Governor Arnold Schwarzenegger considers a question about the state budget during an interview with The Associated Press. (Photo: Rich Pedroncelli / AP)
For the second time in three years, Gov. Arnold Schwarzenegger on Tuesday vetoed legislation that would have established a government-run universal health care system.
Senate Bill 840 by Sen. Sheila Kuehl, D-Santa Monica, would have set up a single-payer system in which the state would assume the role that private insurance companies now play.
In his veto message, the governor said he could not support "a bill that places an annual shortfall of over $40 billion to our state's economy."
"According to the Legislative Analyst's Office, the bill is estimated to cost $210 billion in its first full year of implementation and cause annual shortfalls of $42 billion," Schwarzenegger said.
The veto came nine months after Kuehl, the chair of the Senate Health Committee, and other Democrats joined Republicans in voting against the governor's health care expansion program, which would have required most employees and employers to contribute to the cost of their health care.
The governor also vetoed one of the legislative session's most contentious proposals, Assembly Bill 1945 by Assemblyman Hector De La Torre, D-South Gate.
The bill would have banned insurance companies from canceling policies retroactively except under certain conditions, such as when a person intentionally misleads an insurer about his or her health history when applying for coverage.
Five insurers have been fined a combined $15 million in the last couple of years for rescinding the health insurance of more than 3,300 people.
De La Torre said his bill would have prevented health insurers from canceling sick patients' coverage for innocent omissions on their insurance application.
But Schwarzenegger, who in his State of the State address called for strong protections for cancelled patients, said AB 1945 would increase health career costs.
"This bill was written by attorneys that stand to benefit from its provisions," the governor said in his veto message. "In rushing to protect a right to litigate, the proponents failed to consider the real consumer protections that are needed."
Jerry Flanagan, health policy director for Consumer Watchdog, which represents attorneys, called the governor's veto "hypocritical."
"This veto will mean that health insurers who have given more than $1 million to the governor will continue to rescind innocent patients when they fall and need coverage the most, forcing consumers into court to challenge unfair policy cancellations," Flannigan said in a statement.
The California Medical Association, which sponsored the bill, called the governor's veto a betrayal of the governor's promise to stop cancellations.
"Californians need health care coverage they can count on when they get sick," said Dr. Richard Frankenstein, president of the 35,000-physician member organization. "This veto denies them that security."
But Chris Ohman, president of the California Association of Health Plans, which represents insurers, said AB 1945 "would have undermined 100 years of contract law that allows contracts to be rescinded for failure to disclose a material (fact) regardless of intent."
The governor did sign a companion measure - Assembly Bill 2569 by Assemblyman Kevin DeLeon - that will require insurers to continue covering the family members of people whose policies have been rescinded
But he vetoed Senate Bill 981 by Senate President Pro Tem Don Perata, which would have prohibited hospital emergency room physicians from billing patients directly when there are billing disputes with their HMOs, a practice known as "balance billing."
In his veto message, the governor said SB 981 would have rewarded "non-contracting physicians by assuring their continued financial slice of the pie" without fixing California's "broken health care system."
In a statement, Perata, D-Oakland, said he was surprised "that a governor who aggressively pushed for health care reform would veto a measure that would have ensured a fair, uniform standard for handling disagreements over emergency room bills."