The proposal did not pass. In a response to a letter I sent to him last yera, the following reply regarding my concerns about the tax were addressed as follows:
Thank you for writing to express your concerns and suggestions for addressing California's health care challenges. Governor Schwarzenegger appreciates hearing from people on the important issues facing our state.
Although California enjoys a reputation for excellent health care services, the system for delivering those services is broken. Six and a half million Californians are uninsured. Providers shift the cost of uncompensated care to private payers, a problem further aggravated by underpayments from Medi-Cal. As a result, insured individuals and employers pay a "hidden tax" of up to an estimated 17 percent in additional premiums to compensate for the uninsured and underinsured.
The growing cost of health care has intensified these difficulties. Health care spending has almost doubled in the last 10 years, and premiums continue to grow faster than inflation. Further, medical errors, chronic diseases, and poor lifestyle choices drive increases in health care spending.
Governor Schwarzenegger is committed to enacting a comprehensive solution to our current health care crisis and working with the California Legislature, stakeholders, consumer groups, and others to design a solution that is effective, reasonable, and fair to everyone.
The Governor has proposed a bold and comprehensive approach aligned with the values of prevention and wellness, shared responsibility for covering all Californians, and health care affordability. He believes that health care coverage and costs are problems that, working together, we can solve.
The Governor's plan promotes prevention and wellness by providing appropriate incentives for individuals to make healthier choices. Premium discounts and rewards will be tied to preventative health services. Enhanced disease management and the use of e-prescribing will increase efficiency and cut costs by managing chronic illnesses before expensive intervention services become a last resort. Obesity is our number one public health priority, and the Governor's plan positions California to lead the nation in the battle against obesity, much as California has done with tobacco control.
Second, the Governor's plan advances the principle of shared responsibility. Just as all sectors of society share in the benefits of coverage for all Californians, so too must each sector share responsibility. Fixing our broken health care system requires changes from all of us, including individuals, government, medical providers, insurers, and employers.
Responsibility begins with the individual. Under the Governor's plan, all Californians will be required to obtain health care coverage for themselves and their children. The state, in turn, will take responsibility for supporting access to affordable coverage for low-income Californians. Californians under 100 percent of the Federal Poverty Level (FPL) will be able to enroll in Medi-Cal. Working families earning $20,000 to $50,000 a year will be eligible for coverage subsidies, and all children will be covered up to 300 percent FPL (which is $60,000 for a family of four) through Medi-Cal or Healthy Families. The state will also increase its Medi-Cal reimbursement rates to adequate levels, substantially reducing the hidden tax.
Doctors and hospitals will benefit from $10 billion to $15 billion in new funds added to the health care system. In turn, doctors and hospitals have a responsibility to provide affordable, quality coverage, and to share in the cost savings. Providers will contribute a portion of the coverage dividend associated with universal coverage and increased Medi-Cal rates. Physicians will contribute 2 percent of revenues, and hospitals will contribute 4 percent, ensuring some of the new revenue stays in the system to support total coverage and increased Medi-Cal rates.
Health plans also play a key role in guaranteeing coverage. Health plans will no longer be able to refuse individuals based on age or health status or drive them away with excessive premiums. In addition, health plans will be required to dedicate 85 percent of premiums to patient care and to offer "Healthy Actions," benefits designed to encourage and reward healthy behaviors.
Lastly, employers are critical to any reform effort and have important roles to play as well. Under the Governor's plan, employers will be required to offer plans that allow employees to make pre-tax contributions to health care costs. Employers with more than 10 employees who choose not to offer health care coverage will contribute 4 percent of payroll to the statewide purchasing pool, helping to level the playing field between offering and non-offering employers to ensure that incentives aren't created for employers to drop coverage.
The Governor's plan recognizes that coverage and cost are inextricably linked. That is why the third component of reform is affordability. We must drive down rising health care costs and provide relief for both the insured and uninsured alike. In addition to addressing the hidden tax, the Governor's plan takes clear steps to make insurance more affordable. Individuals will be able to pay for their health coverage and contribute to Health Savings Accounts using pretax dollars. To stimulate the development of lower-cost, high-quality models of care, the state will lower regulatory barriers that stifle health care innovation and increase costs. The state will embrace and accelerate the adoption of advanced health information technology to streamline operations, reduce duplication of services, and prevent medical errors.
There must be bold changes so that high quality care is accessible and affordable for all Californians. We have a responsibility to take action. Working together, we can reduce the hidden tax and achieve more affordable health care, coverage for all, and a healthier California.
Thank you once again for taking the time to share your thoughts.
Again, targeting physicians with a tax seemingly under the misguided notion that all or even the majority of California physicians are living the Robert Rey life is truly idiotic. My friends practicing primary care in California are mostly low low middle income earners in the California income strata, after just practice expenses, overhead, employee salaries, benefits, equipment costs, and equipment amortization, etc. are subtracted from the gross income. Tack on a 2% tax on that gross and you drop their net income by almost 10%. The threat was enough to make two of them relocate to Austin and here to Dallas. Both miss California, but appreciate the difference in income and the possibility to actually retire from practice and not die in it.
Also, where is the 2% actors'/performers' tax? Two percent politicians tax? Two percent LAWYERS' tax? If the governator wants to target high income professions to subsidize health care in California, he is certainly missing the larger targets and his proposal still fails to address indigent populations that earn income or draw state benefits, yet contribute nothing in taxes.
