Background: Whether to Increase Phone Tax to Improve Emergency Medical Services
Proposition 67 would add a surcharge on telephone calls within California to fund improvements in emergency care. Both sides of the debate are using strong language and investing millions of dollars in what they agree is a high-stakes race.
So far, the No side is raising twice as much funding as the Yes side, according to the California secretary of state’s Cal-Access Campaign Finance Activity Web site. As of June 30, opponents—mostly large phone companies like SBC—had contributed almost $6.2 million, while supporters—a coalition of emergency physicians, CMA, community clinics, and others—had gathered $3.1 million. (See MoneyWatch for update.)
According to the Field Poll released on August 15, more voters are lining up on the No side (47%) than the Yes side (37%). (See PollWatch for continuing updates.)
Current revenue sources
Telephone customers in California currently pay a monthly surcharge that supports the 911 emergency telephone system. The current surcharge rate is 0.72 percent (under current law, it can be increased up to 0.75 percent of a customer’s monthly bill for phone calls made within the state). The surcharge applies to each telephone bill a customer may receive. Revenues are used to reimburse government agencies and telephone companies for equipment and related costs associated with California’s 911 system.
Another current revenue source is funding from the Tobacco Tax and Health Protection Act, Prop. 99, enacted by the voters in 1988, which assesses a tax on cigarettes. In 2004-05 “the state is projected to receive approximately $334 million in Prop. 99 revenues,” according to the Legislative Analyst’s Office (LAO). The funds are used for a number of health-related purposes, including tobacco education and prevention efforts, tobacco-related disease research, environmental and recreation programs, and health care services for low-income people. The state currently budgets about $32 million in Prop. 99 funds to help pay for uncompensated medical care provided by physicians and community clinics.
Also, under existing law, each county is allowed to establish a Maddy Emergency Medical Services Fund made up of revenues from criminal fines and penalties to go toward uncompensated emergency care and other emergency services such as regional poison control centers. “Even with these funds,” according to the LAO, “hospitals and physicians generally are not compensated for all of the emergency and trauma care they provide.”
Under state and federal law, any person seeking emergency medical care must be provided it regardless of ability to pay. While the amount spent today on uncompensated emergency medical care is not known, physicians and hospitals reported that, in 2000-01, their cost for this care was about $540 million. The LAO says this estimate may be low “because physicians and hospitals may have underreported the cost of the care that they provided.”
Where the money would go
The LAO estimates the following annual distribution of new revenue from the Prop. 67 surcharge increase:
| Account | Estimated Revenue |
| 911 Account | $4 million |
| Emergency and Trauma First Responders Account | 19 million |
| Community Clinics Urgent Care Account | 25 million |
| Emergency and Trauma Physician Uninsured Account | 153 million |
| Emergency and Trauma Hospital Services Account | 300 million |
| Total* | $500 million |
*Total may not equal $500 million due to rounding
For the impact on existing state and local funds, the LAO estimates a transfer of about $32 million each year to the state from the county Maddy Funds to reimburse physicians for uncompensated emergency care. The measure also requires that about $32 million per year in Prop. 99 funds continue to be provided to reimburse physicians and community clinics for uncompensated medical care. As tobacco tax revenues decline with reduced tobacco consumption, this could also mean that other programs now relying on Prop. 99 revenues would have to be reduced or find alternate sources of funding. One-time and ongoing state administrative expenditures of several million dollars would generally be offset by the additional revenues generated by Prop. 67, according to the LAO.
Pro side warns of emergency care loss
The initiative is sponsored by the Coalition to Preserve Emergency Care (CPEC). Current coalition members include: California Emergency Nurses Association; California Professional Firefighters; California Chapter of the American College of Emergency Physicians; California Medical Association; and the California Primary Care Association. (The California Healthcare Association was an initial supporter, but withdrew its support in April.) Other endorsers are listed on the CPEC Web site.
“Firefighters, paramedics, doctors, and nurses agree that passage of Prop. 67 is essential to maintain emergency care in California,” write proponents in the California Official Voter Information Guide. They say Prop. 67 will provide needed funds to help:
- Keep hospital emergency rooms, trauma centers, and health clinics open and operational.
- Prevent long lines and wait times at local emergency rooms.
- Attract and retain highly skilled physicians, nurses, and medical staff at local emergency rooms and trauma centers.
- Provide critical emergency medical equipment and technology.
- Support local health clinics that treat nonemergency patients and preserve emergency rooms for real emergencies.
- Equip and train firefighters and paramedics who are often the first to respond and provide medical care in emergencies.
- Upgrade the 911 emergency telephone system.
Why the ballot initiative route?
Proponents of Prop. 67 say they had no choice but to go the initiative route. Jack Lewin, MD, executive vice president and CEO of the California Medical Association, says turning to the initiative process was “a desperate measure.” He cited earlier efforts to safeguard California’s emergency services. In one example, educational campaigns in Los Angeles County brought temporary relief to threatened emergency room cutbacks.
The legislative route was also tried, repeatedly, say proponents. Senator Gloria Romero (D-Los Angeles) proposed legislation that would impose a 5-cent-per-drink fee on wholesalers of alcoholic beverages. The fees would be used to reimburse local emergency services providers for alcohol-related emergencies. The bill, SB X1-5, did not make it out of committee. “Unfortunately,” says Romero’s legislative director, Margaret Pena, “revenue increases have been taken off the table by Republicans in the legislature, thus proposals such as this one do not receive the attention that they warrant.”
Lewin is concerned. “In the absence of universal coverage, California has a growing access-to-care crisis,” he warns. “Prop 67 is a very important band-aid. If it loses, we will have a dozen or more emergency room closures within the year, and a loss of trauma care services in California.”
What we’re seeing, says Lewin, is “the gradual evolution of a defined-contribution employer health coverage system, which will lead to higher numbers of uninsured. Employees will realize that they can’t afford health coverage for their dependents, or even themselves.” This trend, he predicts, will lead to even more crowded emergency rooms as uninsured individuals either seek primary care services, or put off primary care treatment until an illness becomes an emergency.
Prop. 67 “is imperfect,” Lewin acknowledges. “We should have put more money in the 911 allocation than we did, but that can be fixed later.”
“We believe what we’re doing is in the best interests of our patients,” says Loren Johnson, MD, an emergency physician who chairs the Coalition to Preserve Emergency Care. “What we have now is a tattered ‘safety net’ that is vulnerable to a domino effect.”
Clearly, backers are worried about the opposition. “I’ve heard that SBC allocated up to $16 million” to fight Prop. 67, says Leonard Inch of the EMS Administrators’ Association of California. “They’re involving phone companies from outside California.” Inch believes the phone companies see the California initiative as an early indicator of a national trend to raise funding for services through telephone surcharges. (Numerous calls to SBC and other phone companies were not returned.)
Opponents decry phone tax
Indeed, backers of Prop. 67 face strong opposition. The No side includes: telecommunications companies; California Chamber of Commerce; California Telephone Association; California Taxpayers’ Association; California Chapter of the National Emergency Number Association (representing 911 dispatchers); Congress of California Seniors; and California State Sheriffs’ Association, among others.
Opponents argue that Prop. 67 is really a phone tax. “With no cap on cell phones or businesses,” opponents warn in the California Official Voter Information Guide “the more you talk, the more taxes you’ll have to pay.” They assert that “more than one million seniors, many of whom live on fixed incomes, will be affected by the phone tax.” They also note that less than 1 percent of the money from Prop. 67 will go to the 911 system.
“This initiative,” says Larry McCarthy, president of the California Taxpayers’ Association, “would cost consumers $540 million per year in new phone taxes. Further, it does nothing to expand health care or reduce health care costs for consumers. Instead, the real purpose of this misleading initiative is to increase the profits of doctors and hospital corporations.”
On their Web site, www.stopthephonetax.com (link no longer valid), opponents warn that residential consumers with different local and long distance companies “will be forced to pay twice every month on their land line.” Ads posted on the site include: “If you liked the car tax, you’ll love the cell phone tax” and “Don’t sign a blank check to the health care industry.”
The California Chamber of Commerce is among Prop. 67’s detractors. Sara Lee, vice president for media relations and external affairs, says this is because there’s no cap on the phone surcharge for small businesses. “We think we should step back and look at the health care problem in California—why are costs going through the roof? We need to control costs instead of throwing money at the problem.” Like other opponents, Lee also points to the small amount of money directed toward 911 services.
Opponent websites charge that Prop. 67 lacks accountability and would “create a costly new government bureaucracy that doles out cash to hospitals and doctors, with no requirement that this windfall be used to improve health care in California.” Proponents point to language that seems to provide the necessary safeguards:
- “an eligible hospital shall use the funds…only to further the provision of hospital and medical services to emergency patients”; and
- “the administering agency may review and audit the records for accuracy.”
But opponents note that audits are not mandatory, and therefore may be delayed or avoided.
What are the problems at EDs?
Numerous researchers have studied factors contributing to emergency room overcrowding in California, and whether California EDs and trauma centers have the capacity to meet current and future demand. (Refer to the sidebar to view these studies, including the 2003 GAO report Hospital Emergency Departments, Crowded Conditions Vary among Hospitals and Communities.)
While not all researchers agree on the extent of and solutions to California’s emergency services problems, several themes stand out in the research.
- Capacity and ED closures. Various studies have analyzed emergency department closures over the past decade, and whether there is enough capacity in remaining EDs and trauma centers to meet the needs of a growing population, increasing numbers of uninsured patients, and the necessary “surge capacity” to meet spikes in demand from flu outbreaks to bioterrorism. Some researchers say that, despite some closures over the past decade, overall ED bed capacity has increased. Others say that statewide averages of bed capacity don’t tell the whole story of particular areas, such as Los Angeles County, which has been hit hard by closures at the same time the population has increased.
- Appropriate use of ED. EDs are sometimes used inappropriately by people who lack access to primary care physicians, but it is not clear to what extent this is a problem in California. Recent studies have shown that California EDs are slightly busier than their counterparts nationally, and their patients appear to be sicker. Increased California ED patient acuity has resulted in higher inpatient admission rates in recent years, although this can vary by area. In addition, some researchers have theorized that more primary care physicians are sending patients to the ED as a way of getting faster diagnoses.
- Access to on-call physician services. One of the key drivers of ED cost and service problems is an increasing lack of access to on-call physician specialists. According to a report by the California Senate Office of Research, “problems with lack of payment or underpayment associated with on-call services extend to all payers—health plans, Medi-Cal, Medicare, and safety net programs for the uninsured—and act cumulatively to reduce the willingness of physicians to provide on-call services.” Fewer specialists are willing to be on-call, and those that are willing are demanding steep stipends from emergency departments. Says CHA’s Jan Emerson, “In some cases, hospitals have to pay stipends of up to $3,000 per night” to specialists to be on-call.
- Wait times. According to a study in the Annals of Emergency Medicine, ED directors defined overcrowding, in part, as waiting more than one hour to see a physician. Patients waited an average of 56 minutes to see a physician, but 42 percent waited longer than 60 minutes. The study also found that wait times are longer in poorer neighborhoods.
- Ambulance diverts. Sometimes, hospitals request that ambulances bypass their EDs and transport patients to other, possibly further away, medical facilities. This can be an indicator of how often EDs believe they cannot safely handle additional ambulance patients. A study by the U.S. General Accounting Office (GAO) found that one in ten EDs across the nation reported being on “diversion” status for more than 20 percent of the year. According to the GAO, hospitals in areas with larger populations, areas with high recent population growth, and areas with higher-than-average percentages of people without health insurance reported higher levels of crowding.
- Access to inpatient beds. A key problem cited by many researchers is “boarding,” when patients waiting to be admitted are left in the ED (sometimes in hallways) because no inpatient bed is available. This sometimes reduces available ED beds and results in crowding and increased wait times for ED patients. A recent study in Los Angeles County revealed a downstream effect of lack of access to beds—the increasing amount of time that ambulances are out of service because paramedics are delayed at hospitals, waiting to transfer patients to empty ED gurneys.
- RN staffing shortages. The lack of registered nurses can affect ED overcrowding. With California’s new mandated nurse staffing ratios, more nurses than ever before are needed by hospitals. Even if an ED manages to have a full complement of nurses, patients cannot be moved to inpatient beds if the inpatient side of the hospital is experiencing nursing shortages. The available supply of nurses has not kept pace with demand. As California’s population ages, and more nurses retire than enter the profession, this problem will persist.
- Patients leaving before receiving care. Patients who leave EDs after triage but before receiving a medical evaluation was another indicator used by the GAO in its report on ED overcrowding. A 1991 study of the consequences at one public hospital found that 46 percent of those who left were judged to need immediate attention, and 11 percent who left were hospitalized within the next week. In 2001, six California metropolitan areas had as many as 25 percent of hospitals reporting that at least 5 percent of patients leave before evaluation.
Neither side of the debate can estimate to what extent Prop. 67 could relieve these problems in California’s EDs. Researchers have described the ED problems as complex and widely varied across locations. While the infusion of funding from Prop. 67 would help address the problem of uncompensated care, some observers have noted that many of the issues facing EDs require management and efficiency solutions, as well. Scott Allen, a reporter for the Boston Globe described in a July 8, 2004 article how the Boston Medical Center was able to make a substantial cut into ED wait times by addressing problems connected to the lack of available inpatient beds, such as rescheduling some surgeries and improving staff communication protocols.
Marcy Kates did the reporting and writing for this article.
