California Senate Bill SB 840, also known as the California Health Insurance Reliability Act (CHIRA), was authored by California Democratic Senator Sheila Kuehl and was introduced to the state Senate in February, 2005, and was passed by the legislature, but later vetoed by the governor (Healthcare for All, California, n.d). The bill was intended to serve as an effort to reform California’s health insurance system, as well as the very nature and quality of the provision of care itself (Healthcare for All, California, n.d.). As such, it included a provision for the establishment of the California Health Insurance Agency, which would oversee the California Health Insurance System. The Agency was envisioned as being directed by a Health Insurance Commissioner, who would be an elected official serving an eight year term (Healthcare for All, California, n.d.). One of the primary responsibilities of the Commissioner would be to appoint other managers who would oversee the implementation of the overhauled insurance system.

The provision of insurance and the medical services they cover were also addressed by SB 840. One of the most dramatic of the proposed reforms was that all Californians, including those who had attained neither residency nor citizenship and who were residing illegally in the state, would be eligible for healthcare coverage (Healthcare for All, California, n.d.). In addition to universal patient coverage, the scope of services authorized for payment increased significantly, including almost all kinds of care except cosmetic surgery and any kinds of procedures or medication that have not been tested and approved (Healthcare for All California, 2007). Other important features of the bill included patients’ right to choose their own providers and an emphasis on cost containment via consolidation of existing insurance systems, streamlining of approval and provision processes, and a renewed emphasis on preventive care in all possible cases (Kuehl, 2005).

Senator Kuehl submitted SB 840 to the California legislature for its consideration because her state was struggling with inadequate health insurance coverage, inflated insurance and medical provision costs, and inconsistent standards for quality of care (Kuehl, 2005). In presenting the bill, Kuehl argued that SB 840 would address and begin to remediate these structural and systemic problems in the state’s health care and health insurance systems (Kuehl, 2005). Kuehl further contended that simply increasing coverage would not resolve the state’s underlying problems, and that a comprehensive bill addressing all aspects of the state’s healthcare systems was necessary in order to address this persistent social problem.

Clearly, if successful in its implementation phase, the bill potentially has significant implications for other states. Given that health insurance and quality care is a national problem, any state that can propose reasonable and effective solutions may be able to offer a template that can be replicated in other jurisdictions.  As of July, 2006, SB 840 had garnered the support of 43 state legislators who had signed on as co-authors (Healthcare for All, California, n.d.).  Of these, 13 coauthors were senators and 30 were assembly members (Healthcare for All, California, n.d.). When the vote came before the legislature, all but one of the Democratic senators and assembly people voted in favor of passage (Gallagher, 2006).

Arguments For and Against the Bill

Debate surrounding SB840 has been vigorous. Proponents of the bill recognized the potential for significant positive change, which they claimed was nothing short of a total realignment of California’s health system. They considered the bill to be the most effective means of addressing California’s problem-ridden system, as the bill sought to resolve those problems from a structural perspective. As Gallagher (2006) explains, the bill was viewed by supporters as a way of trimming wasteful processes and economic excesses, which did not serve Californians well:The “single payer” would be a trust fund consolidating all existing public health programs – currently accounting for nearly half of California’s total healthcare spending – and replacing premiums, co-pays and deductibles currently paid to insurance companies with a premium paid into the trust fund. (Gallagher, 2006, para. 6).  Supporters also purported that the bill would save the state more than one billion dollars in insurance-related expenditures if implemented according to the terms of the proposal.

Opponents, however, presented a different argument. Because SB840 intended to eliminate private insurers and replace them with a single insuring entity overseen by the state, some people and interest groups considered the bill to represent an effort to move towards a socialist system. Others argued that similar systems, such as those in place in England and Canada, result in inordinately long waits for treatment (Arnquist, n.d.). Finally, opponents challenged SB 840’s adherents’ arguments regarding cost containment and savings, claiming that no evidence supporter that such accomplishments would be achievable, much less within as ambitious a time frame as the supporters indicated (Arnquist, n.d.).