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Calif. health care overhaul passes first hurdle

California's Assembly on Monday approved Gov. Arnold Schwarzenegger's plan for universal health insurance as overhauling health care gains national prominence ahead of the 2008 presidential election.
/ Source: The Associated Press

The state Assembly on Monday approved a massive health care overhaul that will expand coverage to nearly 70 percent of the state's uninsured and require most Californians to buy health insurance.

Lawmakers approved the $14.4 billion plan on a party-line, 45-31 vote.

"Fundamentally, health care is a right and not a privilege, and it ought to be afforded to everybody," Assembly Speaker Fabian Nunez, the bill's author, told his colleagues before they voted. "Make no mistake about it, this is truly a historic effort."

Money for the health care package relies on fees imposed on hospitals and employers, as well as a boost in the tax on cigarettes. If the plan is passed by the Senate, it will go to voters in November.

It would represent the largest health care overhaul undertaken by any state if voters give their approval.

Governor's top priority
Of the 5.1 million people who are considered permanently uninsured in California, 3.7 million would be covered under the plan, according to Nunez's office. That includes children from low-income families, employees at small businesses that cannot afford to provide health insurance and Californians with pre-existing medical conditions who have trouble finding coverage.

The Assembly leader struck the deal last week with Gov. Arnold Schwarzenegger, who made health care reform his top policy priority this year.

But members of the governor's own party, health insurance companies and business groups criticized the proposal, in part because they say it relies on risky funding sources. They also said it penalizes California employers.

The tobacco tax would bring in about one-tenth of the health care program's funding, but critics said the amount of money generated by the tax increase will decline as fewer people smoke and buy cigarettes in California. The program also relies on $4.5 billion in federal matching dollars that Republicans say may not materialize.

Too expensive, Republican lawmakers say
Republicans said the state cannot afford a massive health care plan while facing a budget deficit projected at $10 billion to $14 billion over the next two fiscal years.

Committing to such a long-term expenditure with questionable revenue could create "a fiscal meltdown in California," Assemblyman Chuck DeVore, R-Irvine, told his fellow lawmakers.

He also criticized Schwarzenegger for raising spending and promoting tax increases after the governor was elected on a platform of fiscal responsibility. Schwarzenegger promised not to raise taxes but now is pushing "the largest business tax increase in the history of California," DeVore said.

"We can't afford all the government that we seem to want around here, and raising taxes is not going to be the solution," he said.