Can California's Proposed Coverage Reform Be a Model for the District of Columbia?

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Abstract

The ongoing debate in California over two competing 2007 proposals for universal health coverage highlights both the strengths and weaknesses of the current insurance system in the District of Columbia as a platform for coverage expansion. The District's advantages include its relatively small uninsured population and existing mechanisms for administering a public coverage program tied to income. But its fiscal base is relatively small compared with California's, its largely unregulated insurance market could lead to severe adverse selection problems for new programs, and it is at much greater risk for border-crossing by both individuals and businesses in response to reform.

Introduction

California developed two competing proposals for universal health coverage in 2007. Early in the year, Governor Arnold Schwarzenegger unveiled a universal coverage plan for the state with a focus on affordability and prevention. The legislature passed a competing bill, which the governor vetoed as promised. In October, the governor responded by putting his proposal into the form of a legislative bill, which the legislature was considering as of November.

The governor’s proposal features an approach that is, in many ways, similar to the landmark legislation Massachusetts passed in 2006, although the size of the uninsurance problem facing California is far greater than that facing Massachusetts. Almost 5 million people in California are uninsured on any given day, 20.7 percent of the nonelderly population, compared with a little over 500,000 (11.1 percent) in Massachusetts. Thus, California needs to solve a much larger problem. The share of the population that is uninsured in the District of Columbia, 13.5 percent in 2005–2006, is closer to that of Massachusetts than of California.

This brief examines two fundamental questions that are addressed by the California proposals and would need to be addressed by the District if it chose to pursue universal coverage:

• how would coverage be expanded?
  
• how would the coverage expansion be financed?

We start by outlining the proposal put forward by the governor both initially and as modified in the legislative process, and compare its features to those in the legislature’s proposal. We then discuss how conditions in the District might affect the implementation of similar reforms here.

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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.