Before the health care proposal put forward by Assembly Speaker Fabian Núñez and Gov. Arnold Schwarzenegger can become law, it must face a few more hurdles — among them a potentially hostile reception in the Senate Health Committee and some concerns from one of the plan’s major sponsors, the California Hospital Association.

The Senate Health Committee is chaired by Sen. Sheila Kuehl, D-Santa Monica, who is openly opposing the bill. Kuehl’s opposition gives the bill’s supporters a single-vote margin on the 11-member health committee.  

That means that any Democrat on the committee could single-handedly sink the proposal. And not all of the committee members are sure they’re going to vote for the bill. Kuehl, who has promised an exhaustive examination of the proposal, delayed the first hearing by a week.

“The issue I have is that we have a $14 billion shortfall,” said Sen. Leland Yee, D-San Francisco. “We are cutting services like you cannot believe. So how can we pay for a new health care plan?”

The fate of the bill may ultimately rest in the hands of Senate leader Don Perata, D-Oakland. But Yee insisted he was getting no guidance or pressure from Perata on how to vote.

“There is not a strong interest to make a leadership play on this issue,” Yee said. “I think the bill’s fate will depend on the individual members of the committee.”

The health care bill has divided many core Democratic constituencies and health care groups. The California Medical Association, which led the campaign for employer-based health care in 2004, is expected to officially oppose the bill next week. The bill has also split labor groups, some of whom are among the bill’s strongest supporters, and others who are opposed.

Another member of the committee, Sen. Mark Ridley-Thomas, D-Los Angeles, is also caught between his supporters with different ideas on the bill. Ridley-Thomas is running for Los Angeles County supervisor with the backing of organized labor. But labor, including some of the most powerful unions in Los Angeles, is deeply divided over AB1X1. The bill is supported by the Service Employees International Union but opposed by the United Food and Commercial Workers, both of whom are strong Ridley-Thomas supporters.

But Ridley-Thomas said he plans to support the bill.

“I feel obliged to take advantage of the opportunity to do something that deals with the crisis of the uninsured,” he said. “I think the question we all have to ask ourselves is, ‘Is this a step forward?’ and I believe that it is.”

Even if the bill does get out of committee next week, and eventually off the Senate floor, it still faces some problems from one of its chief supporters, which came to a head earlier this week.

The California Hospitals Association threatened to pull its support of the initiative that would fund the health care plan — a move that would all but sink the November initiative campaign.

Support from the hospitals is seen as a linchpin to the health care coalition. The plan includes an increase of hospital fees by 4 percent, or an estimated $2 billion. The association is apparently bristling at language toward the end of the initiative that would allow the Legislature, with a two-thirds vote, to raise that fee even higher, and use the money for other purposes.

The hospitals met Wednesday morning with Schwarzenegger, Perata and Núñez. Sources say the concerns of the hospitals were not satisfied in the meeting.

CHA spokeswoman Jan Emerson downplayed the concerns of the association, citing a “misunderstanding with the language and how it was drafted, but we’ve been in ongoing conversations with the administration to try to rectify those problems.”
Emerson said, “The only way to do that would be to refile the initiative.”

But timing is of the utmost importance. In order to qualify for the November ballot, the initiative proponents would need to collect 1.2 million signatures before June 26. Currently, the initiative is awaiting a title and summary from the attorney general’s office. If the initiative is refilled, it would reset the clock, shortening the signature collection window and making the cost of qualifying the measure that much more expensive.

But that alternative may be preferable to losing the hospitals altogether, which could be devastating to the campaign coalition forming to pass the funding initiative on the November ballot. Hospitals are expected to spend upward of $20 million to get the initiative passed, according to sources familiar with the political discussions.

“If the hospitals pull their support, it very likely will kill health care reform for 2008,” said one source close to the health care talks.

Emerson maintained that the details could be ironed out, if proponents are willing to rewrite the initiative. “We want to be a partner in health reform,” she said, adding, “We want to make sure the language in the initiative contains the protections for hospitals that were discussed in the negotiations, and that fees are permanently capped at 4 percent.”

“Clearly we’d like to have the hospitals on board. We are confident we can iron out the minor wrinkles in short order,” said Núñez spokesman Steve Maviglio.

Hospitals agreed to the 4 percent fee hike with the understanding that the money would be used by the state to increase MediCal reimbursement rates for doctors and hospitals. If the state increases Medi-Cal payments by $2 billion, that would lead to an additional $2 billion in federal matching funds for health care providers. So in effect, hospitals would get back most, if not all, of the money they are spending on the new fees.