost increases could be
up to tens of millions of dollars annually, due to the measure's effects on health
care costs generally.
"The state currently spends about $900 million annually for health benefits of
employees and retirees, and the amount spent by local governments is greater.
By increasing health care costs generally, the measure could increase benefit
costs to the state and local governments by an unknown amount, potentially in
the tens of millions of dollars annually. However, the provisions that require
disclosure of financial data and certification of rate increases (which might
discourage such increases) could offset some portion of these costs."
Arguments in favor of and against Proposition 214:
The argument in favor of Proposition 214 is signed by the Chair, State Legislative
Committee of the American Association of Retired Persons (AARP); the Executive
Director of Children Now; and the Issues Coordinator of the National Multiple
Sclerosis Society, California Chapters.
The rebuttal to the argument in favor of Proposition 214 is signed by the Legislative
Director of the Seniors Coalition; a nurse at Children's Hospital in Los Angeles; and
the President of the California Chamber of Commerce.
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The argument against Proposition 214 is signed by a nurse for Daughter of Charity;
a physician in Arcadia, California; and the President of the California Chamber of
Commerce.
The rebuttal to the argument against Proposition 214 is signed by the President of
the Orange County Chapter of the Susan G. Komen Breast Cancer Foundation; the
President of the Alzheimers Association, California Council; and the Vice President
of Cure Autism Now.
These arguments are attached for the Board's information, along with the full text of
the Proposition itself.
Arguments in favor of and against Proposition 216:
The argument in favor of Proposition 216 is signed by Ralph Nader, Consumer
Advocate; a former President of the American Public Health Association; and the
President of the California Nurses' Association.
The rebuttal to the argument in favor of Proposition 216 is signed by a nurse for
Daughter of Charity; an economist with the Pacific Research Institute of Public
Policy; and by the Legislative Director, the Seniors Coalition.
The argument against Proposition 216 is signed by a nurse for Sisters of Mercy; a
physician with Cedars Sinai Health Association; and an economist with the Pacific
Research Institute of Public Policy.
The rebuttal to the argument against Proposition 216 is signed by Harvey
Rosenfield, Executive Director of the Foundation for Taxpayer and Consumer Rights;
a physician who is the founder of the University of California Wellness Letter; and
the Co-Chair of the California Committee of Small Business Owners.
These arguments are attached for the Board's information, along with the full text of
the Proposition itself.
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214 Health Care. Consumer Protection. Initiative Statute.
I
Official Title and Summary Prepared by the Attorney General
HEALTH CARE. CONSUMER PROTECTION. INITIATIVE STATUTE.
• Prohibits health care businesses from: discouraging health care professionals from informing
patients or advocating for treatment; offering incentives for withholding care; refusing services
recommended by licensed caregiver without examination by business's own professional.
• Requires health care businesses to: make tax returns and other financial information public;
disclose certain financial information to consumers including administrative costs; establish
criteria for authorizing or denying payment for care; provide for minimum safe and adequate
staffing of health care facilities.
• Authorizes public/private enforcement actions. Provides penalties for repeated violations. Defines
"health insurer."
Summary of Legislative Analyst's
Estimate of Net State and Local Government Fiscal Impact:
• Increased state and local government costs for existing health care programs and benefits,
probably in the range of tens of millions to hundreds of millions of dollars annually, depending on
several factors.
52
J
Analysis by the Legislative Analyst
BACKGROUND patients, such as a bonus payment for each patient that
HEAL'T'H CARE SPENDING is not hospitalized during the year. However, federal law
Annual spending on health care in California totals does allow "risk pools"and other types of profit-sharing
more than $100 billion. About two-thirds of this cost is arrangements that enable doctors to benefit from
covered by various forms of health insurance, with the controlling costs forgroups'of patients.
remainder paid by other sources. Utilization Review. HMOs—as well as the state's
Roughly 80 percent of all Californians are covered by Medi-Cal program and insurers using the fee-for-service
health insurance. Specifically: approach—also attempt to contain costs by using
• About half receive health insurance through_.their "utilization review"procedures. Under these procedures,
employer or the employer of a family member. health plans will not pay for certain types of expensive or
• Roughly 20 percent are covered by two major unusual treatments unless they have approved the
government-funded health insurance programs: the treatment in advance.
federal Medicare Program, primarily serving
persons age 65 or older, and the Medi-Cal Program, CONTROLLING HOSPITAL Costs
jointly funded by the federal and state governments, Health maintenance organizations also control their
serving eligible low-income persons. costs by reducing their use of hospitals and encouraging
• About 10 percent of Californians directly purchase more treatment in doctors'offices and clinics. This trend
health insurance, has contributed to an excess of hospital be
Until recently, spending on health care had been On average, about half of the hospital beds in
growing much faster than inflation and population California were unused in 1994. As a result, some
changes. During the 1980s, for example, average health hospitals have downsized, merged, or closed; and many
care spending in the United States grew by almost 11 hospitals are seeking ways to reduce costs in order to
percent annually after adjusting for inflation and compete for business more effectively. Since staffing is a
population. Since 1990, however, this rate of growth has major cost, hospital cost control efforts often focus on
slowed to about 4 percent annually. reducing staff and using less expensive personnel in
place of more expensive personnel where possible (using
HEALTH MAINTENANCE ORGANIZATIONS nurses'aides rather than nurses, for example).
In part, this slower growth has been due to efforts by
employers and government to control their health REGULATION OF HEALTH CARE FAcnxrms
insurance costs. One way they have attempted to hold Licensing of Facilities. The Department of Health
down costs is to contract with health maintenance Services(DHS)licenses many types of health facilities in
organizations (HMOs), which provide health services California, such as hospitals and nursing homes, and has
through their own doctors and hospitals or through general authority to set staffing standards for those
contracts with physicians and hospitals.About one-third facilities. Clinics that are owned and operated directly by
of Californians belong to HMOs. Most of these HMO doctors,however,are not licensed.
members are covered under employee health plans, but Staffing Standards. State regulations generally
many persons covered by Medicare or Medi-Cal also require hospitals to keep staffing records and to base
receive their health care through HMOs. their staffing levels.for nurses on an assessment of
Generally,health coverage provided by an HMO is less patient needs. Hospitals are not required to have
expensive than comparable health insurance coverage specified number of nurses per patient, except ir
provided on a"fee-for-service"basis:Health Maintenance intensive care units. State law requires nursing homes tc
Organizations use several methods'to control.costs; such have at.least.one registered nurse per shift and set:
as "capitation"payments, other financial incentives, and minimum staffing standards for nurses and nursint
utilization review assistants per.patient:
Capitation and Other Financial Incentives. The DIES is revising its current,hospital staffin€
Under the traditional fee-for-service approach, doctors regulations to cover all departments within each facility
and hospitals charge fees based on the specific service .Additionally,the pending regulations require hospitals tc
provided to a patient. By contrast, HMOs generally use establish their staffing needs using a system that mors
capitation to pay doctors. Under this approach, doctors specifically takes into account the condition of eacl
receive a fixed _payment for each HMO member patient.The DHS also enforces federal requirements tha
regardless of the amount of service provided to the health facilities serving Medicare or Medi-Cal patient;
member. Capitation gives doctors a financial incentive to must have enough staff to provide adequate care.
use cost-effective types of,care.
In addition to capitation, HMOs use other financial REGULATION OF HEALTH PLANS AND HEALTH INsuRANcE
incentives to control health care costs. The federal The state Department of Corporations regulates thi
government, however, limits the types of financial financial and business operations of health plans
incentives that may be used by HMOs when serving including HMOs, in California. The Department o
Medicare or Medi-Cal recipients. Specifically, federal law Insurance regulates companies that sell health insurane
prohibits any financial incentives to doctors that could but do not provide health care themselves, includin;
act to reduce medically necessary care to individual workers'compensation insurers.
G96 5
PROPOSAL facilities that it licenses, such as hospitals, nursing
This measure establishes additional requirements for facilities, and certain types of clinics. The Department of
the operation of health care businesses. The measure: Corporations would set, and periodically update, staffing
• Prohibits health care businesses from denying standards for medical clinics operated by health plans,
recommended care without a physical examination. which are not licensed by the DHS.
• Requires the state to set more comprehensive The staffing standards required by this measure would
staffing standards for more types of health care cover more types of facilities and all licensed and
facilities. certified caregivers. In addition, these standards would
• Prohibits health care businesses from using have to be based. on the specific needs of individual
financial incentives to withhold medically patients. Depending on the specific standards adopted,
appropriate care. some health care facilities might have to add more staff,
• Increases protections for certain health care hire more highly skilled staff, or both. The effect on
employees and contractors. overall health care costs could range from minor to
• Requires health care businesses to make various significant.
types of information available to the public. Financial Incentives. The measure prohibits
The measure's provisions would affect both public and insurers, health plans, and other health care businesses
private health facilities. However, it is not clear whether from offering financial incentives to doctors, nurses, or
the state's Medi-Cal Program would be considered a other licensed or certified caregivers if those incentives
"health care business"subject to the requirements of this would deny, withhold, or delay medically appropriate
measure. care to which patients are entitled.
Restricting financial incentives could increase general
FISCAL EFFECT health care costs by limiting the use of risk pools and
The fiscal effect of this measure is subject to a great profit-sharing arrangements that encourage providers to
deal of uncertainty. The health care industry is large, restrain costs. However, the measure specifically allows
complex, and undergoing rapid change, making it the use of capitation payments. Furthermore, it is not
difficult to estimate the effect of new requirements on the clear whether the measure prohibits any financial
overall health care marketplace. Furthermore, several of incentives that are not already prohibited under federal
the measure's provisions could have widely varying fiscal restrictions that apply to providers who serve Medicare
effects, depending on. how they are implemented or or Medi-Cal patients. Consequently, the provision's effect
interpreted by the courts. on health care costs is unknown, but could range from
minor to significant.
EFFECT of THE MEAsuxE ON HEALTH Protection for Certain Health Care Professionals.
CARE Cows GENERALLY The measure prohibits health care businesses from
Changes in health care costs have an impact on the. attempting to prevent doctors, nurses, and other healtl
state and local governments because of their role in care professionals from giving patients any informatior
directly operating health programs as well as purchasing relevant to their medical care. The measure als(
health care services. The following provisions of this broadens existing protections for health car(
measure would increase health care costs generally. professionals who advocate for.patient care.
Physical Examination. Currently, HMOs,health In addition, the measure protects doctors, nurses, an(
insurers, and other health care businesses may refuse to other licensed or certified caregivers from adverse
authorize recommended care that they believe to be . actions by health care businesses—such as firing
unnecessary,, unproven, .or more _expensive than an contract termination, or demotion—without "just cause.
effective alternative treatment, without physically Exarnples of just cause include proven malpractice
examining the patient. Patients usually have a right to endangering patients,drug abuse,or economic necessit,
appealsuch a denial. This .measure requires health Just cause protections currentlyapply to some healt:
insurers,health plans,or other health care businesses to care professionals, such as those who work for publi
physically examine a patient before refusing to approve agencies under civil service and.those who work unde
care that.is a covered benefit and that has .been labor agreements with just cause provisions.. Thi
recommended by the patient's doctor or nurse (or other provision of the measure would reduce some employer
licensed health professional). The person conducting the flexibility and thereby could increase costs to health car
examination would have to be a licensed health care businesses by an unknown amount. The additional cosi
professional with the expertise to evaluate the patient's would include the need to keep records to document tt
need for the recommended care. basis for actions taken against employees or contracto:
Requiring a physical examination prior to denying care in order to show just cause for the action.
would increase general health care costs in two ways. Liability of Health Care Professionals. Tl
First, health care businesses would have to add staff to measure specifies that licensed health care professiona
provide additional examinations. Second, requiring an who set guidelines for care, or determine what ca
examination probably would result in some approvals of patients receive,shall be subject to the same profession
j care that otherwise would be denied. standards that apply to health care professionals w]
Staffing Requirements. The measure requires that provide direct care to patients. This provision wou
all health care facilities provide "minimum safe and increase the risk of malpractice liability for some heal
adequate"staffing of doctors, nurses, and other licensed care professionals who make decisions affecting patie
i or certified caregivers. The DHS would set, and care; but who do not provide direct care. This cou
periodically update, staffing standards for health care increase health care costs by an unknown amount.
54 G
Access to Information. The measure requires Increased Costs to Government to Purchase
private health care businesses with more than 100 Health Care Services
employees to make certain types of information available State Medi-Cal Program. The state contracts with
to the public regarding staffing, guidelines for care, HMOs and health care networks to serve a portion of the
financial data, and the status of complaints against the clients in the Medi-Cal Program. Cost increases to these
business. organizations would tend to increase Medi-Cal costs by
EFFECT OF THE MEASURE ON THE STATE AND an unknown amount. The state spends about $6 billion
LOCAL GOVERNMENTS annually (plus a larger amount of federal funds) for the
Summary. This measure would result in unknown Medi-Cal Program, primarily to purchase health care
services. The potential cost increase to the state could
additional costs, probably in the range of tens of millions range from a few million dollars to more than one
to hundreds of millions of dollars annually, due to the hundred million dollars annually, due to the measure's
measure's effects on the state's and local governments' effects on health care costs generally (as described
costs of directly operating health programs as well as above).
j purchasing health care services. County Health Care Costs. Counties spend over
Increased Costs to Government to Operate $2 billion annually to provide health care to indigents. In
Health Programs addition to services that they provide directly, counties
contract to purchase a significant amount of services.
Requirement for Physical Examinations. If the The potential county cost increases could be up to tens of
Medi-Cal Program is subject to this measure, the millions of dollars annually,'due to the measure's effects
requirement for a physical examination prior to denial of on health care costs generally.
care would increase state costs by an unknown amount, State and Local Employee Health Insurance
potentially exceeding$100 million annually. Costs.. The state currently spends about $900 million
Counties operate health care programs for people in annually for health benefits of employees and retirees,
need who do not qualify for other health care programs and the amount spent by local governments is greater.By
such as Medicare or Medi-Cal. These programs also increasing health care costs generally, the measure could
would experience some increase in costs to provide increase benefit costs to the state and local governments
additional examinations and for additional costs of care. by an unknown amount, potentially in the tens of
These costs are unknown, but probably less than the millions of dollars annually. However,the disclosure of
potential costs to the Medi-Cal Program. financial information as a result of this measure could
Staffing Requirements. The staffing requirements assist in negotiating lower rates with health plans,
in this measure could increase the costs of health offsetting some portion of these costs.
facilities operated by the state and local governments,
including University of California hospitals, state State Administration and Enforcement Costs
developmental centers and mental hospitals, prison and The measure would result in additional costs to the
Youth Authority health facilities, state veterans'homes., Departments of Health Services and Corporations and to
county hospitals and clinics., and hospitals operated by other state agencies to administer and enforce its
hospital districts. The amount of this potential increase provisions(primarily the staffing standards). These costs
is unknown and could range from minor to significant, could be roughly$10 million annually, to various special
depending on the actual staffing standards that are funds that are supported by fees imposed on health care
adopted: businesses and professionals.
For text of Proposition 214 seepage 102
i
G96 55
214 Health Care. Consumer Protection. Initiative Statute.
Argument in Favor of Proposition 214
The health care industry is changing rapidly, and some of If you get sick,you have a right to know what care you need,
those changes could be dangerous to your health.That's why we and you have a right to get the care your insurance premiums
need Proposition 214,the HMO Patient Rights Initiative.All of have paid for.
us, especially those of us who depend on health care the You should not have to worry whether your doctor is afraid of
most—seniors, cancer patients, adults and children with retaliation for referring you to a specialist or whether nursing
disabilities—must be certain that our health insurance will be home aides fear being punished for speaking up for their
there when we need it. patients.You should not have to worry that your health plan
Proposition 214: could drop your doctor for no reason.
• Prohibits written and unwritten gag rules that keep You should not need to be afraid your doctor is being paid a
doctors from telling patients about the care they need. bonus for denying you the care you need.
• Protects doctors,nurses,nursing home aides,paramedics You should know how much of your insurance premium is
and other health care givers.from intimidation when they spent on actual patient care and how much on bureaucratic
speak out on behalf of patients. overhead and executive salaries.
• Prohibits financial incentives for withholding care Is it important to contain costs to keep health care
patients need. affordable?Yes.
• Requires insurers to disclose guidelines for denying care
and to give patients a second opinion—including a Should cost controls be used as an excuse to deny patients the
physical examination—before denying care recommended treatments they.need just because administrators for HMOs
by the patient's doctor. and insurers think it will cost them too much money?Never.
• Forces HMOs and insurers to disclose how much they 214 will be enforced -by existing agencies, minimizing
spend on patient care and how much is spent on executive enforcement costs.And those costs are necessary in order to
salaries and corporate overhead. make sure the rights of patients are safeguarded.
• Requires that hospitals and nursing homes have safe Proposition 214 is a decision about life and death. Please
levels of staffing. consider carefully and join us in voting yes on Proposition 214.
• Prohibits the sale of your medical records without your MARY TUCKER
permission. Chair,State Legislative Committee
• Will be enforced by existing state agencies and without American Association of Retired Persona
new taxes. LOIS SALISBURY
Gag rules on doctors and nurses are wrong. Intimidation of Executive Director,Children Now
caregivers is wrong.Bonuses for denying care that people need
are wrong. Secret guidelines for denying care are wrong. LAURAREMSONMITCHELL
Unsafe staffing in hospitals and nursing homes is wrong. Issues Coordinator,National Multiple Sclerosis
It is dangerous for everyone'if HMOs and health insurers Society,California Chapters
worry more about making.money than they do about your
health when they make decisions about your care.
Rebuttal.to Argument in Favor of Proposition 214
PROPOSITION 214, LIKE 216, IS"A COSTLY TROJAN That's why groups like the Seniors Coalition, 60 Plu
HORSE. We don't need special-interest ballot initiatives to Association and United Seniors Association oppose 214 an
"protect"patients.EXISTING LAW ALREADY protects patient' 216.,It's why leaders of groups that care for the poor lik
advocacy pprohibits gag rules- requires.coverage criteria be SISTERS OF MERCY sad DAUGHTERS OF CHARITY oppos
developed by physicians;provides for safe`stafl`ing m.ho ' *tali; the initiatives.Andit's why small business and taxpayer grout
prohibits paying doctors to deny.needed care;.and prohibits like the CALIFORNIA TAXPAYERS ASSOCIATION and th
disclosing confidential patient records. NATIONAL TAX LIMITATION'COMMITTEE.say NO on 2
These provisions.are part of 214 to hide the measure's real and 216.
purposes:to add bloated,costly staffng.requirements,to give Don't be fooled by special-interest, troja.n horse baIl4
special-interest job protection to some health care workers,sand initiatiyes.VOTE NO.
to help trial lawyers file frivolous health care lawsuits. .
Proposition 214 DOES.NOT provide health coverage to a GORDON JONES
single Californian. I_t costs-consumers BILLIONS OF Legislative Director,The Seniors Coalition
DOLLARS in higher health insurance. costs.while costing MARY DEE HACKER,.t.N.
taxpayers HUNDREDS OF MILLIONS - more for Childrens Hospital,Los Angeles
administration and to cover government workers.Not a penny
of 214 will provide health insurance for the uninpured. KIRK WEST
. Real health care reform should make insurance 'more 'President;California Chamber of Commerce
affordable and reduce the number of uninsured.Props.214 and
216 dramatically increase health:insurance costs and will lead
to MORE UNINSURED:
56 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. G
Health Care. Consumer Protection. Initiative Statute. 214
Argument Against Proposition 214
PROPOSITIONS 214 and 216 are two peas in a pod. They DOES PROP. 214 HELP TAXPAYERS?—No. The
contain similar language promising bogus health care reforms non-partisan Legislative Analyst says 214 could cost state
that will dramatically raise health insurance and taxpayer taxpayers HUNDREDS OF MILLIONS of dollars MORE per
costs for consumers and taxpayers in California. year. These higher costs will need to be cut from existing
Just ask yourself: programs like law enforcement and education,or TAXES WILL
DOES PROPOSITION 214 MAKE HEALTH INSURANCE NEED TO BE RAISED.
MORE AFFORDABLE?—No.An independent economic study "According to one expert study, taxpayers in Los Angeles
estimates that under 214 insurance premiums could go up by as County alone would to forced taxpayers
pay almost
much as 15%. That would cost Californians OVER 3 BILLION
DOLLARS AYEAR IN HIGHER HEALTH COSTS. $60 MILLION more to insure government employees.
WHAT DOES A 15%INCREASE IN HEALTH INSURANCE Taxpayers in every jurisdiction will be hurt by 214."
I DO TO YOUR FAMILY'S BUDGET?For many families, that's —California Taxpayer's Association.
k ALMOST. $1,000 PER YEAR. Seniors and people on fixed WHO'S BEHIND 2149 The Service Employees International
incomes will be hardest hit. That's one reason why groups like Union—a labor union representing health care workers.They'll
The SENIORS COALITION and the 60 Plus Association have more workers to unionize under 214.And, 214 provides
OPPOSE PROP. 214. special interest job protection to certain health care workers.
Small business employees are also concerned: Trial lawyers will be able to file lawsuits over virtually every
"I work for a small company struggling to survive. If employment decision involving a health care worker because of
health insurance goes up,my employer couldn't afford it, 214.
and neither could my family." WHAT'S IN IT FOR THE REST OF US?
—Aletha Hill,Camellia City Landscape . . . HIGHER INSURANCE COSTS FOR FAMILIES
Management,Sacramento AND SMALL BUSINESSES
DOES PROP. 214 HELP THE UNINSURED?—No. Higher • • • MILLIONS IN TAX INCREASES
insurance costs will lead to MORE Californians WITHOUT • • • MORE GOVERNMENT BUREAUCRACY
INSURANCE. That's why California nurses and physicians • • • and up to 60,000 LOST CALIFORNIA JOBS
oppose 214. California needs health care reform but Proposition 214—like
"For the past 20 years,I've cared for patients who have no Prop. 216—WILL MAKE THINGS WORSE. That's why a
diverse coalition opposes them, including Democrats,
health coverage. Proposition 214 means fewer people will
have health insurance. That's just what California Republicans and Independents, seniors, physicians, nurses,
� hospitals, taxpayer groups, small businesses, and local
DOESN'T need." • government organizations.
—Joseph Coulter,M.D.,Yuba City Propositions 214 and 216 are the WRONG SOLUTIONS to
DOES 214 HELP THE .POOR AND MEDICALLY California's health care ills.
INDIGENT?—No.Hospitals that are committed to care for the SISTER CAROL PADII.LA,R.N.
poor would be SEVERELY HURT under 214.
"Our mission is to provide health care to the poor and Daughter of Charity
underserved. Proposition 214 will make it much more RICHARD GORDRUER,M.D.
difficult to help people in need." Arcadia
—Sister Brenda O'Keeffe,R.N. KIRK WEST
Sisters of Mercy President,California Chamber of Commerce
Rebuttal to the Argument Against Proposition 214
Let's be clear.Who opposes 214?The California Association of An independent analysis states that 214's patient protections
HMOs and the Association of California Life and Health would increase overall costs by less than 1%.
Insurance.Companies. HMOs and insurers plan to spend Opponents try to confuse 214 with Proposition 216. But
millions of your insurance premium dollars to defeat 214. Propositions 214 and 216 are NOT"two peas in a pod:"
The opbonents call 214's patient protections-"bogus". Read 214 is a simple, effective measure that relies on existing
Proposition 214.Then ask yourself,are its protections"bogus" agencies to implement its patient protections, minimizing
or are they genuine protections patients need?
• Is it"bogus"to protect freedom of speech between patients enforcement costs.214 CONTAINS NNEW TAXES.
and doctors? 216 lacks some of 214's p key patient protections and 216
,; includes billions of dollars in new taxes.
Is it"bogus to make sure medical decisions are made by please, help protect patient rights. VOTE_ YES ON
patients and doctors,not by HMO and insurance company pROPOSITION 214.
bureaucrats?
• Is it."bogus"to prevent HMOs and insurers from using gag ROBYN WAGNER HOLTZ
rules, intimidation, or financial incentives to discourage president,Orange County Chapter,
doctors from providing needed care? THE Susan G.Komen Breast Cancer Foundation
• Is it "bogus" to require HMOs and insurers to tell E.(GENE)GIBERSON
consumers if their insurance premiums are being spent on W.
actual patient care or bureaucratic overhead and executive President,Alzheimers Association,California Council
salaries? JONATHAN SHESTACK
Opponents make wildly exaggerated claims about costs, Vice President,Cure Autism Now
based"on an"economic study"paid for by their own campaign.
G96 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. 57
216 Health Care. Consumer Protection. Taxes on
Corporate Restructuring. Initiative Statute.
' Official Title and Summary Prepared by the Attorney General
HEALTH CARE. CONSUMER PROTECTION. TAXES ON
CORPORATE RESTRUCTURING. INITIATIVE STATUTE.
• Prohibits health care businesses from: discouraging health care professionals from informing
patients/advocating for treatment; offering incentives for withholding care; refusing services
recommended by licensed caregiver without examination by business's own professional;
increasing charges without filing required statement; conditioning coverage on arbitration
agreement.
• Requires health care businesses to: make tax returns public; establish criteria written by licensed
health professionals for denying payment for care; establish staffing standards for health care
facilities.
• Authorizes public/private enforcement actions.
• Establishes nonprofit public corporation for consumer advocacy.
• Assesses taxes for certain corporate structure changes.
Summary of Legislative Analyst's
Estimate of Net State and Local Government Fiscal Impact:
Increased revenues from new taxes on health care businesses—potentially in the hundreds of
millions of dollars annually—to Sund a corresponding amount of expenditures for specified health
care services.
• Additional state and local costs for existing health care programs and benefits, probably in the
range of tens of millions to hundreds of millions of dollars annually, depending on several factors.
• Reduced state General Fund revenue of up to tens of millions of dollars annually because the new
taxes would reduce businesses'taxable income.
Analysis by the Legislative Analyst
BACKGROUND through their own doctors and hospitals or through
HEALTH CARE SPEmiNG contracts with physicians and hospitals.About one-third
Annual sending on health care in California tot a of Californians,belong to HMOs. Most of these HMO
more than 100 billion.About two-.thirds of this cost # members are covered under employee health plans, but
covered by various forms.of health insurance, with the many persons covered by Medicare or Medi-Cal also
.remainder paid by other sources. receive their health care through HMOs.
Roughly 80 percent of all Californians are covered by Generally,health coverage provided by an HMO is less
health insurance. Specifically: expensive than comparable health insurance coverage
• About half receive health insurance through their Provided on a"fee-for-service"basis. Health maintenance
employer-or the employer of a family member. organizations use several methods to control costs, such
• Roughly 20. percent -are covered by two major as "capitation"payments, other financial incentives, and
government-funded health insurance programs: the utilization review.
federal Medicare Program, .primarily serving Capitation and Other Financial Incentives.
persons age 65 or older, and the Medi-Cal Program, Under the traditional fee-for-service approach, doctors
jointly funded by-the federal and state governments, and hospitals charge fees based on the specific service
serving eligible low-income persons. provided to a patient. By contrast, HMOs generally use
• About 10 percent-of Californians directly purchase capitation to pay doctors. Under this approach, doctors
health insurance. receive a fixed payment for each HMO member
Until recently, spending on health care had been regardless of the amount of service provided to the
growing much faster than inflation and population member. Capitation gives doctors a financial incentive to
changes. During the 1980s, for example, average health use cost-effective types of care.
care spending in the United States grew by almost 11 1 In addition to capitation, HMOs use other financial
percent annually after adjusting for inflation and incentives to control health care costs. The federal
population. Since 1990, however, this rate of growth has government, however, limits the types of financial
slowed.to about 4 percent annually. incentives that may be used by HMOs when serving
HEALTH MnnvTErinxcE ORGANIZATIONS Medicare or Medi-Cal recipients. Specifically, federal law
In part;this slower growth has been due.to efforts by prohibits any financial incentives to doctors that could
employers and government to control their health act to reduce.medically necessary care to individual
insurance costs. One way they have attempted to hold Patients, such as a bonus payment for each patient that
is not hospitalized during the year. However, federal law
down costs is to contract with health maintenance does allow "risk pools"and other types of profit-sharing
organizations (HMOs), which provide health services
62 G96
arrangements that enable doctors to benefit from receive stock distributions from health care
controlling costs for groups of patients. businesses. Provides that revenues from these taxes
Utilization Review. Health maintenance be spent to administer the measure and to fund
organizations—as well as the state's Medi-Cal program specified health care services.
and insurers using the fee-for-service approach—also • Prohibits health care businesses from denying
attempt to contain costs by using "utilization review" recommended care without a physical examination.
procedures. Under these procedures, health plans will • Requires the state to set more comprehensive
not pay for certain types of expensive or unusual staffing standards for all health care facilities
treatments unless they have approved the treatment in within six months.
advance. • Prohibits health care . businesses from using
CONTROLLING HOSPITAL COSTS financial incentives to withhold safe, adequate, and
appropriate care.
Health maintenance organizations also control their • Increases protections for certain health care
costs by reducing their use of hospitals and encouraging employees and contractors.
more treatment in doctors'offices and clinics. This trend • Requires health care businesses to make various
has contributed to an excess of hospital beds. . types of information available to the public.
On average, about half of the hospital beds in • Creates a new public corporation—the Health Care
California were unused in 1994. As a result, some Consumer Association. The association, supported
hospitals have downsized, merged, or closed; and many by voluntary contributions deposited in a new
hospitals are seeking ways to reduce costs in order to . Health Care Consumer Protection Fund, would
compete for business more effectively. Since staffing is a advocate for the interests of health care consumers.
major cost, hospital cost control efforts often focus on The measure's provisions would affect both public and
reducing staff and using less expensive personnel in private health facilities. However, it is not clear whether
placed more expensive personnel where possible (using the state's Medi-Cal Program would be considered a
nurses'aides rather than nurses, for example). "health care business"subject to the requirements of this
REGULATION OF HEALTH CARE FACILITIES measure.
Licensing of Facilities. The Department of Health FISCAL EFFECT
Services (DHS)licenses many types of health facilities in The fiscal effect of this measure is subject to a great
California, such as hospitals and nursing homes, and has deal of uncertainty. The health care industry is large,
general authority to set staffing,standards for those complex, and undergoing rapid change, making it
facilities. Clinics.that are owned and operated directly by difficult to estimate the effect of new requirements on the
doctors,however, are not licensed. overall health care marketplace. Furthermore, several of
Staffing Standards. State regulations generally the measure's provisions could have widely varying fiscal
require hospitals to keep staffing records and to base effects, depending.on how they are implemented or
their staffing levels for nurses on an assessment of . interpreted by the courts.
patient needs. Hospitals are not required to have. a
specified .number of nurses per patient, except in REVENUES
intensive care units.State law requires nursing homes to The measure imposes three new taxes on private
have at least one registered nurse per shift and sets health care businesses in California (excluding insurers)
minimum staffing standards for nurses and nursing with at least •15.0 employees and a new tax on certain
assistants per patient. individuals. The State Board of Equalization;would
The DHS is revising its current hospital staffing collect these taxes.
regulations to cover all departments within each facility. Bed Reduction Tax. This is a tag on any private
Additionally,the pending reations require hospitals to health care business that reduces licensed patient beds .
establishtheir staffing needs using,a system that more in hospitals . or nursing facilities. For each bed
specifically takes into .account the condition of each eliminated,the tax would be 1 percent of the business'
K
The DHS also enforces federal.requirements that average per-bed gross revenues.The tax would have to be
health facilities serving Medicare or Medi-Cal patients paid each year for five years:
must have enough staff to provide adequate.care. Tax on Mergers.and Combinations. The measure
REGULATION of HEALTH Pales generally imposes a one-time 1 percent tax on the value -
AND HEALTH TNsuitnNCE of. any California assets .involved in mergers or
acquisitions of health care businesses. The measure also
The state:Department of Corporations regulates the imposes a 3 .percent tax on the gross revenue of newly
financial and business operations of health plans, formed "multiprovider networks" (that is, health care j
including:HMOs, in California. The Department of businesses.that jointly market or provide health care
Insurance regulates companies that sell health insurance services). The network tax would be paid during the first j
but do not provide health care themselves, including five years of operation.
workers'compensation insurers. Tax on Sale or Transfer of Nonprofit or Publicly
PROPOSAL Owned Assets. The measure imposes a 10 percent tax
on the sale,lease,transfer,or conversion of any nonprofit
This measure imposes new taxes on some health care_ health care business (or provider of health supplies or
businesses and individuals, with the revenue dedicated services)to a for-profit business. The tax would be on the
to financing•a. variety of health care services..It also value ofthe nonprofit assets that are involved in the
establishes additional requirements for the operation of transaction. In the case of the.sale or conversion of a'
health care businesses. _ publicly owned health facility (such as a county hospital
The measure: or clinic)to a private entity,the tax would be 1 percent of
• Imposes new taxes on health care businesses for bed the value of the converted assets.
reductions, mergers, acquisitions, and Tax on Stock Distributions. The measure imposes
restructurings; and .on certain individuals who a 2.5 percent tax on the value of any new stock or other
G96 63
securities provided as payment to officers of, employees from offering financial incentives to doctors, nurses, or
of, or consultants to private health care businesses or other licensed or certified caregivers if those incentives
suppliers. The tax would apply only to persons who own would deny, withhold, or delay safe, adequate, and
(individually or together with family members) at least appropriate care to which patients are entitled.
$2 million of stock or securities in the business or related Restricting financial incentives could increase general
businesses. This new tax would be in addition to health care costs by limiting the use of risk pools and
California's existing income tax. profit-sharing arrangements that encourage providers to
Use of New Tax Revenues. Revenues from the taxes restrain costs. However, the measure specifically allows
imposed by this measure would be deposited in a new the use of capitation payments. Furthermore, it is not
Public Health and Preventive Services Fund. After clear whether the measure prohibits any financial
covering the costs of administering and enforcing this incentives that are not already prohibited under federal
measure, the DHS would spend the remaining revenues restrictions that apply to providers who serve Medicare
for the following purposes: or Medi-Cal patients. Consequently, the provision's effect
• Maintaining essential public health services, on health care costs is unknown, but could range from
including trauma care, controlling communicable minor to significant.
diseases, and preventive services. Protection for Certain Health Care
• Maintaining health care for seniors whose access to Professionals. The measure prohibits health care
safe and adequate care is jeopardized by cuts in businesses from attempting to prevent doctors, nurses,
Medicare and other benefits. and other health care professionals from giving patients
• Ensuring adequate public health services and any information relevant to their medical care. The
facilities .for the population at large, including measure also broadens existing protections for health
individuals and families who lose job-related health care professionals who advocate for patient care.
benefits. In addition, the measureprotects doctors, nurses, and
other licensed or certified caregivers from any adverse
EFFECT of THE MEASURE ON HEALTH actions by health care businesses—such as firing,
CARE CosTs GENERALLY contract termination, or demotion—for providing "safe,
Changes in health care costs have an impact on the adequate,and appropriate care."Depending on how this
state and local governments because of their role in provision is interpreted, it could increase general health
directly operating health programs as well as purchasing care costs by an unknown amount. Costs could increase
health care services. The following provisions of this to the extent that this protection restricts the ability of
measure would increase health care costs generally. . health care businesses to manage the level of care
Physical Examination. Currently, HMOs, health provided by their employees and contractors.
insurers, and other health care businesses may refuse to Liability of Health Care Professionals. The
authorize recommended care that they believe tobe measure specifies that licensed health care professionals
unnecessary, unproven, or more expensive than an who set guidelines for .care, or determine what care
effective alternative treatment, without physically patients receive,shall be subject to the same professional
examining the patient. Patients usually have a right to standards that apply to health care professionals who
appeal such 'a denial. This measure requires health provide direct care to patients. This provision would
insurers,health plans, or other health care businesses to increase the risk of malpractice liability for some health
physically examine a patient before refusing to approve care professionals who make decisions affecting patient
care that is a covered benefit and that has been care, but who do not provide. direct care. This could
recommended by the patient's doctor or nurse (or other increase health care costs by an unknown amount.
licensed health care professional).The person conducting Access to Information. The measure requires all
the examination would have.to be a licensed health care health care businesses to make certain types, of
professional with the expertise.to evaluate the patient's information available to the public regarding staffing,
need for.the.recommended care. guidelines for payment of care, and quality of care. In
Requiring a physical examination prior to denying care addition, the measure requires health care businesses
would increase general.health care.costs in two ways. with more than 150:employees to make available certain
First, health care businesses-would have to add staff to financial data and information on the .status of
provide additional_examinations. Second, requiring an complaints against the businesses.
examination probably would result in some approvals of -Businesses Must.Certify Higher Charges. .Private i
care that otherwise would be denied. I health care businesses would have to certify to the.DHS
Staffing Requirements. The measure requires that that any increase in their premiums or other charges for
all health care facilities provide"safe and adequate" health services is necessary before the increase can take
staffing of doctors, nurses, and other licensed or certified effect.Also,the measure requires public disclosure of the
caregivers: Within six months after the approval of this estimated revenue from the increase and the planned use
measure, the DHS would set staffing standards for all of the additional funds.
health care facilities,such as hospitals,nursing facilities, Effect of New Taxes on Health Care Costs. The
clinics, and doctor's offices. taxes imposed by this measure would be an additional
The staffing standards required by this measure would direct cost to certain health care businesses.
have to cover all types of facilities and all licensed and Furthermore, the taxes could result in higher costs by
certified caregivers. In addition, these standards would discouraging some actions (such as eliminating excess
have to be based on the specific needs of individual beds or creating larger networks) that would generate
patients. Depending on the specific standards adopted, savings by improving efficiency. Some portion of these
some health care facilities might have to add more staff, increased costs probably would be passed on in higher
hire more highly skilled staff, or both. The effect on prices to purchasers of health care services. However,
overall health care costs could range from minor to these additional costs could be partially offset to the
significant. extent that some..of the tax revenues are allocated to
Financial Incentives. The measure prohibits finance"uncompensated care"costs for services currently
insurers, health plans, and other health care businesses provided to indigents and covered by higher charges to
64 G96
other parties. The overall net increase in health care Medi-Cal Program is subject to this measure, the
costs is unknown. requirement for a physical examination prior to denial of
EFFECT OF THE MEASURE ON THE STATE care would increase state costs by an unknown amount,
AND LOCAL GOVERNMENTS potentially exceeding$100 million annually.
Counties operate health care programs for people in
Summary. The most significant fiscal effects of this need who do not qualify for other health care programs
measure on the state and local governments are such as Medicare or Medi-Cal. These programs also
summarized below and then discussed in more detail: would experience some increase in costs to provide
• Revenues. The measure would result in unknown additional examinations and for additional costs of care.
additional revenues, potentially in the hundreds of These costs are unknown, but probably less than the
millions of dollars annually, from the new taxes on potential costs to the Medi-Cal Program.
health care businesses and certain individuals. Staffing Requirements. The staffing requirements
These revenues would be used to cover the in this measure could increase the costs of health
administrative costs of the measure and for facilities operated by the state and local governments,
expenditure on specified health care services. The including University of California hospitals, state
measure would also result in a state General Fund developmental centers and mental hospitals, prison and
revenue loss of up to tens of millions of dollars Youth Authority health facilities, state veterans'homes,
annually, due.to the effect on income taxes. county hospitals and clinics, and hospitals operated by
• Costs. In addition to the increased spending hospital districts. The amount of this potential increase
funded by the new tax revenues, the measure would is unknown and could range from minor to significant,
result in unknown additional costs, probably in the depending on the actual staffing standards that are
range of tens of millions to hundreds of millions of adopted.
dollars annually. This is due to the measure's effects
on the state's and local governments'costs of directly Increased Costs to Government to
operating health programs as well as purchasing ' Purchase Health Care Services
health care services. State Medi-Cal Program. The state contracts with
Revenue Effects of Measure HMOs and health care networks to serve a portion of the
clients in the Medi-Cal Program. Cost increases to these
Public Health and Preventive Services organizations would tend to increase Medi-Cal costs by
Fund. The four taxes established by this measure an unknown amount. The state spends about $6 billion
would generate unknown revenues, potentially hundreds annually (plus a larger amount of federal funds) for the
of millions of dollars annually. The actual amount of Medi-Cal Program, primarily to purchase Health care
revenues will depend primarily ondecisions made by services. The potential cost increase to the state could
health care businesses regarding the activities subject to range from a few million dollars to more than
these taxes, such as bed reductions, mergers, and $100 million annually, due to the measure's effects on
acquisitions. health care costs generally(as described above).
General Fund. The taxes imposed by this measure County Health Care Costs. Counties spend over
on health care businesses would reduce their taxable $2 billion annually to provide health care to indigents. In
income: For this reason, the measure would reduce addition to services that they provide directly, counties
General Fund revenue from income taxes.The amount of contract to purchase a significant amount of services.
this revenue loss would be up to tens of millions of dollars The potential county cost increases could be up to tens of
annually. millions of dollars annually, due to the measure's effects
Potential Loss of Revenues From the Sale or Lease on health care costs generally.
of Health Facilities. By imposing a tax on the sale, State and Local Employee Health Insurance
transfer, or lease of publicly owned health facilities to Costs. The state currently spends about $900 million
private organizations, the measure could reduce .the annually for health benefits of employees and retirees,
market value of those facilities. As a result, the tax and the amount spent by local governments is greater.By
potentially would reduce revenues from those types of increasing health care costs generally, the measure could
transactions. The amount of this earnings loss could be increase benefit costs to the state and local governments
up to millions of dollars annually to the state and local by an unknown amount, .potentially in the tens of
governments,but would depend on many factors. millions of dollars annually. However,the provisions that
Health Care Consumer Protection Fund. The require disclosure of financial data and certification of
measure also would result in an unknown amount of rate increases (which might discourage such increases)
revenues from voluntary contributions to the Health could offset some portion of these costs.
Care Consumer Association to support its activities.
Spending of New Tax Revenues. The measure State Administration and Enforcement Costs.
requires the DHS to spend the revenues from the new The measure would result in additional costs to the
taxes on a variety of health care services (after covering Department of Health Services, the State Board of
state administrative costs). These expenditures could Equalization, and other state agencies to administer and
total up to hundreds of millions of dollars annually, enforce its provisions (primarily the staffing standards
depending on the amount of revenue produced by the and the collection of new taxes). The ongoing costs could
new taxes. be roughly $15 million annually, plus several million
Increased Costs to Government to dollars of start-up costs in the first year. These costs
would be paid from the new tax revenues in the Public
Operate Health Programs Health and Preventive Services Fund created by this
Requirement for Physical Examinations. If the measure.
For text of Proposition 216 see page 104
G96 65
Health Care. Consumer Protection. Taxes on
216 Corporate Restructuring. Initiative Statute.
Argument in Favor of Proposition 216
Insurance companies and HMOs are downgrading medicine from a Proposition 216 will save taxpayers money.According to the official
profession that serves patients to a business that squeezes them.Under State Legislative Analyst,the health care industry will pay all the costs
"managed care," medical decisions.are often made by insurance of enforcing the initiative through penalty fees on wildly-excessive
bureaucrats—instead of by doctors and nurses. HMO salaries,multi-billion dollar hospital mergers and medical service
HMOs and insurance companies are increasingly controlling what reductions. Also, these fees will help cover the costs of crucial
doctors can say or do for you . . . Awarding bonuses to doctors for community programs such as emergency care and contagious disease
withholding treatment . . . Imposing"gag rules"that censor what prevention.
doctors or nurses tell patients about their treatment . . : Denying Voter Alert #1. If Prop. 216 passes, insurers will have to cut out
referrals to specialists . Forcing patients out of hospitals before waste and excess profits and reduce overhead,which consumes 31 cents
they're fully recovered . . . Replacing nurses with. untrained, of every $1 in premiums policyholders pay. So the giant health
low-wage workers to care for patients . . .'Cutting medical staff,while corporations are spending millions to frighten voters about "big
assigning doctors and nurses more patients.
These practices are reaping billions of dollars for giant health government,more taxes."Don't be misled.Under Prop.216,taxpayers,
corporations and Wall Street moguls.But substandard care and unsafe businesses and California's economy benefit.
cost-cutting result in tragic and unnecessary deaths.and injuries. Voter Alert #2. Many voters are confused by Proposition 214, a
To maintain the quality and compassion of the health care system,it's different initiative.Only Prop.216 establishes a consumer watchdog to
time to put patients and qualified doctors and nurses back in control. protect against insurance abuse. And only Prop. 216 will prevent
That's why over 800,000 California voters,led by nurses'and consumer industry-funded politicians from easily overriding these voter-approved
advocates,have joined to pass Proposition.216,the Patient Protection. reforms in the Legislature.
Act. The Patient Protection Act will best protect you and your family
Prop.216 will: against unsafe and costly medical care.'Ib guarantee that every reform
1. Outlaw bonuses to doctors and nurses for withholding treatment. in Prop.216 becomes law,it must get more"Yes"votes than Prop. 214.
2. Ban "gag rules" that restrict physicians and nurses from Remember,vote"Yes"only on Prop.216.
discussing treatment options with patients.
3. Establish safe staffing levels in hospitals, clinics and nursing RALPH NADER'
homes;ban the use of untrained personnel for patient care. Consumer Advocate
4. End arbitrary denial of medical treatment; require a written DR.HELEN RODRIGUEZ-TRIAS,M.D.
explanation and qualified second opinion before care may be Former President,American Public Health Association
denied. HIT COSTELLO,R.N.
5. Establish aself-funded,independent consumer watchdog group;
require industry disclosure of safety and financial data. President,California Nurses Association
6. Ban the sale of your private medical records without your
permission.
7. Require detailed justification,for premium increases.
Rebuttal to Argument in Favor of Proposition 216
This initiative, like Proposition 214, is not what it seems. It's a The Legislative Analyst says 216 will cost taxpayers HUNDREDS OF
special interest trick that contains "patient protection"provisions MILLIONS per year.Economists predict it could lead to a 15%increase
THAT ARE ALREADY LAW.It doesn't give consumers added protection in health insurance costs for California families.Trial lawyers will be
and it's not real health care reform. able to file new frivolous lawsuits under both Props.216 and 214.
Existing laws already ensure that doctors must-advocate for patients; Proposition 216 makes California's health care system worse. It
that hospital staffing be safe and adequate; and that health care raises health insurance, and taxpayer costs by BILLIONS OF
providers provide information to patients about their health care needs. DOLLARS. per..year, but it DOESN'T EXTEND INSURANCE
Health plans and HMOs are ALREADY REQUIRED to base medical COVERAGE TO UNINSURED CALIFORNIANS.
decisions on written criteria developed by doctors. VOTE NO on Propositions 216 and 214.
Take out the bogus"reforms"in 216.and what is left?Costly new
bureaucratic rules,special-interest job protection,and higher health SISTER CAROL PADILLA,R.N.
care costs for consumers and taxpayers: Daughter of Charity .
Proposition 216 DOES NOT provide health insurance coverage to a SALLY C.PIPES
single Californian. It assesses BILLIONS OF DOLLARS IN NEW Economist,Pacific Research Institute,of Public Policy
TAXES,.which will lead to huge increases in health care costs for
consumers-without improving quality.Prop.216 REQUIRES that these GORDON JONES,
taxes be used for GOVERNMENT BUREAUCRATS to administer the Legislative Director,The Seniors Coalition
initiative.
66 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. G96
Health Care. Consumer Protection. Taxes on
Corporate Restructuring. Initiative Statute. 216
Argument Against Proposition 216
PROPOSITIONS 216 and 214 HAVE THIS IN COMMON:THEY'RE HIGHER HEALTH COSTS
BAD MEDICINE FOR CALIFORNIA. They're special interest Health costs will skyrocket under Proposition 216. Independent
measures that won't deliver real health care reform.Instead,they make economists estimate premiums could increase up to 15%, COSTING
things worse. We need health care reform, but 216 and 214 are CONSUMERS BILLIONS OF DOLLARS.Higher costs hit families and
WRONG SOLUTIONS. small businesses hardest.Many could be forced to lay off workers and
Real health care reform should make insurance more affordable and reduce benefits; some could be forced to close. Proposition 216 could
reduce the number of uninsured Californians.Proposition 216 does the mean 60,000 LOST CALIFORNIA JOBS.
opposite—it could DRAMATICALLY RAISE HEALTH INSURANCE Employees pay the highest price:
costs,leading to FEWER PEOPLE COVERED. The small company where I work can't afford those higher costs.
They'll be forced to drop our coverage or pass the costs to employees like
Californians from every walk of life, including Republicans, me.I can't afford 216."
Democrats and Independents, nurses,physicians,hospitals, seniors, .—Jane Gonzales,Office Manager,Los Altos
consumers,taxpayers,and businesses oppose Proposition 216.
SPONSORED BY SPECIAL INTERESTS EXCESSIVE GOVERNMENT INVOLVEMENT
Prop.216 requires dozens of new rules,regulations and government
Like Proposition 214, Prop. 216 is a special interest measure functions,employing a legion of government bureaucrats.For instance,
designed to help its sponsors.The nurses union co-sponsoring 216 will 216 gives bureaucrats power to mandate staffing levels in every
have more health care workers to represent because of Proposition hospital, doctor's office: and clinic. It even requires DAILY
216's quotas.These quotas could cost consumers hundreds of millions of COMPLIANCE REPORTS.
dollars in higher health charges and will not improve health care.Trial "That's too much government! .Imagine the cost of government
lawyers stand to make MILLIONS OF DOLLARS in attorney fees for bureaucrats hovering over every health care.provider office in
filing more frivolous health care lawsuits permitted by 216. California."
HAMMERS TAXPAYERS —Lew Uhler,National Tax Limitation Committee
Proposition 216 is DEVASTATING TO TAXPAYERS. The CAN'T BE FIXED
independent Legislative Analyst, says 216 could cost taxpayers When was the last time a ballot initiative turned out exactly as
'SEVERAL HUNDRED MILLION DOL .W
DOLLARS per year in promised?Prop.216 makes it almost impossible to fix problems when
administrative costs . . . millions MORE to provide coverage to they develop.Californians will be stuck with a costly,flawed initiative.
government workers .•. . millions more in lost tax revenues: Proposition 216 is phony health care reform sponsored by special
Proposition 216 also enacts FOUR,NEW TAXES on health care interests.It will cost taxpayers and consumers billions of dollars.
businesses that could cost BILLIONS of dollars. Every consumer in SISTER KRISTA u aM�3EZ R.N.
California will ultimately pay! Sisters of Mercy,
"216 is a disaster for taxpayers.According to an independent study,in
LA County alone, it's nearly $60 million more to provide health WILLIAM S.WEIL,M.D.
coverage to government workers. Statewide, we'll pay hundreds of Cedars Sinai Health Associates
millions in higher costs." SALLY C.PIPES
--California Taxpayer's Association Economist,Pacific Research Institute of Public Policy
Rebuttal to Argument Against Proposition 216
There they go again. SAVES CALIFORNIA .BUSINESSES BILLIONS in lost
Insurance companies, HMOs and other giant health corporations productivity by protecting employee health; experts estimate a
'=• want to divert your attention from their fraudulent medical practices $14 billion benefit to California's economy with Prop.216.
and their excessive profits.That's why they resort to their usual scare is REAL CONSUMER PROTECTION- with SHARP
tactics:government!.tasea! ENFORCEMENT TEETH.Amendments require a tough two-thirds
But their deceptions,tricks and phony statistics won't work this time vote by state lawmakers,preventing sabotage by HMO and insurance
because voters know the facts. lobbyists in Sacramento.
The health industry is spending tens of millions against Prop. 216.
Only Prop.216 . .• . They've even,imported campaign consultants from Washington, D.C.
. . . is backed by 836,000 California,voters,25,000 California What are they afraid of?216 will force them to provide safe health care.
Nurses Association members,Ralph Nader and other leading consumer 216 puts patients first,before profits.The giant HMOs are desperate
advocates,and by thousands of families who know firsthand the tragic because the facts--and informed voters=support Prop.216.
costs of HMO greed-driven cutbacks. HARVEY ROSENFIELD
. WILL COST TAXPAYERS NOTHING.The official Legislative Executive Director,Foundation.for Taxpayer and
Analyst confirms that penalties on HMO practices that reduce quality Consumer Rights
care will cover 100%of all enforcement costs. DR.SHELDON MARGEN,M.D.
REDUCES GOVERNMENT by establishing a self-funded, Founder, University of California Wellness Newsletter
independent,nonprofit consumer watchdog group to monitor HMOs.
LINDA ROSS
BLOCKS ARBITRARY PREMIUM INCREASES and
Co-chair,California Committee of Small
i,specifically prohibits passing on costs of safeguarding.quality care. Business Owners
'..'G96 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. 67
i
(2) The parties have determined to compromise and enter into a settlement of some or all SEC. 29. If any provision of this law,or the application of that provision to any person
of the disputed claims and the court,after hearing,determines that the settlement is in the or circumstances,shall be held invalid,the remainder of this law to the extent that it can be
public interest.Any settlement or compromise approved by the court shall be deemed to be a given effect,or the application of that provision to persons or circumstances other than those
finding of violation for purposes of subdivision(c)of Section 91002 and Section 91009. as to which it was held invalid,shall not be affected thereby,and to this extent the provisions
SEC. 26. Section 91012 of the Government Code is amended to read: of this law are severable.In addition,if the expenditure limitations of Section 85401 of this
91012. The court may shall award to a plaintiff or defendant other than an agency,who act shall not be in effect,the contribution limits of Sections 85301.85302,85303,and 85304
prevails in any action authorized by this title his or her costs of litigation, including shall remain in effect.
reasonable attorney's fees.On motion of any party,a court shall require a private piaintiff to SEC. 30. This law shall become effective November 6, 1996. In the event that this
post a bond in a tcasonable amount at arty stage of the litigation to gttarantee papmertc of measure and another measure or measures relating to campaign finance reform in this state
costs.The court may award to a defendant other than an agency who prevails in any action shall appear on the statewide general election ballot on November 5, 1996,the provisions of
authorized by this title his or her costs of litigation,including reasonable attorney's fees,only these other measures shall be deemed to be in conflict with this measure.In the event that this
if the court finds,on the record,that the matter was frivolous,or brought in bad faith or for
some other improper purpose. The provisions of Section 425.16 of the Code of Civil measure shall receive a greater number of affirmative votes,the provisions of this measure
Procedure shall not apply to any action filed pursuant to Section 91004,91005,or 91005.5. shall prevail in their entirety,and the provisions of the other measure or measures shall be
SEC. 27. Section 91015 of the Government Code is repealed. null and void in their entirety.In the event that the other measure or measures shall receive a
W15. The provisions of this chapter shaft not apply to violations of Section 63116.5. greater number of affirmative votes,the provisions of this measure shall take effect to the
extent permitted by law.
MISCELLANEOUS PROVISIONS SEC. 31. It is the sense of the people of California that candidates for the United States
SEC. 28. There is hereby appropriated annually from the General Fund the sum of three House of Representatives and the United States Senate seeking to represent the people in the
cents($0.03)per individual of the voting age population in the state,to be adjusted to reflect Congress of the United States should comply with the contribution limits and expenditure
changes in the Cost of Living Index in January of each even-numbered year after the limits prescribed herein for candidates for the State Senate and Governor,respectively.The
operative date of this act,for expenditures to support the operations of the Fair Political people recognize that the limitations prescribed in this law may not be mandated by the
Practices Commission in administering and enforcing this title.The Franchise Tax Boardshall, people for candidates for federal office.However,it is the sense of the people that these
24335 oof the Revenue and Taxation Code have been in effect,calculate the amount of the.asoon as possible after the end of the first calendar year in which Sections 17221 and limitations are necessary to prevent corruption and the appearance thereof and to preserve the
2433
increased tax revenues to the state as a result of these sections. From the amount so fairness and integrity of the electoral process in California.The people,therefore,suggest that
calculated,the Controller shall,for each fiscal year,transfer to the commission,from the candidates for federal office seeking to represent the people in the Congress of the United'
General Fund,the amount necessary to meet the appropriation to the commission set forth States comply voluntarily with the limitations prescribed herein until such time as comparable
above.In any event,regardless of whether the increased revenue from Sections 17221 and limitations are adopted by the Congress of the United States or through a constitutional
24335 of the Revenue and Taxation Code is sufficient,the Legislature shall provide the amendment.
appropriation to the commission set forth above.To the extent the Legislature provides It is also the sense of the people of California that the broadcast licensees,as public
budgetary support for local agencies for administration and enforcement of this title,the trustees,have a special obligation to present voter information broadcasts.For the privilege of
amount of increased tax revenues to the state as a result of Section 86102 of the Government using scarce radio and television frequencies,the broadcasters are public trustees with an
Code shall also be provided for this purpose.If any provision of this title is challenged obligation to provide at no cost and no profit time for candidates to appear and use the station,
successfully in court,any attorney's fees and costs awarded shall be paid from the General whether radio or�television,for the presentation of candidates'views for some brief period
Fund and shall not be assessed or otherwise offset against the Fair Political Practices during prime viewing or listening time in the 30-day period prior to an election.The people of
Commission budget.Any savings or revenues derived from this title shall be applied to the California recognize that the federal government has jurisdiction for such a mandate,and
Anti-Corruption Act of 1996 Enforcement Fund to pay costs related to the administration and strongly urge the Congress of the United States to require the Federal Communications
enforcement of the title,with the remainder to be placed in the General Fund for general Commission to enforce these requirements upon broadcasters as a condition of holding a
purposes. public broadcast license and fulfilling the broadcaster's public service obligation.
Proposition 213: Text of Proposed Law
This initiative measure is submitted to the.people in accordance with the provisions of (1) The injured person was at the time of the accident operating the vehicle in violation of
Article IT,Section 8 of the Constitution. Section 23152 or 23153 of the Vehicle Code,and was convicted of that offense.
This initiative measure adds sections to the Civil Code;therefore,new provisions proposed (2) The injured person was the owner of a vehicle involved in the accident and the vehicle
to be added are printed in italic type to indicatg that they are new. was not insured as required by the financial responsibility laws of this state.
PROPOSED LAW (3) The injured person was the operator of a vehicle involved in the accident and the
operator can not establish his or her financial responsibility as required by the financial
SECTION 1. Title responsibility laws of this state.
This measure shall be known and may be cited as"The Personal Responsibility Act of (b) Except as provided in subdivision(c),an insurer shall not be liable, directly or
1996.". indirectly, under a policy of liability or uninsured motorist insurance to indemnify for
SECTION 2. Findings and Declaration of Purpose non-economic losses of a person injured as described in subdivision(a).
(a) Insurance costs have skyrocketed for those Californians who have taken responsibility (c)In the event a person described in paragraph(2)of subdivision(a)was injured by a
for their actions..Uninsured motorists;drunk drivers;and criminal felons are law breakers,. motorist who at the time of the accident was operating his or her vehicle in violation of
and should not be rewarded for their irresponsibility and law breaking..However,under Section 23152 or 23153 of the Vehicle Code,and was convicted of that offense,the injured
current laws,uninsured motorists and drunk drivers are able to recover unreasonable damages person shall not be barred from recovering non-economic losses to compensate for pain_
from law-abiding citizens as a result of drunk driving and other accidents,and criminals have suffering, inconvenience,physical impairment, disfigurement, and other nonpecuniary
been able to recover damages from law-abiding citizens for injuries suffered during the damages.
commission of their crimes. SECTION 4. Effective Date
(b) Californians must change the system that rewards individuals who fail to take essential This act shall be effective immediately upon its adoption by the voters.Its provisions shall
personal responsibility to,prevent them from seeking unreasonable damages or from suing apply to all actions in which the initial trial has not commenced prior to January 1,1997.
law-abiding citizens. SECTION 5. Severability .
(c)Therefore,the People of the State of California do hereby enact this measure to restore If any provision of this measure,or the application to any person or circumstances is held
balance to our justice system by limiting the right to sue of criminals,drunk drivers,and invalid or void,such invalidity or.voidness shall not affect other provisions or applications
uninsured motorists. that can be given effect without the invalid or void provision or application,and to this end,
SECTION 3. Civil Justice Reform all of the provisions of this measure are declared to be severable.
Section 3333.3 is added to the Civil Code;to read: SECTION 6. Conflicting Measures
3333.3. In any action for damages based on negligence,a person may,not recover any In the event another measure to be voted on by the voters at the same election as this
damages if the plaintiffs injuries were in.any way proximately caused by the plaintiffs measure, and which constitutes a comprehensive regulatory scheme, receives more
commission of any felony,or immediate flight therefrom,and the plaintiff has been duly affirmative votes than this measure,,the electors intend that any provision or provisions of this
convicted of that felony. measure not in direct and apparent conflict with any provision or provisions of that other
Section 3333.4 is added to the Civil Code,to read: measure shall not be deemed to be in conflict therewith,and shall be severed from any other
3333.4. (a) Except as provided in subdivision(c),in any action to recover damages provision or provisions of this measure that are in direct and apparent conflict with the
arising out of the operation or use of a motor vehicle, a person shall not recover provision or provisions of the other measure.In that event,the provision or provisions not
non-economic losses to compensate for pain,suffering;inconvenience,physical impairment, deemed in conflict shall be severed according to Section 5 of this measure upon application to
disfigurement,and other nonpecuniary damages if any of the following applies: any court of competent jurisdiction.
Proposition 214:Text of Proposed Law
This initiative measure is submitted to the people in accordance with the provisions of of the Health and Safety Code,to read:
Article 11,Section 8 of the Constitution.. CHAPTER 2.25. THE HEALTH CARE PAnEvr PRorecnoN Aer or 1996
This initiative measure adds sections to the Health and Safety Code;therefore,new Article 1. Purpose and Intent
provisions proposed to be added are printed in italic type to indicate that they are new.
PROPOSED LAW 1399.900. (a) This chapter shall be known as the"Health Care Patient Protection Act of
1996."The people of California find and declare all of rhe following:
SECTION 1. Chapter 2.25(commencing with Section 1399.900)is added to Division 2 (1) No health maintenance organization(HMO)or other health care business should be
102 G96
able to prevent physicians,nurses,and other health caregivers from informing patients of any contractor of a health care business and who is responsible for establishing procedures for
information that is relevant to their health care. assuring quality of care,or in any way determining what care will be provided to patients,
(2) Doctors,nurses,and other health caregivers should be able to advocate for patients shall be subject to the same standards and disciplinary procedures as all other physicians,
without fear of retaliation from HMOs and other health care businesses. nurses,or other licensed caregivers providing direct patient care in California.
(3) Health care businesses should not create conflicts of interest that force doctors and Article 8. Safe Physician and Nursing Levels in Health Facilities
ether caregivers to choose between increasing their pay or giving their patients medically
appropriate care. 1399.930. (a) All health facilities shall provide minimum safe and adequate staffing of
(4) Patients should not be denied the medical care their doctor recommends just because Physicians,nurses,and other licensed and certified caregivers.
-heir HMO or health insurer thinks it will cost too much. (b) The Director of Health Services shall periodically update staffing standards designed
(5) HMOs and other health insurers should establish publicly available criteria for to assure minimum safe and adequate levels of patient care in facilities licensed by the State
authorizing or.denying care that are determined by appropriately qualified health Department of Health Services.Those standards shall be based upon all of the following:
Professionals. (1) The severity of patient illness.
(6)No HMO or other health insurer should be able to deny a treatment recommended by a (2) Factors affecting the period and quality of patient recovery.
Patient's physician unless the decision to deny is made by an appropriately qualified health (3) Any other factor substantially related to the condition and health care needs of
Professional who has physically examined the patient. patients.
(7)All doctors and health care professionals who are responsible for determining in any (c) For those health services that are provided by health care service plans licensed by the
voy the medical care that a health plan provides to patients should be subject to the same Department of Corporations and provided in organized medical clinics not licensed by the
Professional standards and disciplinary procedures as similarly licensed health professionals State Department of Health Services,the Commissioner of Corporations shall periodically
vho provide direct care for patients. update staffing standards designed to assure minimum safe and adequate levels of patient
(8)No hospital,nursing home,or other health facility should be allowed to operate unless. care.
t maintains minimum levels of safe staffing by doctors,nurses,and other health caregivers. (d) Licensed health facilities shall make available for public inspection reports of the daily
(9) The quality of health care available to California consumers will suffer if health care staffing patternsutilized by the facility and a written plan for assuring compliance with the
,ecomes a big business that cares more about making money than it cares about taking good staffing standards required by law
are of patients. Article 9. Disclosure of Excessive Overhead of Health Insurers
(10) It is root fair to consumers when health care executives are paid millions of dollars in 1399.935. (a) Health care insurers shall disclose to all purchasers of health insurance
alaries and bonuses white consumers are being forced to accept more and more restrictions coverage the amount of the total premiums,fees,and other periodic payments received by the
n their health care coverage. insurer spent providing for health care services to its subscribers or enrollees and the amount
(11).The premiums paid to health Ensurers should be spent on the health care services spent on administrative costs.For the purposes of this chapter,administrative costs are
vhich patients are entitled not on big corporate salaries,expensive advertising,and otheerr defined to include all of the following:
•xcessive administrative overhead (1) Marketing and advertising,including sales costs and commissions.
(12) The people of Califomia should not be forced to rely only upon politicians and their (2) Total compensation,including bonuses,incentives,and stock options for officers and
•olitical appointees to enforce this chapter.The people themselves should have standing with directors of the corporation.
dministrative agencies and the courts to make sure that the provisions,purposes,and intent •(3) Dividends,shares of profit,or any other compensation received by shareholders,if
f this chapter are carried out. any,or any other revenue in excess of expenditures for the direct provision of health care.
(b) This chapter contains reforms based upon these findings.It is the purpose and intent of
ach section of this chapter to protect the health,safety,and welfare of the people of (4)All other expenses not related to the provision of direct health care services.
,alifornia by ensuring the quality of health services provided to consumers and patients and (b) If the amount of payments
re a costs exceeds ten percent surer s althe rota!premiums,
,y requiring health care businesses to provide the services to which consumers and patients fees,and other periodic payments received by the Ensurer,the insurer shall further disclose to
re entitled in a safe and appropriate manner. all its purchasers of health insurance the specific amounts spent on marketing and
advertising,on total compensation,dividends,profits or excess revenues,and on other
Article 2. Full Disclosure of Medical Information to Patients expenses not related-to the provision of direct health care services.
1399.901. No health care business shall attempt to prevent in any way a physician,nurse, (c) The disclosures required by this section also shall be filed with the appropriate state
r other licensed or certified caregiver,from disclosing to a patient any information that the agency and be made available for public inspection.,
aregiver determines to be relevant to the patient's health care. Article 10. Protection of Patient Privacy
Article 3. Physicians Must Be Able to Advocate for Their Patients 1399.940. The confidentiality of patients'medical records shall be fully protected as
1399.905. (a) No health care business shall discharge,demote,terminate a contract provided by law.No section of this chapter shall be interpreted as changing those protections,
ith,deny privileges to,or otherwise sanction,a physician,nurse,or other licensed or except that no health care business shall sell a patient's medical records to any third party
ertified caregiver,for advocating in private or in public on behalf of patients or for reporting without the express written authorization of the patient.
,ny violation of law to appropriate authorities. Article 11. Public Disclosure
(b) No physician,nurse,or other licensed or certified caregiver,shall be discharged, 1399.945. (a) The appropriate agencies shall collect and.review any information as is
zmoted have a contract terminated be denied privileges,or otherwise sanctioned wept necessary to assure compliance with this chapter.
,r just cause,Examples of just cause include,but are not limited.to,proven malpractice,
uien(endangerment,substance abuse,sexual abuse of patients,or economic necessity. (b) Each private health care business and its affiliated enterprises with more than 100
employees in the aggregate shall file annually with the responsible_agency all of the
Article 4. Ban on Financial Conflicts of Interest following:
1399.910. No health care business shall offer or pay bonuses,incentives,or other (1) Data or studies used to determine the quality,scope or stat ing of health care services,
nancial compensation,directly or indirectly,to any physician,nurse,or other licensed or including modifications in such services.
erhfied caregiver,for the denial,withholding,or delay,of medically appropriate care to (2) Financial reports substantially similar to the reports requited of nonprofit health care
vhich patients or enrollees are.entitled.This section shall not prohibit a health care business businesses under existing law
vin using capitated rates. (3) Copies of all state and federal tax and securities reports'and filings.'
(4)A description of the subject and outcome of all'eomplaints,lawsuirs,arbitrations,or
Article 5. Written Criteria for the Denial of Care other legal proceedings brought against the business'or any affiliated enterprise,unless
1399.915. Health insurers shall establish criteria for authorizing or denying payment for disclosure is prohibited by court order or applicable law.
•sur and for assuring quality of care.The criteria shall comply with all of the following: (c)Any information collected or filed in order to comply with this section shall be
(a) Be determined by physicians, nurses, or other appropriately,licensed health available for public inspection.
.mfessionals,acting within their existing scope of practice and actively providing direct care Article 12. Interpretation
patients.
(b) Use sound clinical principles and processes. 1399.950. (a) This law is written in plain language so thatpeople who are not lawyers
(c) Be updated at least annually. can read and understand it.When any question of interpretation arises it is the intent of the
(d) Be publicly available. people that this chapter shall be interpreted in a'manner that is consistent with its findings,
purpose,and intent and to the greatest extent possible,advances and safeguards the rights of
Article 6. Patients Must Be Examined Before Care is Denied patients,enhances the quality of health care services to which consumers are entitled,and !
1399.920. in arranging for medical care and in providing direct care to patients,no furthers the application of the reforms contained in this chapter
ralth care business shalt refuse to authorize the health care services to which a patient is (b) If any provision of this chapter conflicts with any other provision of California statute
hilted and which have been recommended by a patient's physician,or other appropriately or legal precedent,this chapter shall prevail. i
:eased health care professional,acting within their existing scope of practice,unless all of n
e following conditions are mer: Article 13. Implementation and Enforcement n
(a) The employee or contractor who authorizes the denial on behalf of the health care 1399.955. (a) This chapter shall be administered and enforced by the appropriate state
,csiness has physically examined the patient in a timely manner. agencies,which shall issue regulations,hold hearings,and take any other administrative
(b) That employee or contractor is an appropriately licensed health care professional with actions that are necessary to carry out the purposes and enforce the provisions of this chapter.
,e education,training,and relevant expertise that is appropriate for evaluating the specific (b) Health care consumers shall have standing to Entervene in any administrative matter
'inical issues involved in the denial. arising from this chapter.Health care consumers also may go directly to court to enforce any
(c) Any denial and the reasons for it have been communicated by that employee or provision of this chapter individually or,in the public interest,and any successful enforcement
mtractor in a timely manner in writing to the patient and the physician or other licensed of the provisions of this chapter by consumers confers a substantial benefit upon the general
ralth care professional responsible for the care of the patient. public.Conduct in violation of this chapter is wrongful and in violation of public policy.
Article 7. Physicians Determine Medical Care (c)Any private health care business found by a court in either a private or governmental
Y enforcement action to have engaged in a pattern and practice of deliberate or willful
1399.925. A physician, nurse, or other licensed caregiver, who is an employee or violation of the provisions of this chapter shall for a period of five years be prohibited from
X96 103
asserting as a defense or otherwise relying on any of the antitrust law exemptions contained (d) "Healthcare business"means any health facility,organization, or institution of any
in Section 16770 of the Business and,Professions Code,Section 1342.6 of the Health and kind that provides,or arranges for the provision of,health services, regardless of business
Safety Code,or Section 10133.6 of the Insurance Code,in any civil or criminal action against form and whether or not organized and operating as a profit or nonprofit, tax-exempt
it for restraint of trade, unfair trading practices,unfair competition or other violations of enterprise,including all of the following:
Part 2(commencing with Section 16600)of Division 7 of the Business and Professions Code. (1) Any health facility defined herein.
(d) The remedies contained in this chapter are in addition and cumulative to any other (2)Any health care service plan as defined in subdivision(f)of Section 1345 of the Health
remedies provided by statute or common law. and Safety Code.
Article 14. Severability (3) Any nonprofit hospital service plan as governed by Chapter Ila(commencing with
1399.960. (a) If any provision,sentence,phrase,word,or group of words in this chapter, Section 11491)of Part 2 of Division 2 of rhe Insurance Code.
or their application to any person or circumstance,is held to be invalid,that invalidity shall (4) Any disability insurer providing hospital,medical,or surgical coverage as governed
bSection
not affect other provisions,sentences,phrases,words,groups of words or applications of this y provider
5 and following of the Insurance Code.
chapter.To this end the provisions,sentences,phrases,words and groups of words in thip
s (5) Any provider of emergency ambulance services, limited advanced life support, or
advanced life support services.
chapter are severable.
(b) Whenever a provision,sentence,phrase,word,or group of words is held to be in (6) Any preferred provider organization, independent practice association, or other
conflict with federal law,that provision,sentence,phrase,word,or group of words shall organized group of health professionals with 50 or more employees in the aggregate
remain in full force and effect to the maximum extent permitted by federal law. contracting for the provision or arrangement of health services.
(e) "Healthcare consumer"or"patient"means any person who is an actual or potential
Article 15. Amendment recipient of health services.
1399.965. (a) This chapter maybe amended only by the Legislature in ways that further () "Health care services"or "health services"means health services of any kind,
its purposes.Any other change in the provisions of this chapter shall be approved by vote of including,but not limited to,diagnostic tests or procedures,medical treatments,nursing care,
the people.In any judicial proceeding concerning a legislative amendment to this chapter,the mental health,and other health care services as defined in subdivision(b)of Section 1345 of
court shall exercise its independent judgment as to whether or not the amendment satisfies the the Health and Safety Code.
requirements of this chapter. (g) "Health facility"means any licensed facility of any kind at which health services are
(b) No amendment shall be deemed to further the purposes of this chapter unless it Provided including,but not limited to,those facilities defined in Sections 1250,1200,1200.1,
furthers the purpose of the specific provision of this chapter that is being amended and 1204,and home health agencies,as defined in Section 1374.10,regardless of business
form,and whether or not organized and operating as a profit or nonprofit, tax-exempt or
Article 16. Definitions non-exempt enterprise, and including facilities owned, operated, or controlled, by
1399.970. The following definitions shall apply to this chapter: governmental entities,hospital districts,or other public entities.
(a) "Affiliated enterprise"means any entity of any form that is wholly owned controlled, (h) "Private health care business"means any health care business as defined herein
or managed by a health care business,or in which a health care business holds a beneficial except governmental entities,including hospital districts and other public entities. "Private
interest of at least twenty-five percent(25%)either through ownership of shares or control of health care business"shall include any joint venture,partnership,or any other arrangement
memberships. or enterprise involving a private entity or person in combination or alliance with a public
(b) 'Available for public inspection"means available at the facility or agency during entity.
regular business hours to any person for inspection or copying,or both,with any charges for (i) "Health insurer"means any of the following:
the copying limited to the reasonable cost of reproduction and when applicable,postage. (1)Any health care service plan as defined in subdivision(f)of Section 1345 of the Health
(c) "Caregiver"or"licensed or certified caregiver"means health personnel licensed or and Safety Code.
certified under Division 2(commencing with Section 500)of the Business and Professions (2) Any nonprofit hospital service plan as governed by Chapter Ila(commencing with
Code, including a person licensed under any initiative act referred to therein, health Section 11491)of Part 2 of Division 2 ofthe Insurance Code.
personnel regulated by the State Department of Health Services,and health personnel (3)Any disability insurer providing hospital,medical,or surgical coverage as governed
regulated by the Emergency Medical Services Authority. by Section 11012.5 andfollowing of the Insurance Code.
Proposition 215: Text of Proposed Law
This initiative measure is submitted to the people in accordance with the provisions-of (C) To encourage the federal and state governments to implement a plan to provide for the
Article 11,Section 8 of the Constitution. safe and affordable distribution of marijuana to all patients in medical need of marijuana.
This initiative measure adds a section to the Health and Safety Code;therefore,new (2) Nothing in this section shall be construed to supersede legislation prohibiting persons
provisions proposed to be added are printed in italic type to indicate that they are new. from engaging in conduct that endangers others,nor to condone the diversion of marijuana
PROPOSED LAW ` for nonmedical purposes. .
(c) Notwithstanding any other provision of law, no physician in this state shall be
SECTION 1. Section 11362.5 is added to the Health and.Safety- Code,to read: punished or denied any right or privilege,for having recommended marijuana to a patient
11362.5. (a) This section shall be known and may be cited as the Compassionate Use Act for medical purposes.
of 1996. (d) Section 11357,relating to the possession of marijuana,and Section 11358,relating to
(b)(1) The people of the State of Califomla hereby find and declare that the purposes of the cultivation of marijuana;shall not apply to a patient,or to a patient's primary caregiver,
the Compassionate Use Act of 1996 are as follows: who possesses or cultivates marijuana for the personal medical purposes of the patient upon
(A) To ensure that seriously ill Californians have the right to obtain and use marijuana for the written or oral recommendation or approval of a physician..
medical purposes where that medical use is deemed appropriate and has been recommended (e) For the purposes of this section, 'primary caregiver"means the individual designated
by a physician who has determined that the person's health would benefit from the use of by the person exempted under this section who has consistently assumed responsibilityfor the
marijuana,in the treatment of cancer,anorexia,AIDS,chronic pain,spasticity,glaucoma, housing,health,or safety of that persom
arthritis,migraine,or any other illness for which marijuana provides relief. SEC. 2. If any provision of this measure or the application thereof to any person or
(B).To ensure that patients and their primary caregivers who obtain and use marijuana for circumstance is held invalid,that invalidity shall not-affect other provisions or applications of
medical purposes upon the.recommendation of a physician are not subject to criminal the measure that can be given effect without the invalid provision or application,and to this
prosecution or sanction. end the provisions of this measure are severable.
Proposition 216: Text of Proposed Law
This initiative measure is submitted to the people in accordance with the provisions of their HMO or health insurer thinks it will cost too much.
Article.II;Section 8 of the Constitution. (e) HMOs and other health insurers should establish publicly available criteria for
This initiative measure adds sections.to the Health and Safety Code;therefore,new authorizing or denying care that are determined by appropriately qualified health
prosvisionproposed to be added are printed in italic type to indicate that they are new. professionals.
PROPOSED LAW (t) No HMO or other health insurer should be able to deny a treatment recommended by a
patient's physician unless the decision to deny is made by an appropriately qualified health
Division 2.4(commencing with Section 1796.01)is added to the Health and Safety Code professional who has physically examined the patient.
to read: (g)All doctors and health care professionals who are responsible for determining in any
DnvrstoN 2.4. THE PAnenr PROTEcrtoNACT way the medical care that a health plan provides to patients should be subject to the same
professional standards and disciplinary procedures as similarly licensed health professionals
CMU'TER 1. PURPOSE AND INTENT who provide direct care for patients.
1796.01. This division shall be known as the "Patient Protection Act."The people of (h) No hospital,nursing home,or other health facility should be allowed to operate unless
California find and declare all of the following: it maintains minimum levels of safe staffing by doctors,registered nurses,and other health
(a) No health maintenance organization(HMO)or other health care business should be professionals.
able to prevent doctors,registered nurses,and other health care professionals from informing (i) The quality of health care available to California consumers will suffer if health care
patients of any information that is relevant to their health care. becomes a big business that cares more about making money than it cares about taking good
(b) Doctors,registered nurses,and other health care professionals should be able to care of patients.
advocate for patients without fear of retallation from HMOs and other health care businesses. (.I) It is not fair to consumers when health care executives are paid millions of dollars in
(c) Health care businesses should not create conflicts of interest that force doctors to salaries and bonuses while consumers are being forced to accept more and more restrictions
choose between increasing their pay or giving their patients medically appropriate care. on their health care coverage.
(d)Patients should not be denied the medical care their doctor recommends just because (k) The premiums paid to health insurers should be spent on health care services for
104 G96
patients, not on big corporate salaries, expensive advertising, and other excessive generally in the same or similar locality and under similar circumstances.
administrative overhead. CHAPTER 9. PuBuc D/scLosuRE OF F1NANuAL AND QUALITY REPORTS
(l) The people of California should not be forced to rely on politicians and their political
appointees to enforce this division. The people themselves should have standing with 1796.09. All health care businesses and their affiliated enterprises shall file annually
administrative agencies and the courts to make sure that the provisions,purposes,and intent with the State Department of Health Services the following.information:
of this division are carried out. (a)All quality health care indicators,criteria,data,or studies used to evaluate,assess,or
(m) Health care businesses have a responsibility to provide consumers with a prompt,fair, determine the nature,scope,quality,and staffing of health care services,and for reductions in
and understandable means of resolving disputes. or modifications of the provision of health care services.
(n) When decisions are made affecting their health care,patients and consumers'interests (b) With respect to private health care businesses with more than one hundred and fifty
need to be better represented. employees in the aggregate,both of the following:
(I)All financial reports and returns required by federal and state tax and securities laws,
(o) A high quality,safe,and adequately funded public health care system is needed in and statements of any financial interest greater than 5 percent or five thousand dollars
California to maintain vital emergency and preventive services,to provide a safety net for ($5,000), whichever is lower,in any other health care business or ancillary health care
seniors,and to protect against the threat and taxpayer costs of contagious diseases and other service supplier.
health dangers. (2)A description of the subject and outcome of all complaints,lawsuits,arbitrations,or
This division contains reforms based upon these findings.It is the purpose and intent of other legal proceedings brought against the business or any affiliated enterprise,unless
each section of this division to protect the health, safety, and welfare of the people Of disclosure is prohibited by court order or applicable law
California by ensuring the quality of health services provided to consumers and patients and (c) The filings required by this section shall also be available for public inspection after
by requiring health care businesses to provide the services to which consumers and patients fling,and provided at the actual cost of reproduction and postage to the Health Care
are entitled in a safe and appropriate manner. Consumer Association.
CHAPTER 2. FULL DISCLOSURE OF MEDTGL INFORMAnoN To PATTENS CHAPTER 10. PRoTr cnoN OF PATTENr PRtvecr
1796.02. No health care business shall attempt to prevent or discourage a physician, 1796.10. The confidentiality of patients'medical records shall be fully protected as
nurse,or other licensed or certified caregiver from disclosing to a patient any information provided by law.No section of this division shall be interpreted as changing those protections,
that the caregiver determines to be relevant to the patient's health care. except that no health care business shall sell a patient's medical records to any third parties
CHAPTER 3. DocroRs AND NuRsEs Musr BE ABLE To ADvocATE FOR THELR PATTFxrs without the express written authorization of the patient.
1796.03. No health care business shall discharge,demote,terminate a contract with, CHAPTER Il. ftourrroN of DrsFurm ovER QuAuTy of CARE
deny privileges to,or otherwise sanction,a physician,nurse,or.other licensed or certified 1796.11. When there is a dispute between a patient and a private healthcare business
caregiver for providing safe,adequate,and appropriate care,for advocating in private or in over the.quality of care that the consumer has received,and the patient has been harmed in
public on behalf of patients,or for reporting any violation of law to appropriate authorities. any way,the patient may not be required to give up the right to go directly to court to resolve
CHAPTFX 4. BAN ON FmAN=CONFum of ImvmTthe dispute unless the consumer has agreed to do so and the agreement for alternative
1796.04. No health care business shall offer or pay bonuses, incentives, or other resolution of disputes:(1)is written in a manner understandable by a lay person;(2)is not
financial compensation directly or indirectly to any physician,nurse,or other licensed or "rade a condition of the patient's coverage or entitlement to health care services,(3)provides
certified caregiver for the denial,withholding,or delay of safe,adequate,and appropriate the patient with at least twenty-one days in which to review the agreement;(4)allows the
care to which patients are entitled This section shall not prohibit a health care business from patient to revoke the agreement for a period of seven days after signing it,during which the
using capitated rates. agreement is unenforceable;and(5)informs the consumer of the protections provided by this
section.Nothing in this section shall be construed to prohibit or limit the-health care
CHAPTER 5. .WRnTEN CmEm FOR THE DENIAL OF CARE consumer's right to voluntarily utilize alternative dispute resolution options in accordance
1796.05. Healthcare businesses shall establish criteria for denying payment for care and with this section.
for assuring quality of care.The criteria shall comply with all of the following: CHAPTER 12. HEALTH.CARE CONSUMER AssociAnoN
(a) Be determined by physicians,registered nurses,or other appropriately licensed health 1796.12. (a) No later than six months after the passage of this division, a
professionals,acting within their existing scope of practice and actively providing direct care consumer-based,not-for-profit,raiz-exempt public corporation known as the Health Care
to patients. Consumer Association(RCCA)shall be established to serve the essential public and
(6) Use sound at leai principles and processes. governmental purposes of protecting and advocating the interests of health care consumers,.
(d)Be updated at least annually. including their interest in the quality and delivery of care,and to operate as a necessary
(d) Be publicly available. element of California's regulation of the provision of health care services in order to ensure
CHAPm 6. PATIENTS Must BE Exutmw BEFoRE CARE is DEmED through education and advocacy safe and adequate care for the people of California.
1796.06. In arranging for medical care and in providing direct care to patients,no health (b) The duties of the HCCA shall include evaluating and issuing reports on the quality of
care business shall refuse to authorize the health care services recommended by a patient's health care services provided by health care businesses;advising other state agencies in their
physician,registered nurse,or other appropriately licensed caregiver to which that patient is adoption of any standards and regulations related to this division,and advocating legislation
entitled unless the employee or contractor who authorizes the denial on behalf of the health to protect and promote the interests of health care consumers;and by initiating or intervening
care business has physically examined the patient in a.timely manner,,and unless that by right in any administrative or legal proceeding to implement or enforce this division,on
employee or contractor is an appropriately licensed health care professional with the behalf of the public interest.The HCCA shall not sponsor,endorse,or oppose any candidate
education,training,and relevant expertise that is appropriate for evaluating the specific for any elected office.
clinical issues involved in the denial.Any denial and the reasons for it shall be communicated (c) The HCCA shall be governed by a board of directors composed of public members,six
in a,timely manner in writing to the patient and to the caregiver whose recommendation is of whom are appointed by the Governor and confirmed by the Senate for two year terms,and
being denied seven public members,elected by the members of the RCCA,who shall serve two year terms,
CrUPl$R'7. DocioRs AND NirssFs DtTERAtmE Mmra�L CnrrE the first election occurring within one year of the establishment of the HCCA.The board shall
hire officers and establish procedures governing board elections.No member of the board
1796:07 A physician,registered nurse,Ior other Ueensed caregiver who is an employee may vote on any matter in which the member has a conflict of interest and members may be
or contractor of a health care business and who is responsible for establishing procedures for removed by a vote of the board for malfeasance or inability to fulfill their duties.All meetings
assuring quality of care or in anyway determining whatcare will be provided to patients of the board shall be open to the public.
shall be subject to the same standards and disciplinary procedures as all other physicians, (d)Membership in the organization shall be free to any California consumer who wishes
registered nurses,or other licensed caregivers providing'direct.patient care in California to join.The organization shall be funded exclusively by voluntary membership contributions,
CHAPTER 8. SAFE PHrs�cuN AND NtiRst vG LEVELS a HFwLnt FAcrurrFs which shall be kept confidential,grants,or donations.All the monies shall be deposited in the
"Health CareConsumer Protection Fund"which shall be maintained as a trust by the State
1796.08.' (a) All health care faciNties shall provide safe and adequate staffing of Treasurer.Monies in this fund shall be automatically and.continuously appropriated for
Physicians, registered nurses, and other licensed and certified caregivers: The skill, expenditure by the HCCA's board in the fu/fdlment of the duties set forth in this section.The
experience,and preparatory educational levels of those caregivers shall be in conformity with Legislature shall make no other appropriation for this section,nor shall it have any right to
all requirements of professionah licensing,.and certification standards adopted by regulatory appropriate the trust funds monies for other purposes.
and accreditation agencies. (e) Every private health care business with more than fifty employees in the aggregate
. _(b) The State Department of Health Services shall issue emergency regulations within six shall enclose a notice.in every insurance policy,contract,renewal,bill,or explanation of
months of the effective date of this division establishing.standards to determine the numbers benefits or services informing health care consumers of the opportunity to become a member
and classifications of licensed or certified direct.caregivers necessary to ensure safe and of the RCCA and to make a voluntary contribution to the organization.The State Director of
adequate staffing at all health care facilities.The standards shall be based upon:(I)the Health Services shall review the content of the notice and ensure that it is content-neutral and
severity of illness of each patient;(2)factors affecting the period and quality of recovery of neither false nor misleading.The HCCA shall proportionately reimburse the health care
each patient;and(3)any other factor substantially related to the condition and health care business for any costs incurred by inclusion of the enclosure.
needs of each patient. .. I (f) The RCCA shall file an annual report of its activities and finances with the State
(c)All health care facilities shall be required as a condition of a license to file annually Department of Health Services,which shall have the right to reasonable,periodic audits of irs
with the Department a statement of compliance certifying that the facility is maintaining safe records.No law restricting or prescribing a mode of procedurefor the exercise of the powers
and adequate staffing levels,and has adopted and is maintaining uniform methods for of state bodies or state agencies shall be applicable to the HCCA unless the Legislature
assuring safe staffing levels in accordance with this section. expressly so declares pursuant to Section 1796.19.
(d)Awritten explanation of the current method for applying the standards in determining CHAPTER 13. PROTECTION of Pusuc HEALTH AND SAFETY FUND
safe staffing levels,and daily reports of the staffing patterns utilized by the facility,shall be
available for public inspection at the facility. 1796.13. (a)A "Public Health and Preventive Services Fund"is hereby created in the
(e) Safe and adequate staffing levels shall be considered by courts as an element of the State Treasury.Notwithstanding Section 13340 of the Government Code,the monies in the
Standard of reasonable care,skill,and diligence ordinarily used by health care facilities fund are continuously appropriated to the State Department of Health Services for
G96 105
`r
expenditure, w0hout regard to fiscal years, which shall administer them solely for the alliance,or both,with a public entity to the extent assets are received or revenues are earned
purposes of this division. and reported to any governmental entity as assets or revenues of the joint venture or private
(b) All monies collected and deposited into the fund shall first be used to pay any costs entity.Notwithstanding Sections 213 to 214,inclusive,and Section 23701 of the Revenue and
associated with implementation of this division.Any remaining monies in the fund shall be Taxation Code,this section shall apply to all private health care businesses regardless of
distributed by the State Department of Health Services and used for purposes of:(1)assisting whether the business was organized and operates as a nonprofit or tax-exempt enterprise.No
in the maintenance of essential community public health services, including trauma care, provision of this section is intended to impose any fee on insurers that is not permitted by
communicable disease control,and preventive services;(2)assuring the maintenance of Section 28 of Article XIII of the California Constitution. The Board of Equalization shall
health services for seniors whose access to safe and adequate care is jeopardized by cuts in adopt all necessary regulations to implement this section.
Medicare and other benefits;and(3)ensuring adequate access to public health services and
facilities,including access by individuals and families who suffer loss of health benefits due CHAPTER 14. No UNNECEssARY INCREASES tN PREMIUMS,Co-PAYMENTS,DEDucrnBLES OR CHARGES
to job loss or their employer's decision to curtail or discontinue health benefits. 1796.14. After the effective date of this division,no private health care business shall
(c) The Board of Equalization shall assess and collect the following fees for deposit to the 'increase premiums,co-payments,deductibles,or charges for health services unless it first
fund: files a statement with the State Department of Health Services that certifies under penalgy of
(1) The following quality care and public health fees are imposed on private health care perjury that the increases are necessary and that discloses for public inspection the following
businesses and ancillary health care service suppliers that have one hundred and fifty or more information: (1) total amounts of additional annual revenue that will result from the
employees in the aggregate: increases;(2)a description of the anticipated uses of the revenue;and(3)the amounts of
(A) Community Health Service Disinvestment Fee. An annual fee is imposed for any total revenue and total expenses of the health care business for each of the previous three
action involving the reorganization, restructuring,downsizing,or closing of health care years.
facilities in a community undertaken by the private health care business or in concert with CHAPTER 15. DEFINrnoNs
any other person or entity,or both,that results in a reduction of health care services for the
community. The annual health service disinvestment fee shall be assessed on the basis of the 1796.15. The following definitions shall apply to this division:
following: (a) "Affiliated enterprise"means any entity of any form that is wholly owned,controlled.
(i) For each inpatient care facility at which a reduction of licensed patient care beds or managed by a health care business,or in which a health care business holds a beneficial
occurs,the fee shall be determined according to the following formula:the bed reduction interest of at least twenty-five percent either through ownership of shares or control of
percentage(divide the number of licensed beds eliminated during the year by the total memberships.
number of licensed beds at beginning of year),multiplied by the facility gross patient revenue (b) "Available for public inspection"means available at the facility during regular
for the year, multiplied by one percent. The disinvestment fee shall be applicable to the business hours to any person for inspection or copying, or both, at a charge for the
elimination of licensed inpatient care beds from health care facilities of any kind including reasonable costs of reproduction.
but not limited to,acute care,sub-acute care,and long-term nursing care facilities. (c) "Caregiver"or"licensed or certified caregiver"means a person licensed under,or
(ii) The fee determined by subparagraph(A)above shall be assessed for each of five licensed under any initiative act referred to in,Division 2(commencing with Section 500)of
consecutive years beginning with the year in which the elimination of licensed patient care the Business and Professions Code.
beds occurs.A separate fee shall be assessed in each year in which additional licensed (d) "Health care business"means any health facility,organization,or institution of any
patient care beds are eliminated from any inpatient facility.Any health facility that restores kind, with more than 25 employees in the aggregate, that provides or arranges for the
patient-care beds that were eliminated and subject to fees under this section shall be entitled provision of health services,including any"health facility"as defined herein,any "health
to a proportionate offset of fees based on the number of beds restored care service plan"as defined in Section 1345,any health care insurer or nonprofit hospital
(B) Fee on Conversion to For Profit Health Care. A conversion fee shall be imposed on service plan as defined in the Insurance Code that issues or administers individual or group
each of the following transactions: insurance policies providing health services,and any medical groups,preferred provider
(i)Any change in status of a private health care business or ancillary health care service organizations, or independent practice organizations, regardless of business form,and
supplier from a California Public Benefit Corporation to any other form of business entity. whether or not organized and operating as a profit or nonprofit,tax-exempt,or non-erempt
(ii)Any sale,lease,conveyance,exchange,transfer„or encumbrance of the assets of a enterprise,
private health care business or ancillary health care service supplier that is a California (e) "Health care consumer"or"patient means any person who is an actual or potential
Public Benefit Corporation to any person or entity that is not a California Public Benefit recipient of health services.
Corporation which constitutes ten percent or more of the corporation's assets. (f) "Health care services"or"health services"means health care services of any kind,
(iii) Any sale,lease,conveyance,exchange,transfer,or encumbrance of the assets of including,but not limited to,diagnostic tests or procedures,medical or surgical treatments,
health facilities owned by any governmental or public entity including any hospital district to nursing care,and other health care services as defined in subdivision(b)of Section 1345.
any private person or entity. (g) "Health facility"means any facility of any kind at which health services are provided.
(iv) The conversion fee under clauses(i)and(ii)shall be assessed on the resulting entity including,but not limited to;those facilities defined in Sections 1200, 1200.1, 1204, 1250,
after a change in status under clause(i)and on the transferee of assets under clause(ii),and clinics,and home health agencies as defined in Section 1374.10,regardless of business form,
shall be in the amount often percent of the total value of all assets involved in the transaction and whether or not organized and operating as a profit or nonprofit, tax-exempt or
and shall constitute.a dedication of assets to charitable purposes within the meaning of non-exempt enterprise, and including facilities owned operated, or controlled by
applicable law.The conversion fee under clause(iii)shall be assessed on the transferee of governmental entities,hospital districts,or other public entities.
assets in the amount of one percent of the total value of all assets involved in the transaction. (h) "Private health care business"means any"health care business"as defined herein
(C) Excessive Compensation Fee. Every officer,director,executive,management official, except governmental entities,hospital districts,or other public entities. "Private health care
employee,agent,or consultant for a private health care business or ancillary health care business"shall include any joint venture,partnership;or any other arrangement or enterprise
service supplier who personally,or together with family members,holds stock or securities of involving a private entity or person in combination or alliance,or barb,with a public entity.
any kind in the health care business or supplier,and/or its affiliated enterprises,valued at CxAPm 16. 1NmuPxTA77oN
more than two million dollars($2,000,000)shall be assessed a fee in the amount of 2.5 1796.16. This division is written in plain language so that people who are not lawyers
percent on the value of any new stock or securities received as compensation for services. can read and understand it.When any question of interpretation arises it is the intent of the
This fee shall be assessed in the year the stock or securities are received or in the year the people that this division shall be.interpreted in a manner that is consistent with its purpose,
compensation is otherwise taxable under applicable provisions of the California Revenue and findings,and intent and to the greatest extent possible,advances and safeguards the rights of
Taxation Code and the United States Internal Revenue Code. patients,enhances the quality of health care services to which consumers and patients are
(D) Merger, Acquisition, and Monopolization Fee. A merger, acquisition, and entitled,and furthers the application of the reforms contained in this division.If any provision
monopolization fee shall be imposed in each of the following transactions: of this division conflicts with any other provision of statute or legal precedent,this division
(i) On the surviving entity in any merger of a private health care business with any other shall prevail.
private health care business,or with any person or entity engaging in any business of any
kind CnAPTER 17. 1MPLFwLvTA77oN AND ENFoRcEm&T
(ii) On the acquiring entity in any acquisition of any health care business by any private 1796.17. (a) The provisions of this division shall be administered and enforced by the
health care business,or by any person or entity engaging in any business of any kind appropriate state agencies, which shall issue regulations,hold hearings,and take,any other
(iii) On the participating entities in the establishment of.any multiprovider network(s)by administrative actions that are necessary to carry out the purposes and enforce the provisions
private health care businesses that jointly market or provide,or both,their health care of this division.Health care consumers shall have standing to intervene in any proceeding
services to purchasers of healthcare services with respect to the revenue obtained by each arising from this.division.Any person may also go directly to court to enforce any provision
from the network of this division,individually,or on behalf of the public interest.In any successful action by
(iv) The fee imposed by clauses(i)and(ii)shall be assessed in the amount of one percent health care consumers to enforce this division on behalf of the public interest,a substantial
of all assets within the State of California involved in the transaction.No private health care benefit will be conferred upon the general public.Conduct in violation of this division is
business that is required to pay a conversion fee for a transaction subject to subparagraph wrongful and in violation of public policy.These remedies are in addition and cumulative to
(B)shall be required to pay a fee under this clause for the same transaction. any other remedies provided by statute or common law.
(v) The fee imposed by clause(iii)shall be an annual fee assessed for each of five (b)Any private health care business found by a court in either a private or governmental
consecutive years in which the multiprovider network operates in the amount of three percent enforcement action to have engaged in a pattern and practice of deliberate or willful
of the gross annual revenue derived from services provided by the network in the State of violation of this division shall,for a period of five years,be prohibited from asserting as a
California. defense,or otherwise relying on,in any civil or criminal action against it for restraint of
(2) For purposes of this section, "ancillary health care service supplier"includes,but is trade,unfair trade practices,unfair competition or other violations of Part 2(commencing
not limited to,health facilities,health care businesses,as well as suppliers of pharmaceutical, with Section 16600)of Division 7 of the Business and Professions Code,any of the antitrust
laboratory,optometry,prosthetic,or orthopedic supplies or services,suppliers of durable law exemptions contained in Section 16770 of the Business and Professions Code,Section
medical equipment,and those businesses that supply care or treatment models,staffing 1342,6 of the Health and Safety Code,or Section 10133.6 of the Insurance Code.
methodologies,quality assurance,or measurement systems and methodologies.
(3) This section does not apply to governmental entities,hospital districts,or other public CHAPTER 18..,SEVERABtUTY
entities.However,this section shall apply to any joint venture,partnership,affiliated entities, 1796.18. If any provision,sentence,phrase,word or group of words in this division,or
or any other arrangement or enterprise involving a private entity or person in combination or their application to any person or circumstance,is held to be invalid,that invalidity shall not
106 G96
affect other provisions,sentences,phrases, words,groups of words or applications of this entered in the journal,two-thirds of the membership concurring,or by a statute that becomes
division. To this end,the provisions,sentences,phrases,words,and groups of words in this effective only when approved by the electorate.No amendment by the Legislature shall be
division are severable. deemed to further the purposes of this division unless it furthers the purpose of the specific
CHAPTER 19. AMENDMENT provision of this division that is being amended. In any judicial action with respect to any
1796.19. No provision of this division may be amended by the Legislature except to legislative amendment,the court shall exercise its independent judgment as to whether or not
further the purposes of that provision by a statute passed in each house by roll call vote the amendment satisfies the requirements of this section.
Proposition 217: Text of Proposed Law
This initiative measure is submitted to the people in accordance with the provisions of Section 97.42 is added to the Revenue and Taxation Code,to read:
Article II,Section 8 of the Constitution. 97.42. (a) Notwithstanding any other provision of law,for each fiscal year commencing
This initiative measure amends and adds sections to various codes;therefore,existing with the 1996-97 fiscal year, the auditor shall not reduce the proportionate share of total
provisions proposed to be deleted are printed in strikeout type and new provisions proposed to property tax revenues collected in the county that is allocated to local agencies below the
be added are printed in italic type to indicate that they are new. corresponding proportionate share for those local agencies for the 1995-96 fiscal year.
(b) It is the intent of the people of the State of California in enacting this section that the
PROPOSED LAW amount of fiscal relief provided by the statutory initiative adding this section not be offset by
Local Control and Fiscal Responsibility Act an additional diversion of local property tax revenues by the state.It is further the intent of
Section 1. The people of the State of California do hereby find and declare all of the the people that the amount of fiscal relief provided by this statutory initiative not be offset by
P P Y any other diversions of local revenue by the state.
following: Section 4. Continuation of the top income tax brackets.
(a) Local taxpayers have the right to see their property tax dollars controlled locally and Section 17041 of the Revenue and Taxation Code is amended to read:
spent for the local services they need.But every year since 1992,against the wishes of local 17041. (a) (1) There shall be imposed for each taxable year upon the entire taxable
government and taxpayers,the state government has taken at least three billion six hundred income of every resident of this state,except the head of a household as defined in Section
million dollars($3,600,000,000)of property taxes from the cities and counties to cover the 17042,taxes in the following amounts and at the following rates upon the amount of taxable
state's budget deficit. income:
(b)This property tax shift from local government control to state government has severely If the taxable income is: the tax is:
damaged the ability of local governments to provide basic local services such as police,
sheriffs,fire,parks,libraries,emergency medical services,and child protection. Not over$3,650.................................... 1%of the taxable income
(c) To replace the funds taken by the state government,ordinary taxpayers have been Over$3,650 but not over$8,650.......... $36.50 plus 2%of the excess over$3,650
burdened with increased sales taxes and other taxes and increased fees at the local level even Over$8,650 but not over$13,650........ $136.50 plus 4%of the excess over$8,650
as local services have been cut. Over$13,650 but not over$18,950...... $336.50 plus 6%of the excess over$13,650
(d) Instead of reversing this tax shift from the state back to local control,the state Over$18,950 but not over$23,950...... $654.50 plus 8%of the excess over$18,950
Legislature gave an eight hundred million dollars($800,000,000)tax break to the wealthiest Over$23,950......................................... $1,054.50 plus 9.3%of the excess over$23,950
1.2%'of Californians by reducing the top income tax brackets in 1996.These wealthiest 1.2%
of taxpayers will receive at least four billion dollars($4,000,000,000)in tax breaks over the (2) (A) For any taxable year beginning on or after January 1,1991;and before 3armary+
next 5 years while local services will suffer and average taxpayers get no relief. +9%,the income tax brackets and rates set forth in paragraph(1)shall be modified by each
(e) When tax measures which fall on ordinary citizens,such as sales tax increases,were of the following:
due to end,the state Legislature has continued them or,provided,for a vote of the people on (i) For that portion of taxable income that is over one hundred thousand dollars($100,000)
their continuation.But when income tax rates on only the very wealthiest 1.2%of taxpayers but not over two hundred thousand dollars($200,000),the tax rate is 10 percent of the excess
were due to expire,the state Legislature refused to even allow a vote of the people on over one hundred thousand dollars($100,000).
continuing the top income tax brackets. (ii) For that portion of taxable income that is over two hundred thousand dollars
(f) Reversing these two actions of the Legislature—the property tax shift and the tax cut ($200,000),the tax rate is 11 percent of the excess over two hundred thousand dollars
for the wealthy—will help restore stability to city and county services,will relieve the burden ($200,000).
on local taxpayers,and will improve the fiscal and economic condition of the entire state of (B) The income tax brackets specified in this paragraph shall be recomputed,as otherwise
California provided in subdivision(h),only for taxable years beginning on and after January 1, 1992.
(g) Thus,the people of the State of California enact the "Local Control and Fiscal (b) There shall be imposed for each taxable year upon the entire taxable income of every
Responsibility Act"to provide cities and counties with fiscal relief and restoration in nonresident or part-year resident which is derived from sources in this state,except the head
proportion to the revenue loss that each local agency sustains as a result of the contintied of a household as defined in Section 17042,a tax which shall be equal to the tax computed
financing of the state budget at the expense of local government,and to pay for the amount of under subdivision(a)as if the nonresident or part-year resident were a resident multiplied by
fiscal relief and restoration as can be financed by continuing those top income tax rates on the the ratio of California adjusted gross income to total adjusted gross income from all sources.
wealthiest taxpayers that would otherwise expire in 1996. For purposes of computing the tax under subdivision(a)and gross income from all sources,
(h) It is the intent of the people of the State of California to restore the historical the net operating loss deduction provided in Section 172 of the Internal Revenue Code,as
connection of basic local government services to the local property tax.In view of the modified by Section 17276,shall be computed as if the taxpayer was a resident for all prior
complexity of both the method by which the Legislature transferred property tax revenues years•
from local agencies and of reversing this.transfer by the initiative process,the people hereby (c) (1) There shall be imposed for each taxable year upon the entire taxable income of
call upon the Legislature and Governor to take those actions that are necessary to reverse the every resident of this state,when the resident is the head of a household,as defined in Section
property tax shift from cities,counties,and.special districts.in a manner that maintains and is 17042,taxes in the following amounts and at the following rates upon the amount of taxable
consistent with the funding and allocation levels resulting from this measure. income:
Section 2. Chapter 6.6(commencing with Section 30061)is added to Part 6 of Division
3 of Title 3 of the Government Code,to read: If the taxable income is: the tax is:
Not over$7,300...:................................ 1%of the taxable income
CHAPTER 6.6. Locu FaCAL Reiser
Over$7,300 but not over$17,300........ $73 plus 2%of the excess over$7,300
.30061. (a) Upon receipt by a county of an apportionment made pursuant to subdivision Over$17,300 but not over$22,300...... $273 plus 4%of the excess over$17,300
(b)of Section 19603,the county treasurer shall deposit that apportionment in a Fiscal Relief Over$22,300 but not over$27,600...... $473 plus 6%of the excess over$22,300
and Restoration Fund in the county treasury and shall notify the auditor of the amount of that Over$27,600 but not over$32,600...... $791 plus 8%of the excess over$27,600
deposit.For each fiscal year immediately following a focal year in which a deposit is made los 9.3%of the excess over$32,600
into a county's Fiscal Relief and Restoration Fund pursuant to this section,the auditor shall Over$32,600.........................:.............. $1,191 p
allocate the amount of the deposit,including any interest accrued thereon,among the local (2) (A) For any taxable year beginning on or after January 1,1991;artd before imitimy+;
dgencies in the county in accordance with each local agency's proportionate share of the total +9%,the income tax brackets and rates set forth in paragraph(1)shall be modified by each
amount of property tax revenue that is required to be shifted from all local agencies in the of the following:
county far that fiscal year as a result of Sections 97.2 and 97.3 of the Revenue and Taxation (i) For that portion of taxable income that is over one hundred thirty-six thousand one
Code.For purposes'of determining proportionate shares pursuant to the preceding sentence, hundred"fifteen dollars($136,115)but not over two hundred seventy-two thousand two
the auditor shall reduce the shift amount determined for each local agency by the amount of hundred thirty dollars($272,230),the tax rate is 10 percent of the excess over one hundred
money allocated to that agency pursuant to Section 35 of Article X117 of the California thirty-six thousand one hundred fifteen dollars($136,115).
Constitution and shall also reduce the shift amount determined for all local agencies in the (ii) For that portion of taxable income that is over two hundred seventy-two thousand two
county pursuant to that same constitutional provision.For purposes of this subdivision, hundred thirty dollars($272,230),the tax rate is 11 percent of the excess over two hundred
z="local agency"does not include a redevelopment agency or an enterprise special district,and seventy-two thousand two hundred thirty dollars($272,230).
an"enterprise special district"means a special district that engages in an enterprise activity .(B) The income tax brackets specified in this paragraph shall be recomputed,as otherwise
as identified in the 1989-90 edition of the State Controller's Report on Financial provided in subdivision(h),only for taxable years beginning on and after January 1,1992.
.,;,'T'ransactions of Special Districts in California. (d) There shall be imposed for each taxable year upon the entire taxable income of every
f;v�(b) It is the intent of the people of the State of California in enacting this section to nonresident or part-year resident which is derived from sources within this state when the
, :provide basic fiscal relief to local agencies in proportion to the amounts of property tax nonresident or part-year resident is the head of a household,as defined in Section 17042,a tax
'i revenue that state law diverted from local agencies commencing with the 1992-93 and which shall be equal to the tax computed under subdivision(c)as if the nonresident or
1;4993-94 fiscal years,but reduced by the additional revenue allocated to those agencies part-year resident were a resident multiplied by the ratio of California adjusted gross income
„.'pursuant to the sales and use tax currently imposed 6 Pp Proposition 172,which was approved to total adjusted gross income from all sources.For purposes of computing the,tax under
"by statewide voters at the November 2,1993,special statewide election.subdivision(c)and gross income from all sources,the net operating loss deduction provided
}` Section 3. Limit on future property tax shifts. in Section 172 of the Internal Revenue Code, as modified by Section 17276, shall be
G96 107
VJHCHospital Council
September 30, 1996
Board of Supervisors
c/o Clerk of the Board
651 Pine Street, Room 106
Martinez, CA 94553
Dear Board of Supervisors:
On behalf of all the hospitals in Contra Costa County, I am writing to urge you not to endorse
Propositions 214 or 216.
Our reasons for opposing Propositions 214 and 216 include the following:
• The non-partisan Legislative Analyst's Office (LAO) has projected a significant increase in
cost for health insurance including health insurance for county, city and state employees.
This increase has been projected at 5.6% to 12.1%. This would over time likely result in
more uninsured residents seeking services from the County Health Department.
• These Propositions don't increase access to or the quality of health care. No additional
residents of Contra Costa County will be insured as a result of these Propositions.
• Many provisions included in the Propositions are already covered in existing laws and some
have been recently strengthened.
• Initiatives cannot be changed easily if provisions do not work out as intended. Complex
issues such as health care and health care reform are inappropriate for the initiative process.
These Propositions have been positioned as health care reform. Real health care reform should
make health care more affordable and reduce the number of uninsured who need to rely on the
county as the provider of last resort. These propositions do just the opposite.
Given the significant negative fiscal impact on county budgets and services, we respectfully
request that you do not endorse Propositions 214 or 216.
Sincerely,
Lynn H. Baskett
Regional Vice President
LHB:ba
Hospital Council of Northern and Central California
7901 Stoneridge Drive,Suite 500•Pleasanton,-California 94588-3600•Fax 510-460-5457•Phone 510-460-5444
1
Board of Supervisors
Page 2
September 30, 1996
cc: Michael Lawson, President/Chief Executive Officer, Brookside Hospital
Jay Kellison, Chief Executive Officer, CPC Walnut Creek Hospital
Gary Sloan, Chief Executive Officer, Doctors Hospital of Pinole
J. Kendall Anderson, President/Chief Executive Officer, John Muir Medical Center
Lois K. Patsey, Administrator/Chief Executive Officer, East Bay Hospital
Donald Oxley, Vice President/Area Manager, Kaiser Hospital, Richmond
Joyce Berger, Vice President/Area Manager, Kaiser Hospital, Martinez and Walnut Creek
Frank Puglisi, Jr., Executive Director, Merrithew Memorial Hospital
Michael Wall, President/Chief Executive Officer, Mt. Diablo Medical Center
Philip Gustafson, Chief Executive Officer, San Ramon Regional Medical Center
and Golden State Rehabilitation Hospital
Linda Horn, Chief Executive Officer, Sutter Delta Medical Center
f.\wpdata\ac\ebhc\can-init\supprops2142161tr
RECEIVED
OCT - !199
CLERK BOARDAFESU
CONTRA:COSTA,
&&Mg of PPA y1deofuo, esio e
California's HMOs are cutting costs every day, by limiting the
amount of care patients receive, prohibiting doctors and nurses from
discussing all treatment options with patients, and discharging
patients from hospitals before they are ready. These cost-cutting
practices have reaped biUions in profits for the HMOs and their
stockholders, but have left Californians with negligent, unsafe care
that has resulted in prolonged illnesses and complications, and
sometimes in death.
Here are profiles'of just five of the thousands of Californians
whose.personal tragedies have been caused by careless cost-cutting
practices that put profits ahead of patients. These five people, Linda
Floss, Patricia MacInnes, Kathy Olsen, Dan Lake, and Suzanne Lobb
have dedicated the past year to passing the Patient Protection Act,
Proposition 218, in order to reform the HMO system so that it serves
patients with the quality medical care that they deserve..
In personal talks and on the video "Patient Protection Nowl",
each of these private citizens is working to share their stories with
community groups across California, to ensure that what happened to
them, and what continues to happen to patients across the state, does
not continue.
r
Yl
• 9
t
SUZANNE LOBB
Suzanne Lobb's 47 year-old husband Dwight :Lobb entered an
HMO hospital in Saar Diego County in 1993 for routine surgery.
Within several hours after the successful completion of the surgery,
Dwight Lobb had bled to death, the victim of careless understaffing
due to hospital cost-cutting policies.
After Dwight Lobb's routine surgery, he was placed on the
mwgioal floor, where he was to be monitored for any signs of post-
operative complications: The.floor was drastically understaffed, and
he was not checked for over an hour and a half. "I assume that they
were too busy," said Suzanne, "The night before, a nurse told me that
they were short-handed and just couldn't get around to do everything
they needed to do." Until this experience, Suzanne had faith in her
HMO; "I believed in my heart that he was in the very best place he
could be; that he was with the caregivers. And the feeling of betrayal
that I have, I will never get over; my husband was denied the most
basic of can, and it cost him his life."
&mums has worked to put the Patient Protection Act on the
ballot because "if the HMO system Is not changed, people will be
forced to hire their own nurses and require their family members to
be with them at all times, because you can no longer trust that health
insuranoe companies have your best interest in wind." When
Suzanne was collecting signatures in grocery stores, she said she met
nurses who were thankful for her work because they felt they could
not do their fobs well when patients are sent home too early and when
nurses are limited in what information they can share with patients.
Suzanne believes that "there is no excuse for a farmay member
to enter the hospital with no serious problems, and to.lose their life
because no one checks on you; this is unacceptable. It destroys a
Whole family; it left my mother-in-law without a son and the
devastation is just endless." Suzanne supports Proposition 216
particularly because "we need HMO reform in California because
California is the leader for the rest of the nation,"
LINDA► ROSS
Linda Rolls, Co-Chair of the California Committee of small
Business Owners and owner of a small manufacturing business, has
personally experienced the tragedy and loss caused by reckless HMO
cost-cutting. Her mother, Barbara Roberts, was subject.to negligent
and dented treatment that the HMO's own experts and arbitration
team admitted was unnecessary.
in 1991, 61 year-old Barbara Roberts suffered from a minor leg
fracture. Roberts' private orthopedist recommended that she be
tested-for blood clots, but her HMO refused.to perform the tests. Over .
several weep, Linda's mother's symptoms grew worse — she had
difficulty breathing, pain in her chest, numbness, and nausea, but the
HMO continued to refuse to perform the tests. Even when Linda's
mother reached an emergency condition, with an extremely weak
pulse and chill , the HMO refused to send an ambulance to pick her
up. After her arrival in the HMO emergency room, Barbara Roberts'
treatment was withheld continued for over six hours, by which time
her condition had dramatically worsened, and she died.
Linda Ross feels that, "for the sake of the cost of a blood
thinning treatment, they let her die. And I think it was because she
was 61 years old, an age at which patients become more costly, and
less profitable to the HMO." Linda's mother was a dedicated
community activist, and Linda has committed herself to carrying on
her mother's work; she has entered law school, and has actively
collected signatures to put the Patient Protection Act on the ballot.
Linda supports Proposition 216 because it will start to "reform the
HMO system, so HMOs will be'what they were designed to be -- a cost-
effective health care provider for everyone, not dust those patients
who are healthy and profitable." "I urge people to get involved in
this," Linda says, "to fight the power that the HMOs have usurped to
control our medical destinies."
Ross's support for Prop 216 stems not only from her personal
experience with her mother, but also from her experience as a small
business owner. Linda says, "Proposition 216 will provide relief for
small businesses in California. Small businesses have seen their
health, rates rise, while the quality has deteriorated. As a
small business owner, I rely on a limited number of employees, some
of whom are family members; I need to have an.HMO that I can rely
on to provide quality, timely care to my family and to my employees,
otherwise I lose on both counts."
PATRICIA WACI11 NNS
Patricia MacInnes's 70 year-old mother, Ruth MacInnes, started
suffering from memory loss and blackouts in 1987. However, as a
result of an HMO's delayed and negligent care, no diagnostio tests
were performed until two years later, by which time Patricia's mother
was in the late stages of severe heart failure.
Patricia; a freelance writer and novelist, moved from the Bay
Area to San Diego to care for her mother and struggled with an HMO
system that puts profits ahead of patients. Patricia said, "The HMO
avoided giving my mother card' o tests and referring her to a
cardiologist because of their system of giving financial incentives to
physicians who limit care. HMOs profit by doing less." Patricia's
mother was also sutject to a premature euthanasia effort, where
Patricia was urged to discontinue her mother's feeding tube. After
six weeks of this effort, by which time Patricia had transferred.her
mother out of the HMO and into the care of a.Private physician, she
reinstated feeding. Her mother regained consciousness within twelve
hours and stated she wanted to live. Ruth Maolnaes went on to live
for another seven and a half months, eating on her own and walking.
Patricia's experience with HMO costcuttingpolicies motivated
her to work to change the HMO system. She contacted Harvey
Rosenfield's Foundation for Taxpayer and Consumer Rights and
lobbied California legislators to pass-legislation giving health care
consumers more power on California's Medical Board. She joined the
fight.to pass the Patient Protection Act, collecting signatures to put it
on the ballot, because "I think the conflict of interest with the
financial incentives in the EMO system is absolutely unethical and is
something that has to be eliminated. And I know the patient
Protection Act will address and eliminate that system."
DAN
Dan Lake, a 38 year-old firefighter in Vacaville, came up
against the cost-cutting health Gare practices.of HMOs when his wife
went into premature labor, and later when his infant son Daniel had
to stay in the hospital for several months.
In 1991, Dan's wife Cindie was six months pregnant when she
started having severe chest pains and headaches. When she called
her HMO doctor, he recommended that she drive herself to the
hospital. Dan, a trained Emergency Medical Technician, saw that his
wife was in too much pain to drive, and ordered an ambulance. The
HMO doctor refused to pay for the ambulance until Dan insistently
demanded that the doctor look at Muffle before making a final
decision. When the HMO doctor saw Cindie's state, he authorized
HMO payment for the ambulance.
Cindle gave birth to their son Daniel at 24 weeks, and he needed
care around the clock. But as Dan experienced, cost-cutting did not
apply just to ambulance services. Dan commented that "If your kid is
in the hospital, you might as well bring a suitcase." He found the
hospital wards so understaffed that registered nurses had to take
care of four intensive care infants at once. Basic care could not be
performed under this skeletal staffing, and Dan was forced to take his
own son's vitals. He even monitored the baby next to his, whose
parents both had to work, and could not watch their child full-time.
Dan says this situation is common, and he knows several people."who
have lost their fobs because the understaffing in hospitals forced them
to go take can of their children in the hospital."
Dan IAke joined the effort to pass the Patient Protection Act,
after writing about his experiences to the Patient Watch program, a
quality-of-care monitoring program of the California Nurses
Association. 'He supports the Act in part because of the safe staffing
provisions: "I want a change where there will be more qualified
registered nurses for patients. Otherwise, what happens to the child
whose parent isn't there or can't be there? Who takes care of that
cbild and who makes sure that those things get done because of a
shortage of nurses?". Dan describes the Patient Protection Act as.a
"revolt against managed care. Because when you're lining someone's
pockets n
ts with money, they're not going to stand up and make the
change."
]K1�TI�X OLSEN
Four years ago, Kathy Olsen, an Operations Massager for a
major retail store in San Diego Country, had no reason to think about
the quality of her HMO. Kathy, her husband Soott, and her four
children, doe, David, Steven, and Stephanie were healthy. However,
Kathy discovered that when she most needed safe, reliable care.from
her HMO when her two year-old son Steven suffered a brain injury
-- she did not receive it.
In 1992, Sathy was hiking with Steven when he feu onto a stick
that punctured his face. She. took Steven to the Emergency Room, and
he was transferred to the hospital surgical unit where they treated
him. One week later, she brought Steven back to the hospital because
he was in extreme pain. The medical providers assured her that
Steven had meningitis, gave him a short IV treatment L of antibiotics
and steroids, and discharged him. Steven continued to complain about
terrible pain in his head, and his parents, fearing that their son may
have more than meningitis, requested several times for a brain scan
to be done. But the staff refused, even though the scan was a
covered benefit.
. By the next morning, .Steven had fallen into a coma and
paramedics had to be called to bring him to the hospital. Tests
revealed that Steven had been 'suffering from a bruin abscess that
had now herniated, causing irreversible brain damage. The brain scats
that had been denied would have coat $800 and would have likely .
discovered the brain abscess before it had herniated. Steven is now
visually impaired, has oerebral.palsy, and severe developmental
delays.. His disabilities have forced Katby to give up her job of 19 .
years, and the Olsens to move to a different house; Scott Olsen
continues to work as a Technical Editor.
Kathy states that "because of the HMO mentality, it was,more
important to-save money than it was to really look at the clinical
problems he was having. For $800 in health care rationing they were
willing to sacrifice him." The Olsens settled them case with their
medical group, and won another lawsuit in 1994, which is now on
appeal.
The OlseWs experience galvanised them to win support for the
Par=t Protection Aot, collecting 650 signatures to place the Patient
Protection Act on the ballot. Kathy said, "...for us, it's very important
to get the word across that what.happened to Steven could happen to
anybody..You're paying for insurance for a reason, and.it's not dust
for'them to mare money, it's for thein to take care of us."
Consumers and Nurses
for Patient Protection
September 30, 1996
TO: Members of the Contra Costa County Board of Supervisors
FM: Kit Costello, RN, President, California Nurses Association
Michael Lighty, CNA Political Action Coordinator
RE: Fiscal Impact of Proposition 216
Proposition 216 is uniquely self funded, prohibits the health
insurance companies and HMOs from coot shifting to premium
increases, and re-channels some of the profits generated by the
corporatization of health care to support county health programs
through the State Department of Health Services.
As Proposition 216 promotes patient safety and quality care, and
restores medical decisions to professionals, patients, and their
families, it will also have a salutary effect on the well-being of
California and the staters business climate, enhance economic
activity for businesses and increase state revenue.
The initiative will lower overall health care costs and the fiscal
impact of implementing the new patient protections established by
the Act will be more than offset by revenue generating and premium
cost containment provisions of the initiative (Articles 13 and 14) .
The overall economic benefits derive from:
/ reductions in absenteeism and increases in productivity
by a healthier workforce as employees have greater access
to needed health care services;
r correcting the worst abuses of arbitrary denial of care
and negligent staffing resulting in a reduction of
overall health care costs due to treatment at earlier
stages of illness;
reducing health care expenditures on preventable and
communicable diseases, epidemics, chronic illnesses,
mental health and homelessness through increased spending
on'preventive care and infectious disease control funded
by Prop 216 revenues;
./ encouraging government efficiency and smoother
administrative operations of state agencies;
/ restricting unnecessary and arbitrary increases in
premiums, co-payments, deductibles or charges.
California Nurses Assoc. Foundation for Taxpayer
1145 Market St.,Suite 1100 and Consumer Rights
San Francisco, CA 94103 1750 Ocean Park Blvd.,Suite 200
Fax: (415)863-1325 Santa Monica, CA 90405
(415)864-4141 Ext.333 Fax: (310)392-8874 @Alew
(310)392-0522
'STATE SENATE OFFICE OF RESEARCH REPORT
The independent State Senate Office of Research (Sept. 9, 1996)
reported on the fiscal impacts of Prop 216 and concluded that "even
if the ini iatiye results in net new costs on h&<h care de1_i_v_ery,
It is unclear how uc of the costs would be passe_d`th 2Mgh to
Peters and consumers of services dug to the competitive environment
currently surreundinq health care del_i_v_ery."
The Senate Office of Research also noted that ". .'.certain
provisions of the initiative have the potential to reduce health
care costs. For example, greater disclosure of financial` and
quality information to health care purchasers and consumers could
force greater competition between health plans, and thus lower
overall premiums. In addition, the initiative could result 'in
additional funds being expended on prevention health care and
community public health programs, which would servo to reduce
health caro costs. .e depending on how provisions of Prop 216
requiring health care businesses to Justify increases in premiums,
copayments, and charges .are interpreted, they could act to. limit
increases in health care. eosts."
Regarding the revenues generated by Proposition 216, we estimate
that it could raise up to $20 billion over the next five years from
fees placed. on corporate mergers and acquisitions, monopolistic
practices,' excessive executive compensation and conversions of
health care businesses from non-profit to for-profit.
Even accepting lower estimates of the revenues generated by these
fees, the SOR 'report. concluded, . that " r
of dpi lares annually, for a new „Public Health and—grayoutivel.
Servic s FunD,. . .they would votentialay be available to offset
Lindirectivl costs to the state acczuing from other provisjQn�,of
the initiati_v_e. "
We provide this analysis to you in order to reassure the Board that
Prop 116 is a self-funded approach health policy that provides new
money to county government as it improves the health of county
residents.
ahe , (Vataanb Trfoutw MONDAY,.SEPTEMBER 23, 1996
Health care reform: ,
• :4
2
• no on
•21
Ye16
s.. on . :� , : • j
ROPOSITIONS 214 and 216 on Court calls.these financial reviewers
tra-
he Nov. 5 ballot are about "1-800-Nurses from Hells salient
health care reform. But under- tion that nonetheless makes a salient
neath, they are about a lot point—these reviews are generic and .-
and Pdone by disinterested people who don't
more than that: money, individuality-
power,
.
power, and who is going to wield both in consider the patient's individuality
the multibillion-dollar California health No bean counters
care system.
At base, the are about whether you Under both Propositions 214 an216,
Y Y refusals cannot take Place until qualified
are getting the best health care possible medical personnel examine the Patient.
and whether you and your doctor should Bothinitiatives also outlaw gag rules, .
have a voice in de- formal or informal,.now forced upon doc-
ciding what is best -tors and nurses. They protect from disci-
for you. Prop. 216 would prevent plinary action nurses and doctors who
Both proposi- advocate for their patients. Both bar.bon-
tions attempt to doctors and nurses from uses to doctors for withholding care.
correct a system bein unished for lvltl HMOs say there are no such incen-
that has been tilt- g P fives, gag rules or punishments, but the
ing away from advice, keep medical deci- evidence of their:existence is strong.
doctors since the Speaking of HMO claims,their adver-
1980s. In those sions in the hands of med- tising campaignagainst Propositions 214
days, doctors were and 216 should be dismissed out of hand
perceived as run- ical personnel and create a. by voters, who would be wise to examine
ning up health - the propositions for themselves:Cam-
care costs by or- citizens watchdog group. paign ads are-not noted for their honesty,
dering unneces- but these seem',especially disingenuous.
sary.procedures. __ For example, they,argue that the two
Some doctors, driven by the fear of r propositions don't expand health.care
coverage. That's generally true,-but to say
being sued for malpractice, were-doing
that, and the system did need correcting. so is like criticizing an eagle for not being
their initiative ever set out
But things have gone too far in the other a whale. Net
direction. Doctors and nurses today say greatly expand coverage; they have other
health maintenance organizations are goals.
making medical decisions based on the in addition, the HMOs are seeking to
bottom line rather than the patient's make these initiatives look identical.
health. For example, according to Jamie While there are similarities, there are se-
Court of the Proposition 216 campaign, if rious differences.
a doctor today ordered a second opinion
or referral, that decision would be re- Proposition 214
viewed byesomeone mm the HMO.. Proposition 214, whose backers call it
HMOs say reviewers are certified medical the Patients Rights Initiative, is solid, but
personnel. But that is a broad:deflnition has serious problems. Its chief strength
that now includes nurses and administ- is the same as Proposition 216's: it puts
rators, and people who are not actively control of your medical care in your doc-
practicing medicine, as well as physi- tor's hands. It also is very tough on dis-
cians. The reviewer often makes the deci- closure. Under it, an HMO will have to
sion without seeing the patient. Instead tell you how it is spending your and your
he or she looks at what is called "proto- employer's money, including how much
cols," or guidelines, that don't always put
the health of the patient — that's you—
first.
it puts into such administrative costs as
advertising and marketing, as well as
bonuses, incentives and stock options of
directors and officers. It protects.patient
privacy, however.
Proposition 214 has some serious The key to Proposition 216, however,
flaws, however. First, it needs only a is its,call for a nonprofit consumer advo-
amend. That makes it subject to the.
simple majority of the Legislature to cafe.to monitor the health care profes-
Sion:The board would advocate for
whims of year-to-year politics and, in ef- patients and prevent runaway profits
fect, extracts its teeth. from hurting them. The Proposition 216
roposition consumer board is a.gamble. First of all,
214 also outlaws it.would.be funded by donations. This
firing employees seems iffy, but Rosenfield thinks there
except for "Just willbe no problem collecting cash from
cause"—de- California consumers, who will be told
priving an em- about the watchdog'group though a no-
tice on their bills.
ma of the right
to Furthermore, the board is supposed to
to make per- be up and running six months after the
sonnei decisions election. Expecting that to happen seems
that it might need to us a very rosy view of the health care
to make for eco- world, and bureaucracy,in general.
nomic reasons.
This last provi- Question Of COSI
sion is, oppo- HMO*executives say both initiatives are
nents believe, a going to send health care costs skyrock-
sop to the Service eting Ias they are forced to pass along.
Employees International Union, which is their new.expenditures to consumers.
backing Proposition 214 and which has This is another place Proposition 216
by It. 00 members who would be covered parts'company. Its wording mandates
by t.
that.any cost.increase not be passed
PropOSlt1011 216 along to consumers, but instead come
from a tax on mergers and acquisitions
Proposition 216 backers call their ini- and other HMO financial dealings.Vader
tiative the Patient Protection Act.They in- calls them "greed fees."
chide-Ralph Nader, the California Nurses Backers of Proposition 214.shied away
Association,'-and-Harvey Rosenfield;who from a watchdog group because they wor-
took on that other Goliath, auto insurers, ried voters would not like it. We feel the
in 1988's Proposition 103,.and won. opposite: we think health care.con
Proposition 216'has all of Proposi- '`- sumers are worried about their care and
tion's 214's strengths, but it is tougher in are ready to take a chance on someone,
a couple of ways. It calls fora two-thirds like Rosenfield's group;which might ac-
vote of the Legislature to amend, which tiny do something about it.
gives it some bite. And it does not micro- proposition 214's timidity was ill-ad-
manage by calling for "just cause" fir- vised. Nonetheless, the initiative is gener-
ings.
ally a good one. Proposition 216 is better.
HMOs, for their part, say they know
tl; .'system is imperfect, but they have
been tinkering here and there and will
continue to tinker to make it better. They
soy consumers are satisfied with every-
thing except cost. They say to trust them.
If you do.trust them, and think they're
doing a swell job, then vote down both
these initiatives. If you think it is time for
some meaningful reform in our health
care system, then vote for Proposition
216. It's a good start.