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September 2007

State Health Reform Updates

California: On September 12, 2007, Governor Arnold Schwarzenegger called the California Legislature into special session to reach a compromise on the issue of health care reform. The Governor first announced his plan for health care reform at the start of the year.

The Governor called for the session after the California Legislature approved a bill (AB8) that did not meet his criteria that everyone in the state should be covered (AB8 would leave 2.8 million uninsured residents without coverage) and that the cost of expanding coverage should be shared among various segments of the economy.[1] Gov. Schwarzenegger called the special session because health care reform is “too important to walk away from simply because of a date on the legislative calendar.”[2]

While both sides of the aisle are committed to passing reform, the mechanisms by which they would like to do so vary. The other primary differences between the Governor and Democratic leadership include[3]:

  • Employer Contributions. The legislative plan requires all but the smallest employers to spend 7.5 percent of payroll on employee health care or pay the difference into a state pool to help finance health care expansions, called the California Health Insurance Purchasing Program, or Cal-CHIPP. The Governor wants an employer mandate of 4 percent of payroll for all employers with more than 10 employees.
  • Mandated Coverage. The legislative plan does not include an individual mandate. However, it does require employees to participate in employer-provided coverage if it is offered, unless expenses exceed 5 percent of the employee’s family income. Governor Schwarzenegger’s plan would require all Californians to have a minimum level of coverage (with out-of-pocket maximums of $7,500 per person per year). Families without employer coverage would be able to obtain health insurance through a Connector-like purchasing mechanism with sliding scale premiums for families with incomes below 250 percent of the federal poverty level. 

Both AB8 and the Governor’s proposal would include an expansion of state health insurance programs and would require health insurers to spend 85 percent of premiums on health care.

Colorado: On September 10, 2007, the Colorado Blue Ribbon Commission for Healthcare Reform reviewed four health care proposals being considered to expand health coverage to the state’s estimated 792,000 uninsured residents.[4] Two of the plans, proposed by the Colorado State Association for Health Underwriters and the Committee for Colorado Health Solutions, respectively, would require all state residents to obtain health insurance. The state would provide subsidies to residents who cannot afford to obtain health insurance. A third plan, proposed by the Health Care for All Colorado Coalition would establish a single-payer health care system administered by the state, and a fourth plan proposed by the Service Employees International Union would expand state health insurance programs and establish a large health insurance purchasing pool.[5] Modeling work has been completed for the four proposals.

A fifth proposal, to be voted on September 24, has been described as a “parking lot” of good ideas from the four modeled proposals.[6] The plan would include an individual health insurance mandate enforced by a tax penalty imposed on those who do not acquire insurance. The state would be required to provide subsidies, on a sliding scale based on income, for low-income families. Likewise, low-income workers who qualify for a government subsidy would be required to use that money to purchase employer-sponsored health insurance if it is offered and costs less than the state insurance plan. The fifth proposal would also expand the state Medicaid program and require private health insurers in the state to offer several low-cost, limited-coverage plans capped at $50,000 in benefits.[7] Should the Commission approve the fifth proposal, it will move forward to have this final proposal modeled to understand the greater implications of its implementation.


[1] Chorneau, T. “Health care bill passes Legislature, but governor says he’ll veto it.”

San Francisco Chronicle

, September 11, 2007.

[2] “California Gov. Schwarzenegger Calls for Special Legislative Session on Health Care”, Kaiser Daily Health Policy Report, September 12, 2007

[3] Chorneau, T. “Health care bill passes Legislature, but governor says he’ll veto it.” San Francisco Chronicle, September 11, 2007.

[4] “Healthy Debate Awaits State”, The Colorado Springs Gazette, September 13, 2007,

[5] “The Price of Wellness”, The Denver Post, August 22, 2007,

[6] “Reform Commission Mulls Proposal with Individual Coverage Mandate”, BNA Health Care Policy Report, September 17, 2007

[7] “Health Panel Eyes 5th Option”, The Denver Post, September 11, 2007,