HomeMy WebLinkAboutMINUTES - 10221996 - D2 TO: ' - BOARD OF SUPERVISORS
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FROM: PHIL BATCHELOR, COUNTY ADMINISTRATOR '� s Costa
o.,�. '�• *v��DATE: September 23, 1996
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SU13JECT: 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 October 1, 996 APPROVED AS RECOMMENDED OTHER X
A Board Position on Proposition 214 failed to receive a majority vote.
NO ACTION TAKEN ON THIS MATTER.
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THIS IS A TRUE
UNANIMOUS(ABSENT ) AND CORR COPY OF AN ACTION TAKEN
AYES: NOES: AN ERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: SUPERVISORS ON THE DATE SHOWN.
ATTESTED
Contact: PHIL BATC R,CLERK OF THE BOARD OF
CC: SUPERVISORS AND UNTY ADMINISTRATOR
County Admi ator
Health ices Director
BY DEPUTY
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 Spence
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."
t�
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:
• Impos'es 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 Medl-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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4 Health Care. Consumer Protection. Initiative Statute.
Argument in Favor of Proposition 214
The health care industry is changing rapidly, and some of If you get sick,you have a right to know what care you need,
those changes could be dangerous to your health.That's why we and you have a.right to get the care your insurance premiums
need Proposition 214,the HMO Patient Rights Initiative.All of have paid for.
us, especially those of us who depend on health care the You should not have to worry whether your doctor is afraid of
most—seniors, cancer patients, adults and children with retaliation for referring you to a specialist or whether nursing
disabilities—must be certain that our health insurance will be home aides fear being punished for speaking up for their
there when we need it. patients.You should not have to worry that your health plan
Proposition 214: could drop your doctor for no reason.
• Prohibits written and unwritten gag rules that keep You should not need to be afraid your doctor is being paid a
doctors from telling patients about the care they need. bonus for denying you the care you need.
• Protects doctors,nurses,nursing home aides,paramedics You should know how much of your insurance premium is
and other health care givers.from intimidation when they spent on actual patient care and how much on bureaucratic
speak out on behalf of patients. overhead and executive salaries.
• Prohibits financial incentives for withholding care Is it important to contain costs to keep health care
Suires
• ents need. affordable?Yes.
insurers to disclose guidelines for den care
to give patients a second opinion—iriding a Should cost controls be used as an excuse t6 deny patients the
physical oa—before denying care recommended treatments they.need just becanse administrators for HMOs
by the patient's doctor. and insurers think it will cost them too much money?Never.
• Forces HMOs and insurers to disclose how much they 214 will be enforced by existing agencies, minimizin€
spend on patient care and how much is spent on executive enforcement costs.And those costs are necessary in order V
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. Pleas(
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
Wi
• Will be enforced by existing state agencies andwithout American Association ofBetired Persons
new taxes. LOIS SALISBURY
Gag rules on doctors and nurses are wrong.Intimidation of Executive Director,Children Now
caregivers is wrong.Bonuses for denying care that people need
are wrong. Secret guidelines for denying care are wrong. LAURAREMSONMITCHELL
Unsafe staffing in hospitals and nursing homes is wrong. lisues Coordinator;National Multiple Sclerosis
It is dangerous for everyone'if HMOs and health insurers SociefA California Chapters
worrymore about making-money than they•do about your
heawhen they make decisions about your care.
RebutW.to Argument in Favor of Proposition 214
PROPOSITION-214, LIKE 216, IS A,COSTLY TROJAN That's why groups like the Seniors Coalition, 60 Ph
HORSE. We don't need�special-interest Ballot initiatives to Association and United Seniors Association oppose 214 an
"protect~'patients.EIIISTIl�TG LAW ALRF.AD)(.protects patient' 216.•It's why leaders of groups that care for the poor lil
advocacy prohibits gag rules• requires.coverage criteria be SISTERS OF MERCY and DAUGHTERS OF CHARPi'Y oppo:
develo by physicians;.proviclea'for safe'stafling in hospitals; the initiatives.Andit's why small business and taxpayer grout
prohibits paying doctors to deny nobded care;.and prohibits like the CALIFOP IA TAXPAYERS ASSOCIAnON and tl
disclosing confidential patient records. NATIONAL TAX LUM ATION.COMMIZTEE.my NO on 2.
These provisions.are art of 214 to hide the measure's real and 216.
puiposes:to add bloats edstly staffng•requgements,to give Don't be fooled by. special-interest, trojau horse ball
special interest job protection to some health care workers,and initiaatryes.VOTE NO.
to help trial lawyers file frivolous health care lawsuits. .
Proposition 214 DOES NOT provide.health coverage to a GORDON JONES
single Californian. It costs'�consumers BILLIONS OF Legislative Director The Seniors Coalition
DOLLARS in higher'health insurance.costs while costing MA?<tY.DEE HACKER,
R.N.
taxpayers HUNDREDS OF ~MILLIONS' more for Childress Hospital,Los Angeles -
administration and to cover government workers.Not a penny
-of 214 will provide health insurance for the uningured. RMK WEST
Real health care reform"should make insurance"more President,California Chamber of Commerce
affordable and reduce the number of uninsured.Props.214 and
216 dramatically increase health:insurance costs and will lead
to MORE UNINSURED:
56 Arguments printed on this page'are the opinions of the authors and have not been checked for accuracy by any official agency.
Health Care. Consumer Protection. Initiative Statute. 21.4
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
AR %HIGHER HEALTH COSTS. Taxpayers in every jurisdiction will be hurt by 214."
WHAT DOES A 159'o INCREASE IN HEALTH INSURANCE l —California Taxpayer's Association.: DO TO YOUR FAMILY'S BUDGET?For many families,that's
t 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,m 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 physiciansand up to 60,000 LOST CALIFORNIA JOBS
oppose 214. California needs health care reform but Proposition 214—like
"For the past 20 ears,Pve cared for patients who have no Prop. 216—WILL MAKE THINGS WORSE. That's why a
p y p diverse coalition opposes them, including Democrats,
health coverage. Proposition 214 means fewer people will Republicans and Independents, seniors, physicians, nurses,
have health insurance. That's just what California hospitals, taxpayer groups, small businesses, and local
DOESN'T need." government organizations.
—Joseph Coulter,M.D.,Yuba City Propositions 214 and 216 are the WRONG SOLUTIONS to
DOES 214 HELP THE .POOR AND MEDICALLY California's health care ills.
INDIGENT?No.Hospitals that are committed to care for the SISTER CAROL PADIIMA,R.N.
poor would be SEVERELY HURT under 214.
"Our mission is to provide health care to the poor and Daughter of Charity
underserved. Proposition 214 will make it much more RICHARD GORDINIER,bM.
difficult to help people in need." Arcadia
—Sister Blends O'Keeffe,R.N. BZRS WEST
Sisters of Mercy President,California Chamber of Commerce
Rebuttal to the Argument Against Proposition 214
Let's be clear.Who opposes 214?The California Association of An independent analysis states that 214's patient protections
HMOs and the Association of California Life and Health would increase overall costs by less than 1%.
Insurance.Companies. HMOs and insurers plan to spend Opponents try to confuse 214 with Proposition 216. But
4 millions of your insurance premium dollars to defeat 214. Propositions 214 and 216 are NOT"two peas in a pod:"
` The opi)onents call 214's patient pmtections•"bogus". Read • 214-is a simple, effective measure that relies on existing
J Proposition 214.Then ask yourself,are its protections'bogus" agencies to implementits patient protections,,minimizing
br are they genuine protections patients need? enforcement costs.214 CONTAINS NO NEW TAXES.
• Is it"bogus"to protect freedom of speech between patients • 216 lacks some of 214%key patient protections and 216
and doctors?
in new.taxes.
It Is it"bogus"to make sure medical decisions are made by Please,dhelpes �protecof to patient 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 Eroviding needed care? THE Susan G.Homen Breast Cancer Foundation
• Is it "bogus to 'require HMOs and insurers to tell
consumers if their insurance premiums are being spent on W.E.(GENE)GIBERSON
actual patient care or bureaucratic overhead and executive President.Alzheimers Association,California Council
.salaries? JONATHAN SHESTACK
Opponents make wildly exaggerated claims about costs, Viae 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
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 GovERNMENzs annually (plus a larger amount of federal funds) for the
Medi-Cal Program, primarily to purchase health care
Summary. This measure would result in unknown services. The potential cost increase to the state could
additional costs, probably in the range of tens of millions range from a few million dollars to more than one
to hundreds of millions of dollars annually, due to the hundred million dollars annually, due to the measure's
measure's effects on the state's and local governments' effects on health care costs generally (as described
costs of directly operating health programs as well as above).
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 eons 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
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 businesseE
private health facilities.However,it is not clear.whether from offering financial incentives to doctors, nurses, of
the state's Medi-Cal Program would be considered a other licensed or certified caregivers if those incentive:
"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 genera
FISCAL EFFECT health care costs by limiting the use of risk pools an('
The fiscal effect of this measure is subject to a great profit-sharing arrangements that encourage providers b
deal of uncertainty. The health care industry is large, restrain costs. However,the measure specifically allow.
complex, and undergoing rapid change, making it the use of capitation payments. Furthermore, it is no-
difficult to estimate the effect of new requirements on the clear whether the measure prohibits any financis
overall health care maricetplace.Furthermore, several of incentives that are not already prohibited under federr
the measure's provisions could have widely varying fiscal restrictions that apply to providers who serve Medicar
effects, depending on. how they are implemented or or Medi-Cal patients. Consequently,the provision's effec
interpreted by the courts. on health care costs is unknown, but could range froi
minor to significant.
EFF=of Tm hbwn RE ox HEALTH Protection for Certain Health Care Professional-
CA=Cosrs GENERauy The measure prohibits health'care businesses froi
Changes in health care costs have an impact on the attempting to prevent doctors, nurses, and other heals
state and local governments because of their role in care professionals from giving patients any informatic
directly operating health programs as well as purchasing relevant to.their medical care. The measure alf
health care services. The following provisions of this broadens existing protections for health ca;
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, ai
insurers,and other health care businesses may refuse to other licensed or certified caregivers from adver
authorize recommended care that they believe to be actions byhealth care businesses--such as firin
unnecessar34 unproven,.or more,expensive than an contract termination, or demotion—without'just taus,
effective alternative treatment, without physically Examples of just cause include proven malpracti(
examining the patient. Patients usually have a right to endangering patients,drug abuse,or economic necessi'
appear such.a denial. This.measure requires health Just cause protections currently apply to some heal
insurers,health-plans,or other health care businesses to care professionals, such as those who work for pub'
physically examine a patient before refusing to approve agencies under civil service and,those who work unr
care that.is a covered benefit and that has been labor agreements with just cause provisions.. TI
recommended by the patient's doctor or nurse (or other provision of the measure would reduce some employe
licensed health professional).The person conducting the flexibility and thereby could increase costs to health cr
examination would have to be a licensed health care businesses by an unknown amount. The additional co-
;! professional with the'expertise to evaluate the patient's would include the need to keep records to document i
need for the recommended care. basis for actions taken against employees or contract,
`i 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. 1
First, health care businesses would have to add staff to measure specifies that licensed health care profession
provide additional examinations. Second, requiring an who set guidelines for care, or determine what c
examination probably would result in some approvals of patients receive,shall besubject to the same professio
j care that otherwise would be-denied. standards that apply to health care professionals N
!i Staffing Requirements. The measure requires that provide direct care to patients. This provision wo
all health care facilities provide "minimum safe and increase the risk of malpractice liability for some hey
„ adequate"staffing of doctors, nurses, and other licensed care professionals who make decisions affecting pat,
or certified caregivers. The DHS would set, and care, but who do not provide direct care. This cc
periodically update, staffing standards for health care increase health care costs by an unknown amount.
54
Analysis by the Legislative Analyst
2
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':
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 usin€
• About half receive health insurance through_.their "utilization review"procedures. Under these procedures.
employer or the employer of a family memben health plans will not pay for certain types of expensive oI
• 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 HosPrrAL Cows
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 trent:
health insurance. I has contributed to an excess of hospital beds.
Until recently, spending on health care had been On average, about half of the hospital beds ii.
growing much faster than inflation and population California were unused in 1994. As a result, somr
changes. During the 1980s, for example, average health hospitals have downsized, merged, or closed; and mangy
care spending in the United States grew by almost 11 hospitals are seeking ways to reduce costs in order tr
Percent annually after adjusting for inflation and compete for business more effectively. Since staffing is .
population. Since 1990, however, this rate of growth has major cost, hospital cost control efforts often focus or
slowed to about 4 percent annually. reducing staff and using less expensive personnel ii
place of more expensive personnel where possible (usin,
HEALTH MAINTENANCE ORGANPLATIONS 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 REGUI.ATION of HEALTH CARE FACILITIES
insurance costs. One way they have attempted to hold Licensing of Facilities. The Department of Healf
down costs is to contract with health maintenance Services(DHS)licenses many types of health facilities i,
organizations (HMOs), which provide health services California,such as hospitals and nursing homes, and ha
through their own doctors and hospitals or through general authority to set staffing standards for thos
contracts with physicians and hospitals.About one-third facilities. Clinics that are owned and operated directly b
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 generall
many persons covered-by Medicare or Medi-Cal also require hospitals to keep staffing records and to bae
receive their health care through HMOs. .. their staffing levels.for nurses on an assessment
Generally,health coverage provided by an HMO is less patient needs. Hospitals are not required to have
expensive than comparable health insurance coverage specified number of nurses per patient, except i
provided on a"fee-for-service"basis:Health Maintenance intensive care units.State law requires nursing homes t
Organizations use several methodd'to control.costs, such - have at,least-one registergd nurse per shift and ser
as•capitation7 payments, other financial incentives, and minimum staffing standards for nurses and nursiL
utilization review assistants per.patient.-
Capitation and Other Financial Incentives. The DHS is .revising its current,hospital staffir,
Under the traditional fee-for-service approach,doctors regulations to cover all departments within each facilit
and hospitals charge fees based on the specific service Additionally,the pending regulations require hospitals
provided to a patient. By contrast, HMOs generally use establish their staffing needs using a system that mo,
capitation to pay doctors. Under this approach, doctors specifically takes into .account the condition of eat
receive a fixed .payment for each 'HMO member patient.The DHS also enforces federal requirements th-
regardless of the amount of service provided to the health facilities serving Medicare or Medi-Cal patien
member. Capitation gives doctors a financial incentive to must have enough staff to provide adequate care.
use cost-effective types of care. I;SGUI.ATION OF HEALTH PLANS AND HEALTH INSURANCE
In addition to capitation, HMOs use other financial
incentives to control health care costs. The federal The state Department of Corporations regulates t;
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
Medicare or Medi-Cal recipients. Specifically, federal law Insurance regulates companies that sell health insuran
Prohibits any financial incentives to doctors that could but do not provide health care themselves, includi,
act to reduce medically necessary care to individual workers'compensation insurers.
G96
(214 Health Care. Consumer Protection. Initiative Statute.
t
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.
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