January 4, 2007

Governor’s Health Plan: New Incentives

For weeks, Governor Schwarzenegger and his advisers have hinted that his soon-to-be-announced health care reforms will center on what he calls “shared responsibility” by everyone. And that certainly seems to be true in some of the first details to emerge about his proposal.

According to new information from the governor’s administration, the Schwarzenegger health care plan will require that employers offer pre-tax savings accounts to help pay for health insurance. These accounts, which are authorized under federal tax code, are currently optional for employers. The governor would require all California businesses to offer them. The money is deducted from an employee’s pre-tax paycheck– if they want to participate– and placed into a separate account to help defray medical costs.

What’s unusual about these so-called “Section 125″ plans (named for IRS tax code) is that they are not contingent on actual health coverage. In other words, they will be available to a worker even if his or her employer doesn’t offer health insurance.

Meanwhile, the governor will also propose the creation of “Healthy Action Programs.” These programs would be offered through both state-run and private insurance plans, and would reward people who take advantage of preventative health programs, like smoking cessation classes and weight reduction. The incentives, according to the administration, could range from health club memberships to possible lower insurance premiums.

This afternoon, Assembly Speaker Fabian Nunez said the governor’s proposals not only “make sense,” but are similar to ones he made in his own health care reform package last month.

Expect to hear much more about health care both in the governor’s inaugural address tomorrow, and next week when the governor unveils his complete proposal.