General Provisions

Senate Bill  No. 810 Chapter  1.  General Provisions


SECTION 1.  Division 114 (commencing with Section 140000) is added to the Health and Safety Code, to read:



140000.  There is hereby established in state government the California Healthcare System, which shall be administered by the California Healthcare Agency, an independent agency under the control
of the Healthcare Commissioner.
140000.6.  No health care service plan contract or health insurance policy, except for the California Healthcare System plan, may be sold in California for services provided by the system.
140001.  This division shall be known and may be cited as the California Universal Healthcare Act.
140002.  This division shall be liberally construed to accomplish its purposes.
140003.  The California Healthcare Agency is hereby created and designated as the single state agency with full power to supervise every phase of the administration of the California Healthcare System
and to receive grants-in-aid made by the United States government, by the state, or by other sources in order to secure full compliance
with the applicable provisions of state and federal law.
140004.  The California Healthcare Agency shall be comprised of the following entities:
(a) The Healthcare Policy Board.
(b) The Office of Patient Advocacy.
(c) The Office of Health Planning.
(d) The Office of Health Care Quality.
(e) The Healthcare Fund.
(f) The Public Advisory Committee.
(g) The Payments Board.
(h) Partnerships for Health.
140005.  The Legislature finds and declares all of the following:
(a) An estimated 6.6 million Californians were uninsured in 2006,
representing over 20 percent of the nonelderly population.
(b) In California, 763,000 children are currently uninsured, and
an additional 300,000 are significantly at risk for losing their
(c) Health care spending has continuously grown two to three times
faster than California’s economy, while health insurance premiums
have grown significantly faster than overall health care spending.
(d) Since 2000, health care costs have outpaced increases in wages
by a ratio of four to one.
(e) One-third of California’s State Budget is devoted to health
care, including direct public programs as well as employee health
benefits. The imbalanced growth in health spending relative to
economic growth which drives public revenues greatly hinders
California’s ability to maintain a balanced budget.
(f) On average, the United States spends more than twice as much
as all other industrial nations on health care, both per person and
as a percentage of its gross domestic product. Additionally, the rate
of health care inflation significantly outpaces other industrial
(g) Despite this high spending, United States healthcare outcomes
consistently rank at the bottom of all industrial nations and the
United States Institute of Medicine has declared an epidemic of
substandard health-care throughout the nation.
(h) Instead of effectively containing costs, costs have been
increasingly shifted to working Californians in the form of a
continual decline in employer-offered coverage, dramatic increases in
premiums, copayments, and deductibles, declining clinical quality,
overall reductions in benefits, and inappropriate utilization review
procedures that deny patients access to needed care.
(i) As a result, one-half of all bankruptcies in the United States
now relate to medical costs, though three-fourths of bankrupted
families had health care coverage at the time of sustaining the
injury or illness.
(j) More than one-half of all Americans report forgoing
recommended health care because of the cost, and Americans are more
likely to report difficulty seeing a doctor on the day they sought.
(k) Health plans and insurers compete to construct patient pools
consisting of the healthiest segments of the population, leaving
higher risk patients to public programs or uninsured.
(l) Segregating patients into groups based on actuarial
assessments of their medical risk guarantees the continuation of
entrenched health care disparities in access and quality, and drives
health care resources toward healthier populations who least need it
for whom more care often does more harm than good.
(m) The Institute of Medicine estimates that 18,000 people die
annually in the United States because of lack of access to care and
that 30,000 die from overtreatment.

(n) The RAND Institute estimates that one-third of clinical
procedures performed are of questionable clinical benefit.
(o) Quantitative analyses performed by the Congressional Budget
Office, the General Accounting Office, the Lewin Group, and the
Legislative Analyst’s Office indicate that under a single payer
health care coverage system, the amount currently spent for health
care is adequate to finance comprehensive high quality health care
coverage for every resident of the state.
(p) According to these reports and numerous other studies, by
simplifying administration, achieving bulk purchase discounts on
pharmaceuticals, reducing the use of emergency facilities for primary
care, and better managing health care resources, California could
divert billions of dollars toward direct health care.
(q) Enactment of a single payer universal health care system would
create 2.6 million jobs in the United States, while infusing three
hundred seventeen billion dollars ($317,000,000,000) in new business
and public revenues and one hundred billion dollars
($100,000,000,000) in wages into the United States economy according
to a recent study by the Institute for Health and Socioeconomic
(r) Single payer health care, exhibited by Medicare and the
Veterans Administration, along with virtually every other industrial
nation in the world, is a well tested model that has been proven to
contain the growth in health care spending while promoting quality
improvements and maintaining comprehensive coverage.
140005.1.  (a) It is the intent of the Legislature to establish a
system of universal health care coverage in this state that provides
all residents with comprehensive health care benefits, guarantees a
single standard of care for all residents, stabilizes the growth in
health care spending, and improves the quality of health care for all
(b) It is the intent of the Legislature that, in order to ensure
an adequate supply and distribution of direct care providers in the
state, a just and fair return for providers electing to be
compensated by the health care system, and a uniform system of
payments, the state shall actively supervise and regulate a system of
payments whereby groups of fee-for-service physicians are authorized
to select representatives of their specialties to negotiate with the
health care system, pursuant to Section 140209. Nothing in this
division shall be construed to allow collective action against the
health care system.
140006.  This division shall have all of the following purposes:
(a) To provide affordable and comprehensive health care coverage
with a single standard of care for all California residents.
(b) To control health care costs and the growth of health care
spending, subject to the obligation described in subdivision (a).
(c) To achieve measurable improvement in the quality of care and
the efficiency of care delivery.
(d) To prevent disease and disability and to improve or maintain
health and functionality.
(e) To increase health care provider, consumer, employee, and
employer satisfaction with the health care system.
(f) To implement policies that strengthen and improve culturally
and linguistically sensitive care and sensitive care provided to
disabled persons.
(g) To develop an integrated population-based health care database
to support health care planning.
(h) To provide information and care in an appropriate and
accessible format.
140007.  As used in this division, the following terms have the
following meanings:
(a) “Agency” means the California Healthcare Agency.
(b) “Clinic” means an organized outpatient health facility that
provides direct medical, surgical, dental, optometric, or podiatric
advice, services, or treatment to patients who remain less than 24
hours, and that may also provide diagnostic or therapeutic services
to patients in the home as an alternative to care provided at the
clinic facility, and includes those facilities defined under Sections
1200 and 1200.1.
(c) “Commissioner” means the Healthcare Commissioner.
(d) “Direct care provider” means any licensed health care
professional that provides health care services through direct
contact with the patient, either in person or using approved
telemedicine modalities as identified in Section 2290.5 of the
Business and Professions Code.
(e) “Essential community provider” means a health facility that
has served as part of the state’s health care safety net for
low-income and traditionally underserved populations in California
and that is one of the following:
(1) A “community clinic” as defined under subparagraph (A) of
paragraph (1) of subdivision (a) of Section 1204.
(2) A “free clinic” as defined under subparagraph (B) of paragraph
(1) of subdivision (a) of Section 1204.
(3) A “federally qualified health center” as defined under Section
1395x (aa)(4) or 1396d (l)(2) of Title 42 of the United States Code.

(4) A “rural health clinic” as defined under Section 1395x (aa)(2)
or 1396d (l)(1) of Title 42 of the United States Code.
(5) Any clinic conducted, maintained, or operated by a federally
recognized Indian tribe or tribal organization, as defined in Section
1603 of Title 25 of the United States Code.
(6) Any clinic exempt from licensure under subdivision (h) of
Section 1206.
(f) “Health care provider” means any professional person, medical
group, independent practice association, organization, health
facility, or other person or institution licensed or authorized by
the state to deliver or furnish health care services.
(g) “Health facility” means any facility, place, or building that
is organized, maintained, and operated for the diagnosis, care,
prevention, and treatment of human illness, physical or mental,
including convalescence and rehabilitation and including care during
and after pregnancy, or for any one or more of these purposes, for
one or more persons, and includes those facilities defined under
subdivision (b) of Section 15432 of the Government Code.
(h) “Hospital” means all health facilities to which persons may be
admitted for a 24-hour stay or longer, as defined in Section 1250,
with the exception of nursing, skilled nursing, intermediate care,
and congregate living health facilities.
(i) “Integrated health care delivery system” means a provider
organization that meets both of the following criteria:
(1) Is fully integrated operationally and clinically to provide a
broad range of health care services, including preventative care,
prenatal and well-baby care, immunizations, screening diagnostics,
emergency services, hospital and medical services, surgical services,
and ancillary services.
(2) Is compensated using capitation or facility budgets, except
for copayments, for the provision of health care services.
(j) “Large employer” means a person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar year
employed at least 50 employees, or, if the employer was not in
business during any part of the preceding calendar year, employed at
least 50 employees on at least 50 percent of its working days during
the preceding calendar quarter.
(k) “Premium Commission” means the California Healthcare Premium
(l) “Primary care provider” means a direct care provider that is a
family physician, internist, general practitioner, pediatrician, an
obstetrician-gynecologist, or a family nurse practitioner or
physician assistant practicing under supervision as defined in
California codes or essential community providers who employ primary
care providers.
(m) “Small employer” means a person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service and that, on at least
50 percent of its working days during the preceding calendar year
employed at least two but no more than 49 employees, or, if the
employer was not in business during any part of the preceding
calendar year, employed at least two but no more than 49 eligible
employees on at least 50 percent of its working days during the
preceding calendar quarter.
(n) “System” means the California Healthcare System.
140008.  The definitions contained in Section 140007 shall govern
the construction of this division, unless the context requires