captioning by vitac, underwritten by fireman's fund the u.s. supreme court ruling on the afford able care act means california's reform on the way is on the right track. >> the era of late budgets is over and i believe that if we continue on this path, this era of unending deficits will be over. >> california has an on time budget, but it is not without some pain, including furloughs for thousands of state workers and the elimination of the healthy families program. education funding remains intact if the voters approve the governor's tax plan in november. state funding to keep all state

parks open past the original july 1st deadline. the need for a long-term funding solution remains. coming up next. good evening. i'm belva davis. welcome to "this week in northern california." joining me tonight on the panel are, paul rogers, san jose news environment writer, and josh

richm richman. we start with a look at thursday's highly anticipated ruling by the u.s. supreme court upholding key provisions of the affordable care act. how does the decision impact california where reform is already under way? >> we love obama care! >> the constitution does not allow a mandate. >> the ruling supplies many who had anticipated the court might strike down the individual mandate requiring most americans to purchase coverage. it came as welcome news to many health care officials here in california, home to an estimated 7 million uninsured. >> we have to brush your teeth. >> the state has already passed legislation to guarantee children with pre-existing medical conditions and young adults to stay on the parents policy until the age of 26. both provisions of federal reform.

and the state has already used $40 million in federal funding to develop the health benefit exchange program. a centerpiece the 2010 legislation. the exchange will create a new online marketplace of affordable health plans for consumers to choose from to take effect in 2014. some may qualify for subsidies. >> in order for you to be eligible for medi-cal, these are the requirements. >> the ruling did strike down the requirement to expand medicaid for low-income individuals, california has the option to expand medi-cal. the program for the poor and disabled. the state could receive about $50 billion from the federal government and about 1.5 million people are expected to be newly covered by the program. but california is about to transfer nearly 900,000 children to medi-cal because of the elimination of the healthy families program in the state

budget. adding strain to that system. and to hear more about the impact of the ruling on california, diana dooley, california secretary of health and human services joins us from sacramento. welcome secretary dooley. >> thank you, belva. >> your agency is responsible for implementing the health care reform. what comes next? >> we have been on the path for healthcare reform for a long time in california. we had many starts and stops in 2010. we began to implement the affordable care act. we have been meeting for the last year and a half since the exchange started in january of 2011. we have many pieces in place, but we have much more to do. we have been operating at full speed to this point and now we have to find a gear higher than that and move into warp speed to get all the work done that we

must in order to have the coverage that people need in january of 2014. >> so you have been operating on faith that this would work out? and so far it looks like things are going well for california. could you explain the key point of debate and that was over the mandate. what exactly is it, if it can be explained quickly and is it all that you -- this is all you could have possibly expected, i guess, from the courts? >> sure. it is what we hoped for. the idea of an individual mandate coupled with the subsidy as the federal government will provide to make it affordable to people is like a carrot and a stick. it is mirrored directly after the romney plan in massachusetts that has also a mandate and also a subsidy.

we need to incentivize people to get the care. most people want the security that comes from having health insurance. for many middle income families, they cannot afford it. up to $90,000 in annual income, which is 400% of the federal poverty level. they will be eligible to purchase insurance. if they choose not to purchase insurance, they will pay a penalty that the court called a tax for their choice not to buy insurance. that will go to help underwrite the cost of the care when they need it. many people think that they won't need care, but then they find themselves in an emergency room and the cost of that care is then born by everyone else who is covered by an insurance plan that they pay for themselves or their employers provide for them. >> that no free riders idea is a

conservative idea going back. is there any idea or estimate of how many people in california might, in fact, not be subject to that penalty tax? >> it actually is quite a conservative idea. it is one that republicans have embraced in the past, the individual mandate. they were advocates of the individual mandate in california in 2007 when governor schwarzenegger proposed it. we don't have any estimates in california. we will do all that we can to communicate with the public in ways that will persuade them that the security that comes from having insurance is better than being one accident or illness away from bankruptcy. in massachusetts, which is our best example, less than 2% of the people have remained uninsured. that would be a very fine goal for us in california. >> madam secretary, i think

there is a lot of folks out there who have paid very little attention to this frankly in the last year and a half. they are overwhelmed by the complexity. they are just catching up. the questions i see coming up on the internet and talk radio and thanks like that. first, how much is the penalty if you don't have insurance? second, are illegal immigrants covered by the program? finally, is it likely that many private employers are going to drop health care because the government is providing it now? >> the first question is the penalty ranges from $600 to $1,000. depending on the circumstances. the reason that we in california thought we might be able to implement this anyway if the mandate was stricken, it is a weak mandate. the cost of paying the penalty is less than it would be to buy the insurance. the combination of the subsidy and pricing we hope to be able

to get for the insurance will make it attractive to them. the question of the illegal immigrants, they are expressly excluded. they are excluded from the medicaid expansion and the opportunity to buy on the exchange. those who are undocumented must remain in the private unsubsidized market if they have insurance at all. the third question? you have to remind me. >> private employers. >> oh, there has been a significant drop in small employer coverage just because of the affect of the great recession. the choices that will be available, we are working with the businesses in the area and many small representatives of small employers to work cooperatively with them. one of the advantages the exchange will offer for their employees is the choice between

plans. most small employers, because of the cost of insurance, have to have all of their employees in one plan. if they choose to have their insurance through the exchange, those employees will be able to have a choice of plans by purchasing on the exchange. the employers will pay a price, but that cost to the employers may be less than it would be to continue the coverage. so i think we will work cooperatively with the business community to make it a win-win for them and for their employees as we move forward. >> what about the often said charge that cost will go up because of this? >> we really think that this can help us control the skyrocketing cost. premiums increase because health care costs increase. there are many provisions of the affordable care act that will allow us to change the incentive structure so that people are

paying for value instead of volume and a fee for service system, as we have primarily. you get paid for procedures and visits and diagnostic examinations. if we can move to a value-based pricing system, which is incentivized by the affordable care act, we will be able to control costs and that will be able to control the premiums. i think that we won't go backwards. i think holding down the rate of inflation will be a significant benefit. that is our goal and that is what we hope to do. >> who will qualify for subsidies? what is the criteria? >> the criteria is income based and it is a percentage of the federal poverty calculation. from 200% to 400%. actually 138% to 400% of

poverty. up to 138%, which is about $30,000 for a family of four. they will be eligible for the state program medi-cal. above that, between 138% or to put it in numbers, $30,000 a year to $92,000 a year, there will be a sliding scale of subsidies that will help pay for the insurance that people will be able to buy. there will be a range of products that will be offered through the health benefit exchange. the benefit exchange will be a place where our goal is to make buying insurance as easy as ordering a book on amazon. >> what's the current status of that? this has to go live next year. some states haven't started it yet. i know california has been a leader in getting this going. how much of that platform is built? >> we are well on our way.

we have sort of three main things we have to do. we have to have a system for people to enroll in the programs. we have recently awarded a contract. we had a very robust bidding process. we awarded a contract to an information technology company that will build an i.t. system for us. a web site and web capability that will be used by county programs to enroll people both in medi-cal and in the insurance product. we are building call centers that will be available to route information and make what we hope to be a first-class consumer experience and we are working with the health plans to design the products and determine to establish the criteria that health plans will have to meet in order to sell the product on the exchange. our goal is to have this simple

straight forward that people who need to buy insurance will be able to know what they are getting and what it will cost and which doctors and hospitals will be in the network for each plan that they have the option to buy. >> secretary, we really appreciate you joining us for this explanation on something that california seems to be ahead of the curve on. thank you so much. >> you are very welcome. >> the next step we have to worry about is money and budget whether it is health care or anything else to keep the state going. we know about the shift in the healthy families which will be absorbed into healthy families. josh, what else? the democrats are crowing we have a budget on time. >> yeah. we have a budget. we'll see how long it lasts. i think the critics of the budget are saying this is a budget that is predicated on passing the governor's tax

measure this november. it is predicated on what still may be some rosy revenue estimates and rosy, perhaps, overestimates of how much the state will get from closing down the redevelopment authorities and seizing assets. but, what we ended up with this week is that the governor used his line item veto authority at the last minute to strike about $130 million in spending out of the $91.3 billion general fund budget. we ended up with a reserve fund of about $948 million, which is close to the $1 billion he wanted from the get go. that is a mission accomplished for governor brown. cuts to the poor are at the core of the budget, as they have been over the last couple of years. there were reforms to cal-works. the welfare to work program and the elimination of the healthy families program which we talked about which will transfer about 880,000 children into the

medi-cal program. that is where the vitriol came this week. republicans were quick to blame democrats of abandoning low-income children. although republicans have stood in the way of revenue adjustments to pay for that program. they felt the cuts should have been elsewhere. they also derided the governor and democratic peers for not addressing pension reform in the budget and certain other things. >> what about the home health care workers? that was a hot item that you unions were on the street over that one. >> they ended up preserving a lot of what they wanted to preserve. it is not all good news. there were cal grants and they receive a cut in awards. loss in additional child care. some of the home health care did get saved from the knife at the last minute. one of the other things that

people have been complaining about is that buried in one of the budget bills was something to move the governor's tax initiative, which is actually a state constitutional amendment to the top of the ballot so it appears first among the blizzard of ballot measures that people will be called upon to decide this november. there is a lawsuit by mol molly monger and the others who are behind the tax initiative saying this is not fair that the governor got his allies in the legislature to bump his to the top. >> there are some studies to show if you have a long list of stuff to vote on and the one at the top, if it involves money, it may be worth another point or two because as voters go down the list, they get tired of spending money. >> a pint or two will not save this. >> this is in the mid-60s a month ago.

now it is pulling at 52. the howard jarvus people have not run a no campaign yet. how in the world will jerry brown pass this thing? >> you know as well as i do that the general rule of thumb is if you are not starting up somewhere beyond 60 points as you are going into the final stretch before election day, you are probably not going to pass. with this hovering on the margin there without a no campaign yet, it will be an uphill battle. especially when there is criticism for not addressing public pensions and high speed rail is moving. >> what can he do short of a huge sweeping public pension deal? >> i think the strategy is going to be to pound home the idea that all of this revenue goes to education in some way. it goes 89% to k-12 education and 11% to community colleges. these are things people don't want to see cut. if the governor and his allies

can make a compelling case this say school-maggedon on the day after election day, that is their best hope. >> they would say there is no cuts to higher education at this point. >> the tax measure passes, yes. >> he has his wide window with the group of people. college students number one. do you think that will play a role if he can get this passed? >> absolutely. if you look at what assembly speaker peretz said upon the signing. it is eliminating the decades old structural deficit. that is what we like to talk about. protecting public education and ensuring the students will not face another year of fee hikes. education is at the core of all of this and rightly so since it constitutes such a segment on

education. you know, to some extent, this budget says -- it isolates k-12 and community college off to the side. if you want to pay for this, you must pass this tax increase. we will see if people swallow that. >> this is the first budget where we had a democratic majority in the legislature that could pass a budget. >> without any revenue increases, right. they are now free to pass by a simple majority. >> they still need the 2/3 to raise taxes. >> paul, those people who you will report upon, those crazy about the state parks, got a little bit of a break in the budget process. >> they did, actually. we have been hearing since may of last year when governor brown was going to close 70 of the 280 state parks in california that basically, one-quarter of the state park systems will close and the systems on the tourism

brochures. it is one of the parts of state government that everybody loves. it is hard to find anybody who gets mad at park rangers. what happened was as part of the budget deal which brown signed on wednesday night, noreen evans from the north bay found $41 million in other pots of money. water treatment money, energy pots, road pots and put that into state parks. governor brown line-item vetoed $79 million of that out. that $10 million that he kept in combined with 40 million deals. everybody from the supermarket which gave money to the big sur land trust to the city of calusa kicked in. what we found yesterday, 40 of the 70 have deals to keep them

open for another year. 25 of the 70 are in negotiations and probably will be saved. five are what we are calling orphan parks which don't have deals. unless someone steps forward by later this summer, those parks could close. >> can you specify who you want to give money to out of the five? >> the california state parks foundation, which is a bay area-based non-profit is coordinating this. the five parks are the state recreation area and the state beach and gray whale cove and providence mountain recreation area in the desert and the california mining and mineral museum. so bottom line, this looks pretty good compared to a year ago. the trouble is all of these deals nearly all of them, are only one year. most of the donations were to keep them open for one more year. we could be back in the situation unless governor brown and the legislature find a much

more supportable funding source. >> if the governor came out at the beginning and said i want to privatize or decentralize the parks, it may not have been all that palatable to people. instead of letting this close, was this a back door way of doing that? >> the whole thing was a political train wreck. what brown was trying to do was find a program the middle class loved. under schwarzenegger, we kept hearing the state is broke. the middle class was not feeling the pain. they were not believing there was a problem. if you don't believe there is a problem, you will not vote for more taxes. brown and his allies were looking for programs the public would see. the whole thing blew up in their face when journalists said this is $15 million. you will lose this much money in

tourism. if you have one fire in the park from poachers or trespassers or vandalism, you will not save the deficit you are trying to get. it is an idea that won't save you any money. all of the saviors came forward. i'm saving $10 million, so i saved the parks. it is something that even during the great depression, no governor has ever closed a state park in california history. >> did we save the rangers to go with them? >> that is a good point. there are 700 open jobs of people who retired and people who have gone on to other jobs. the number of rangers is the same as it was 25 years ago. although the number of visitors has gone up. there are fewer. there are fewer camp fire programs available. it means that a lot of the parks

system has been building up a huge maintenance backlog. $1.2 million in crumbling roads. the voters had a chance in november of 2010 to raise their own registration fee for $18 a year. that would have doubled the parks budget. they were no mood. they voted no. now the people don't really have a clear idea on where to go next. brown has basically, as one legislator told me, has taken the parks out of the icu, but they are still in the hospital. >> that's all for tonight. thank you both, paul and josh. visit our web site to see past segments and subscribe to our podcast and share your thoughts about the program. we will be off next week for the independence day holiday. i'm belva davis.

thank you for watching. good night.