California To Adopt Cost Plus Insurance Scheme?


“…… measure would prohibit hospitals from charging more than 25 percent above the actual cost of providing patient care…….”

Signaling the start of an expensive political battle over health care, a prominent labor union has tapped the San Francisco political team behind Gov. Jerry Brown‘s successful ballot drive boosting taxes to manage a campaign for two proposed ballot measures to cap spiraling hospital costs and executives’ pay.

The 150,000-member SEIU-United Healthcare Workers West began collecting signatures this week for a ballot push that could unleash warfare with the health care industry, and the union has now hired veteran SCN Strategies to run its campaign.

The firm is headed by three seasoned Democratic operatives – Averell “Ace” Smith, Dan Newman and Sean Clegg – who have a reputation for aggressive tactics. They were the chief architects behind Brown’s successful campaign for Proposition 30, the 2012 ballot measure that increased income taxes on the wealthy and sales taxes for all Californians.

SEIU-United Healthcare Workers says its proposed measures represent the nation’s most wide-ranging and aggressive ballot efforts to control hospital costs. They include one measure that would prohibit hospitals from charging more than 25 percent above the actual cost of providing patient care, and another that would bar the executives of not-for-profit hospitals from earning more than $450,000 a year.

Proponents of the measures say the overwhelming number of hospital beds – more than 75 percent of those in California – are in such not-for-profit hospitals, which include giants like Kaiser Permanente and Sutter Health.

Supporters must gather 505,000 valid signatures of registered voters for each measure to qualify for the November ballot. This week, they began the drive through a campaign committee called Yes for a Healthy California, which aims to collect 850,000 signatures per measure by the mid-April deadline set by the secretary of state’s office.

Steve Trossman, a union spokesman, said the measures would appear on the ballot at a time when “the pricing of hospitals is becoming a national phenomenon.”

“The thing that people don’t realize is that 75 percent of the beds in California are (located at) not-for-profit hospitals charging massive amounts above what it costs to deliver care,” Trossman said.

Patients’ dollars are “going directly to the pockets of the executives,” who commonly earn millions a year, he said. “These initiatives will take that on directly.”

The $450,000 compensation limit would be equal to what the president of the United States earns, Trossman said.

The California Hospital Association says it is disappointed the union is trying to put the measures on the ballot. The proposals “put a cloud over the accomplishments that have been mutually beneficial to health care workers, hospitals and patients,” the group said.

Proponents said they expect to spend as much as $20 million.

Clegg said the campaign would focus “not just on pricing, but on how pricing is affecting actual families – because getting a medical bill can be a life-changer for middle-class families, living paycheck to paycheck.”

Carla Marinucci is senior political writer for The San Francisco Chronicle. E-mail: Twitter: @cmarinucci