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FROM: PHIL BATCHELOR, COUNTY ADMINISTRATOR
Costa
County
DATE: September 23, 1996 °rrq cd"uNi
SUBJECT: ANALYSIS OF PROPOSITIONS 214 AND 216
SPECIFIC REQUEST(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):
ACTION OF BOARD ON OCt°bQr '15+ 996 APPROVED AS RECOMMENDED X OTHER X
See the Attached Addendum for Board Action.
.r
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN
AYES: N S: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
ATTESTED October 1'5 , 1996
Contact: PHIL BATCHELOR,CLERK OF THE BOARD OF
cc: SUPERVISORS AND COUNTY ADMINISTRATOR
ounty Administrat
Health Services Dire or � %
LA DEPUTY
1
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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 Spending:
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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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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ADDENDUM TO ITEM D. 3
October 15, 1996 Agenda
Re: Propositions 214 and 216.
The Board of Supervisors considered the recommendations presented by Phil Batchelor,
County Administrator, and Claude Van Marter, Assistant County Administrator, regarding
Proposition 214, titled the "Health Care Patient Protection Act of 1996", and Proposition 216,
titled the "Patient Protection Act".
The following people presented testimony:
Deborah Bayer, California Nurses Association, 5706 Sacramento,
Richmond;
Nancy Casazza, 2690 Sonoma Way, Pinole;
Valerie Gonzales, California Nurses Association, 314 Peachtree Circle,
Antioch;
Michael Lightly, California Nurses Association, 1145 Market Street, San
Francisco
Claudine Thomas, California Nurses Association, 1463 Date Street,
Martinez.
Supervisor Smith commented on corporate interests and profitability in health care matters,
and advised that Proposition 216 could plug some patient care loopholes. He advised that
Proposition 214 would allow amendments by a majority of the legislature, which would bring
the issue back to where it is now. Supervisor Smith moved that the Board endorse Proposition
216.
Supervisor Rogers commented that there are important differences and similarities in both
Propositions, and offered a substitute motion that the Board endorse both Proposition 214
and 216.
Supervisor DeSaulnier seconded Supervisor Smith's motion to endorse Proposition 216. It was
suggested by Supervisor Smith that discussion of the two Propositions be taken individually.
Supervisor Torlakson noted that both measures are complicated, and advised that he would
not be taking a position on the Propositions, and that the voters should sort through the
information.
Following further discussion, the vote in support of Proposition 216 was as follows:
Ayes : Supervisors Rogers, DeSaulnier and Smith
Noes : None
Absent : Supervisor Bishop
Abstain: Supervisor Todakson
There was consensus by the Board that the discussion of Proposition 214 would be
CONTINUED to the October 22, 1996 Board meeting.
1
214 Health Care. Consumer Protection. Initiative Statute.
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.
T
52
Analysis by the Legislative Analyst
BACKGROUND patients, such as a bonus payment for each patient that
HEALTH 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 for groups 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 FACILITIES
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 a
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,F
as "capitation"payments, other financial incentives, and minimum staffing standards for nurses and nursing
utilization review assistants per.patient: .
Capitation and Other Financial Incentives. The DHS is .revising its current.hospital staffing
Under the traditional fee-for-service approach, doctors regulations to coverall departments within each facility
and hospitals charge fees based on the.specific service Additionally,the pending regulations require hospitals t(
provided to a patient. By contrast, HMOs generally use establish their staffing needs using a system that mor(
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 th,
government, however, limits the types of financial financial and business operations of health plan,,
incentives that may be used by HMOs when serving including HMOs, in California. The Department c
Medicare or Medi-Cal recipients. Specifically,federal law Insurance regulates companies that sell health insuranc
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 marIcetplace. 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.
1 EFTEar of THE MEASURE ON HEALTH Protection for Certain Health Care Professionals.
CAm Com 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 health
state and local governments because of their role in care professionals from giving patients any information
directly operating health programs as well as purchasing relevant to their medical care. The measure also
health care services. The following provisions of this broadens existing protections for health carE;
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, ane
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 Examples of just cause include proven malpractice
examining the patient. Patients usually have a right to endangering patients,drug abuse,or economic necessity
appeal such a denial. This measure requires health Just cause protections currently apply to some healtl
_- 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;
V 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 cost
professional with the expertise to evaluate_ the patient's would include the need to keep records to document th
need for the recommended care. basis for actions taken against employees or contractor
r 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. Tr
1 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,
l� examination probably would result in some approvals of patients receive,shall be subject to the same profession,
care that otherwise would be denied. standards that apply to health care professionals wl
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
f ' adequate"staffing of doctors, nurses, and other licensed care professionals who make decisions affecting patie.
F 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.
I '. 54 G
�• 3,
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 GovERN-mNTs 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 asabove).
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 see page 102
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 dro
• Prohibits written and unwritten a rules that keep P Your doctor for a reason.
gag P 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.
• Re wires insurers to disclose guidelines for denying cafe Should cost controls be used as an excuse to deny patients the
and to give patients a second opinion—including a hysical exammation�efore denying care recommended treatments theneed just because administrators for HMOs
p
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 andwithout American.Association of Retired Persons
new taxes. LOIS SALISBURY
Gag rules on doctors and nurses are wrong.Intimidation of
caregivers is wrong.Bonuses for den ' care that people deed Executive Director,Children Now
are wrong. Secret guidelines for enying care are wrong. LAURAREMSONIVIITCHELL
Unsafe staffing in hospitals and nursinghomes is wrong. Issues Coordinator,National Multiple Sclerosis
It is dangerous for everyone'if HMs 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
r PROPOSITION 214, LIKE 216, ISA 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"and DAUGHTERS OF CHARITY oppos
deveIZZi by physicians;provides for safe`staff ng ia.hospitals; the initiatives.Audit's why small business and taxpayer group
prohibits paying doctors to deny needed care. p=it43 like the CALIFORNIA TAXPAYERS ASSOCIATION and th
disclosing confidential patient records. NATIONAL TAX LIMITATION COMMITTEE.say NO on 21
' These provisionsarea 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, trojan horse ball(
special-interest job protection to some health care workers,and initiatipes.VOTE NO.
to help trial lawyers file frivolous health care lawsuits.
Proposition 214 DOES NOT provide health coveragge to a GORDON JONES
single Californian. It costs_' consumers 'BILLIONS OF Legislative Director,The Seniors Coalition
DOLLARS in higher health insurance.costs while costing MARY DEE HACEER,R.N.
taxpayers HUNDREDS OF MILLIONS more for –
administration and to cover government workers.Not a penny Childress Hospital,Los Angeles
of 214 will provide health insurance for the uninpured. BIRK WEST
Real health care reform should make insurance'more President,California Chamber of Commerce
affordable and reduce the number of uninsured.Props.214 and
226 dramatically increase health:insurance costs and will lead
to MORE UNINSURED:
r
56 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. G
�D, �
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 $60 MILLION more would
insure government employees.
DOLLARS DOES
IN HIGHER HEALTH COSTS. Taxpayers in every jurisdiction will be hurt by 214."
WHAT DOES A 15%INCREASE IN HEALTH INSURANCE
1 DO TO YOUR FAMILY'S BUDGET? For many families, that's —California Taxpayer's Association.
ALMOST $1,000 PER YEAR. Seniors and people on fixed WHO'S BEHIND 214?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 ears,I've cared for patients who have no Prop. 216—WILL MAKE THINGS WORSE. That's why a
health cverage.Proposition 214 mens fewer people will diverse coalition opposes them, including Democrats,
have health insurance. That's just what California Republicans and Independents, seniors, physicians, nurses,
� hospitals, taxpayer groups, small businesses, and local
DOESN'T need."
g
h Coulter,M.D.,Yuba Cit government organizations.
—Joseph y 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 '
.poor would be SEVERELY HURT under 214. SISTER CAROL PADILLA,R.N.
"Our mission is to provide health care to the poor and Daughter of Charity
underserved. Proposition 214 will make it much more RICHARD GORDIN1ER,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 1916.
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 opponents call 214's patient prQtections•"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
br are they genuine protectionspatients need? enforcement costs.214 CONTAINS NO NEW TAXES.
• Is it"bogus"to protect freedom of speech between patients o 216 lacks some of 214's key patient protections and 216
and doctors? includes in new
! Is it"bogus"to make sure medical decisions are made by Please, help protect o ptient rights. VOTE_ YES ON
Eand 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 W.E,.(GENE)GIBERSON
consumers if their insurance premiums are being spent on
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
r2216 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 publiclprivate 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 fund 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 SrExnnvG contracts with physicians and hospitals.About one-third
Annual spending on health care in California tota 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
expensive than comparable health,insurance coverage
health insurance. Specifically:
• 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 bythe 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 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 MAINTENANCE ORGANIZATIONS Medicare or Medi-Cal recipients. Specifically,federal law
In part,this slower growth has been due.to efforts by act i reduce any financial
inanmedicallyaincentives necessary care doctors
to individual
could
employers and government to control their health patients, such as a bonus payment for each.patient that
insurance costs. One way they have attempted to hold is not hospitalized during the year.However, federal law
organizations
down costs (HMOs), which provide health services to contract with health maintenance does allow "risk pools" and other types of profit-sharing
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
place.of 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 FAcmrr Es 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 istandards 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•150 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 tax on any private
Additionally,the pending regulations require hospitals to health care business that reduces licensed patient beds
establish their 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'
patient.The DHS also enforces federal requirements that average per-bed gross revenues.The tax would have to be
ealth 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 PLANS generally imposes a one-time 1 percent tax on the value
AND HEALTH]INSURANCE., 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
including,HMOs, in_California. The Department of businesses that jointly market or provide health care 4
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 of the 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 measure.protects doctors, nurses, and
Ecr of 1VIEnsuxE ox HEALTH actions
licensed or certified caregivers from any adverse
CARE Costs GENERALLY contract
by health care businesses--such as firing,
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 to be 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 n. some approvals of Businesses Must Certify Higher Charges. Private
care that otherwise would be denied. : 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 on decisions 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 o f 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 coul&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
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 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 HRISTA RAMIREZ 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
,z, 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 scareis REAL- CONSUMER PROTECTION with SHARP
tactics:government!taxes! 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
.:specifically prohibits passing on costs of safeguarding quality care. Business Owners
Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. 67
3
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
they're fully recovered . Replacing nurses with untrained, waste and excess profits and reduce overhead,which consumes 31 cents
low-wage workers to care for patients . . .Cutting medical staff,while of every $1 in premiums policyholders pay. So the giant health
going doctors and nurses more patients, corporations are spending millions to frighten voters about "big
assi
reaping billions of dollars for giant health government
These practices are reap ,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,its 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.Zb 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. KIT 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 healthcare 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 UNfNSURED 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
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(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 ether 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.6n 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 reasonable amotmt at arty stage of the litigation to guarantee payment 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
91015• The provisions of this chapter shall not apply to violations of Section 83H6.5. 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 Board people for candidates for federal office.However,it is the sense of the people that these
shall,.as soon as possible after the end of the first calendar year in which Sections 17221 and
24335 of the Revenue and Taxation Code have been in effect,calculate the amount of the limitations are necessary to prevent corruption and the appearance thereof and to preserve the
increased tax revenges 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 cotut,.any attorney's fees and costs awarded shall be paid from the General whether radio ortelevision,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 11,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 indicate 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 lawbreaking..However,under Section 23152 or 23153 of the Vehicle Code,and was convicted of that offense,the injured I
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 site 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 plaintiff's 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 I
convicted of that felony. measure not in direct and apparent conflict with any provision or provisions of that other u
Section 3333.4 is added to the Civil Code,to read: measure shall not bedeemed to be in conflict therewith,and shall be severed from any other t
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 u
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 u
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 IT,Section 8 of the Constitution. CHAPTER 2.25. THE HFeraH CARE PA?7EwT PRmc770N Act 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 /399.900• (a) This chapter shall be known as the"Health Care Patient Protection Act of
1996."The people of California find and declare all of the 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
3ther 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 HMD 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 aU 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
vary 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 patterns utilized by the facility and a written plan for assuring compliance with the
Pecomes 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 not 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 while 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 insurers should be spent on the health care services to spent on administrative costs.For the purposes of this chapter,administrative costs are
dtich patients are entitled not on big corporate salaries,expensive advertising,and other defined to include all of the following:
xcessive administrative overhead
(12) The people of California should not be forced to rely only upon politicians and their (1)Marketing and advertising,including sales costs and commissions.
-alitical appointees to enforce this chapter.The people themselves should have standing with di(2)rectTotal the orpo t ion,including bonuses,incentives,and stock options for officers and
dministrative agencies and the courts to make sure that the provisions,purposes,and intent
f this chapter are carried out. (3) Dividends,shares of profit or any other compensation received by,shareholders, if
(b) This chapter contains reform based upon these findings.It is the purpose and intentof any,or any other revenue in excess of expenditures for the direct provision of health care.
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.
:alifornla by ensuring the quality of health services provided to consumers and patients and (b) !f the amount of administrative costs exceeds ten percent(10%)of the total premiums,
the insurer shallrther disclose to
fees,and other periodic payments received by the insure
,y requiting health care businesses to provide the services to which consumers and patients r, fu
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 healthcare business shall attempt to prevent in anyway 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 befully 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 shall collect and review any information as is
zmoted have a contract terminated be denied privileges,or otherwise sanctioned except necessary
r just cause.Examples of just cause include,but are not limited.to,proven malpractice, necessary to assure compliance
ae with this chapter.
anent endangerment,substance abuse,sexual abuse of patients,or economic necessity. (b) Each private health care business and its affiliated enterprises with more than
employees in the aggregate shall Erle annually with the responsible_agency all of the 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 staffing of health care services,
nancial compensation,directly or indirectly,to any physician,nurse,or other licensed or including modifications in such services.
ernfied caregiver,for the denial,withholding,or delay,of medically appropriate care.to (2)Financial reports substantially similar to the reports required of nonprofit health care
,hich patients or enrollees are.entitled.This section shall not prohibit a health care business businesses under existing law, y
mm using capitated rates. (3) Copies of all state and federal tax andsecurities reports and filings.'
(4)A description of the subject and outcome of all complaints,lawsuits,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 far disclosure is prohibited by court order or applicable law.
are andfor 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
rofessionals,acting within their existing scope of practice and actively providing direct care
patients. Article 12. Interpretation
(b) Use sound clinical principles and processes. . 1399.950. (a) This law is written in plain language so that people 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 shall 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
Wiled and which have been recommended by a patient's physician,or other appropriately or legal precedent,this chapter shall prevail.
-eased health care professional,acting within their existing scope of practice,unless all of Article 13. Implementation and Enforcement t
e following conditions are met
(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
,asiness 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 intervene-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
intractor 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
!alth 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
?96 103
asserting as a defense or otherwise relying on any of the antitrust law exemptions contained (d) "Health care 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 cumulaiive'to any other (2) Any health care service plan as defined in subdivision()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 Ha(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 the 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
not affect other provisions,sentences,phrases,words,groups of words or applications of this by Section provider
5 and following of the ambulance
Insurance Code.
chapter.To this end,the provisions,sentences,phrases,words and groups of words in this (5) Any provider of emergency ambulance services,limited advanced life support, or
advanced life support services.
chapter are severable.
(6) Any preferred provider organization, independent practice association, or other
(b) Whenever a provision,sentence,phrase,word,or group of words is held to be in
organized group of health professionals with
conflict with federal law,that provision,sentence,phrase,word,or group of words shall 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) Health care consumer"or'patient'means any person who is an actual or potential
Article 15. Amen&nent recipient of health services.
1399.965. (a) This chapter maybe amended only by the Legislature in ways that further O "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 entityojany
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 of the 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 II,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. i
of 1996. (d) Section 11357,relating to the possession of marijuana,and Section 11358,relating to
(b)(1) The people of the State of California 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 t
(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 responsibility for the i
marijuana in the treatment of cancer,anorexia,AIDS,chronic pain,,spasticity,glaucoma, housing,health,or safety of that person i
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 i
(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.
i
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.
Ar iele.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
provisions proposed to be added are printed in italic type to indicate that they are new. professionals. r
(0 No HMO or other health insurer should be able to deny a treatment recommended by a
PROPOSED LAW 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. 1
to read: (g)All doctors and healthcare professionals who are responsible for determining in any
DrwsioN 2.4. THE PAriE&T Peorecnou ACT way the medical care that a health plan provides to patients should be subject to the same 1
professional standards and disciplinary procedures as similarly licensed health professionals
CturrrR 1. Punrose uvp IniErvr who provide direct care for patients.
1796.01. This division shall be known as the "Patient Protection Act."Theeo le o
P P f (h) No hospital,nursing home,or other health facility should be allowed to operate unless i
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 i
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 retaliation from HMOs and other health care businesses. (j)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.
(l) The people of California should not be forced to rely on politicians and their political CHAPTER 9. Puauc DrSCLOSURE of FINANCIAL AND QuALnr REPORTS
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:
(o)A high quality,safe,and adequately funded public health care system is needed in (1)All financial reports and returns required by federal and state tax and securities laws,
California to maintain vital emergency and preventive services,to provide a safety net for and statements ev any financial interest greater than 5 percent or five thousand dollars
seniors,and to protect against the threat and taxpayer costs o contagious diseases and other service
0), whichever is lower, in any other health care business or ancillary health care
P 8f 8 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 filing,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 MEDICAL INFORMA77ON TO PA77EM CHAPTER 10. PROTECTION OF PA77EW PMVACY
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 bylaw.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 THEIR PAT/E,NTs without the express written authorization of the patient.
1796.03. No health care business shall discharge,demote,terminate a contract with, CHAPTER 11. RESOurITON OF DisPurES OVER QOAIrrY 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
CHAPTER 4. BAN ON FINANctu CONFULTs OF INrERErr the 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)u 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. .WRrrrEw CRITERIA FOR 771E DENUL 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 CoNsumm Assocunort
(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,tax-exempt public corporation known as the Health Care
to patients. Consumer Association (HCCA)shall be established to serve the essential public and
(b) Use sound clinical principles and processes. governmental purposes of protectirig and advocating the interests of health carr consumers,.
(c)Be updated at least annually. including their interest in the quality and delivery of care,and to operate as a necessary
(dJ Be publicly available. element of California's regulation of the provision of health care services in order to ensure
CHAPTER 6. PATrEm MusT BE ExAMINED BEFORE CARE is DENIED 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 shaU 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 andpromote 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
Ln a timely manner in writing to the patient and to the caregiver whose recommendation is of wham are appointed by the Govemor and confirmed by the Senate for two year termr,and
being denied seven public members,elected by the members of rhe HCCA who shall seen tx»year terms,
CHAPlxx 7. DocroRs AND NuRses DerFnAnNE MEDICAL CARE the first election occurring within one year of the establishment ofthe HCCA The board shall
hire officers and establish procedures governing board elections.No member of the board
1796.07. A physician,'registered nurse,or other licensed caregiver who is an employee may vote on any matter in which the member has a confiict of interest and ntenbers may be
or contractor of a health care business and who is responsible for establishing procedures for removed by a vote of rhe board for malfeasance or inability to fulfill their duties AU meetings
assuring quality of care or in anyway determining what care will be provided to patients of the 6oarid 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 consTaner 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,
Cowin 8. SAFE PHmcuN AND NuitsiNc Levers a HEurtt FAaLmEs which shall be kept confidential,grants,or donations.All the monies shall be deposited in the
"Health Care Consumer Protection Fund"which shall be maintained as a trust by the State
1796.08. (a)All health care facilities shall provide safe and adequate staffing Of Treasurer.Monies in this fund shall be automatically and.continuously appmpriated for
physicians, registered nurses, and other licensed and certified caregivers:The skill, expenditure by the HCCA's board in the fulfillment 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 profess ion al.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-Ax 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 HCCA and to make a voluntary contribution to the organization.The Stan Director of
adequate staffing at all health care facilities.The standards shall be based upon:(1)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. (fi The HCCA 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 its
with the Department a statement of compliance certifying that the facility is maintaining safe records.No law restricting orprescribing 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 Cmwm 13. PRomc't ori OF Puauc H&uzu AND SAFErr FuND
-safe staffing levers,and daily reports of the staling 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
expenditure, without 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 andfamilies who suffer loss of health benefits due CHAPTER 14. No UNNECESSARY INCREASES IN PREMIUMS,Co-PAYMENTS,DEoucTIBIFS 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 penalty 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. DEFINITIONS
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-exempt
(ii)Any sale,lease,conveyance,exchange,transfe�:or encumbrance of the assets of a enterprise.
private health care business or ancillary health care service supplier that is a California (e) "Healthcare 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. lff "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 forst,
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 both,with a public entity.
any kind in the health care business or supplier,and/or its affiliated enterprises,valued at CItinu 16. lNmvP TA770N_
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 onopoternal 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:
(i) On the surviving entity in any merger of a private health care business with any other of this division conflicts with any other provision of statute or legal precedent,this division private health care business,or with any person or entity engaging in any business of any shall prevail.
kind - CHAPTER 17. IMPLatENTA77oN AND ENFoRCFMENr
(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 orie 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..SEVERABrLr Y
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
the people that the amount of fiscal relief provided by this statutory initiative not be offset by
Section 1. The people of the State of California do hereby find and declare all of the 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
damaged the ability of local governments to provide basic local services such as police, If the taxable income is: the tax is:
sheriffs,fire,parks,libraries,emergency medical services,and child protection. Not over$3,650.................................... I%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 1,19917 mrd before iaimmy
next 5 years while local services will suffer and average taxpayers get no relief. +996,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 continued 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
I of Title 3 of the Government Code,to read: If the taxable income is: the tau is:
i Not over$7,300...:................................ 1%of the taxable income
CHAPTER 6.6. Loco AsCAL REUEF Over$7,300 but not over$17,300........ $73 phis 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
ond.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 Over$32,600....................: $1,191 los 9.396 of the excess over$32,600
into a county's Fiscal Relief and Restoration Fund pursuant to this section,the auditor shall 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;and before Jatiumy•r
agencies in the county in accordance with each local agency's proportionate share of the total +996,the income tax brackets and rates set forth in paragraph(1)shall be modified by each
amount of property tar revenue that is required to be shifted from all local agencies in the of the following:
couttry for that fiscal year as a result of Sectiorts 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 pursuanito the p""receding 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
motley allocated to that agency pursuant to Section 35 of Article X111 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
?;"local agency"does not include a redevelopment agency ar an enterprise special district,and seventy-two thousand two hundred thirty dollars($272,230).
"an"enterprise special district"means a special district that engages irs an enterpri a 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.
�,Tratuactions of Special Districts in California (d)There shall be imposed for each taxable year upon the entire taxable income of every
`4ei (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
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
:;1993-94 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
'rYursuant to the sales and use tax currently imposed by 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
Ott Section 3. Limit on future property tax shifts. in Section 172 of the Internal Revenue Code, as modified by Section 17276, shall be
tG96 107
RECEIVED =`s'
ate.,3
OCT 151996 .�6xc �
Great Falls Tribune 9A
Sunday,i,Ab M Sul
O.l
� EADERS9 OPINIONS
Guest ccs um
Profit wins in our mnospital merger..'
By F.JOHN ALLAIRE replaced free enterprise and competition vices or close, this disenfranchises pa-
summer,we in Great Falls are wit- with regulation by the attorney general. tients•of those physicians practicing near
This
n This the passing of two friends, our Meanwhile, the public and the physi- that facility. Closure of critical care ser-
two hospitals.True, the two structures cians were separately polled, and over- vices at a hospital creates significant
whelmingly opposed the merger.The at- quality of care and patient safety issues.
still exist (for a while) but the profession-
al and administrative staffs are dissolved, torney general held a hearing attended by The patient in the "have not hospital who
about 2,000 people who showed solid op- suddenly becomes ill enough for critical
and what is a hospital's inner fabric with- position to the merger.A personal poll of care services must then be moved by am-
out these? Merger of the two hospitals in my patients showed 98 bulance or helicopter to the other side of
Great Fails suggests several questions percent in opposition. town.
and observations likely applicable to oth- Letters written by Precious little reference to these and
er Montana communities, physicians and the many other concerns could be found in
Two or three years ago, the community public clearly outlined any of the documents provided by the
was informed the hospitals were going reasons why the merg- hospital boards and the attorney general.
bankrupt unless "consolidation"took er should be opposed. There is reference to the bottom line
place.At that point, reassurance was giv In small group meet- and saving money, but at what cost to the
en that this meant some sort of coopera ings with attorneys quality of health care?Why has nobody
tion and non duplication,but.an actual from the Montana De- responded to the medical care concerns
merger was most unlikely. Many citizens partment of Justice, expressed by the medical community?
had long held that the hospitals could, Allaire one of which I attend- Has there been sufficient attention to ed-
through cooperation, avoid costly adver- ed, exceedingly useful ucating the hospital boards in the medical
tising and duplication of services. Howev- dialogues occurred. It was made clear and public health impacts of their deci-
er, a study was thought to be necessary.A that the law states that the merger should sions? (Nobody doubts their business
large consulting and management firm not go forward unless it can be shown acumen.)
was hired, and this signaled the begin- that costs shall be lowered and access to Did the Federal Trade Commission's of-`
ning of the end of healthy competition and quality of health care shall not be di- Tice carefully evaluate all the medical
between the two hospitals. minished. concerns before allowing the merger to
During this "study" interval,the hospi- In letters to the state and U.S. attorneys proceed?Why was the FTC representa-
tals were showing between$3 and$10 general, several lay people and members tive's only concrete comment, as reported
million profit each per year,while spend- of the medical profession pointed out in the Great Falls Tribune, that the Great
ing$1.5 million to$2 million on the cam- how access and quality would suffer un- Falls Clinic is competition for the merged
paign to merge, hardly acting like two der mergerhood. hospital? (The last I heard the Great Falls
near-bankrupt businesses.The firm con- It is relevant that the major immediate Clinic does not have any hospital beds,
ducted a poll of physicians, and'another method to save money in the merged in- and being purely an out-patient facility,
of the public at large.The specifics.of re- stitutions is noted from the document could not be considered competition for
sponses are unknown, but we found we supplied to the state attorney general. the hospital.) Thus, many health profes-
were playing"Jeopardy"The answers Very simply, it is to close the emergency sionals were puzzled to read: "The Great
were known before the questions were and critical care services at one of the Falls Clinic and the merged hospitals are
asked. hospitals.It is not difficult to conclude expected to wage an escalating battle for
The only viable route was to reject con- that the de-selected hospital would rapid- out-patient services in coming years".
solidation of services and to have instead ly die on the vine.This fits with the worst Many of us are in mourning. We hope
acquisition of the community hospital kept secret in town: the plan is to close that, from what we have learned, this
(Deaconess) by the owner of the Colum- one hospital and transfer all acute ser- trend doesn't spread to other communi-
bus Hospital—the Sisters of Charity of vices to a new inpatient facility construct- ties in Montana.
Providence of Montreal; thus; a merger ed at the opposite hospital's site ($30 mil- That being said, I believe I speak for
was ordained. This, of course, would cre- lion? How's that for saving bucks?) most all Great Falls health professionals
ate a monopoly for community hospital As was indicated in letters to both the in wishing the best and pledging our co-
services. state attorney general and Federal Trade operation with the new Benefis CEO,
How to deal with this, asked the men Commission, early closure of key services Lloyd Smith.Together we intend to do
and women on the hospital boards. Legis- at one hospital and later complete closure everything possible to maintain superb
lation! A bill carefully tailored to get the has obvious access and quality implica- quality health care for central Montana.
hospitals around the antitrust issue was tions. Most all physicians, for safety and F.John Allaire, M.D., 1415 55th Ave. S., is.a
steered through the Legislature by the convenience of their patients, have clus- former president of the Montana Medica!As-
hospital's lobbyists, requiring a"Certifi- tered offices near one or the other hospi- sociation. He has practiced medicine at the
cate of Public Advantage."This new law tal.When one hospital loses essential ser- Great Falls Clinic since 1961.