Eric's Blog

Los Angelenos face a lot of challenges these days, from a troubled economy to a stubborn drought. But few issues as consistently top the list of concerns among voters I talk with as fixing our broken national health care system.

The problems the system creates can be heartbreaking: There’s the family whose breadwinner is panicked over her lost job, and the paid insurance it provided. There’s the person with a chronic “pre-existing condition” who now can’t get coverage, no matter what he can pay. There’s the couple facing bankruptcy, struggling, even with coverage, to pay off the costs of treating a single serious illness. There are even the would-be entrepreneurs who don’t dare quit their day job to pursue their dream because they can’t risk going without coverage for themselves or their family.

Yes, the system provides some of the world’s best quality of care for those positioned to take advantage of it. But some 46 million Americans, about one in eight of us, have no insurance at all. They delay care until a crisis hits, then jam our overwhelmed emergency rooms seeking last-minute help.

Even among the insured, many have less coverage than they would need to get through even a moderately serious situation without financial devastation. Those who file claims often face daunting paperwork, and the possibility their coverage could be revoked. And worse yet, the system rewards the wrong things, with few incentives for preventive care, and too many for excessive tests and expensive procedures.

President Obama has pledged to fix the system, laying out a series of first principles but letting Congress hash through the details of a major reform bill. There is some substantial movement toward a landmark bill, as most of the major players have committed to negotiating a workable compromise.

That’s good news. But we can’t afford to delay serious reform. It’s too important to the long-term health of the nation’s economy, its business competitiveness, its entrepreneurial spirit and most importantly, its human spirit. We can’t leave millions of our people to be needlessly ground down by the vagaries and costs of a badly broken system.

That’s why I introduced a resolution before the Los Angeles City Council last week that would put the council and mayor on record as supporting President Obama’s health-care reform principles, and to direct our representatives to push for those principles as part of the city’s federal legislative program.

Few cities would benefit more than Los Angeles from a reformed system that covers as many Americans as possible, and frees us to deal with the many other challenges this nation must fix.

As many of you know, L.A. is facing fiscal problems of unprecedented magnitudes and in planning our budget we faced a shortfall of $530 million. Several weeks ago in this space, I set out some principles that I intended to use in my work to build a balanced budget. They included sharing sacrifices without compromising our values, protecting our gains in public safety, and treating our employees humanely. I also noted that, because the majority of our budget is spent on payroll, the hard reality is that this cost must come down one way or another.

We have been making progress in this area through the Mayor’s negotiations with the leaders of the Coalition of City Unions (representing about 22,000 of the city’s 40,000 workers). In the spirit of shared sacrifice, Coalition Union members would defer any cost of living adjustment increases (COLA’s) to their salaries for the next 2 years. They would also be increasing their payroll contribution to the City pension fund, which will allow us to implement an early retirement incentive plan without increasing our pension fund liabilities. If approved by the members, these measures will save approximately $200 million and allow the City to avoid the vast majority of furloughs and layoffs at a time when the regional unemployment rate threatens to top 12%.

This agreement doesn’t quite get us over the finish line in terms of getting our budget deficit to zero, but combined with other cuts that have already been approved, our budget shortfall has shrunk from $530 million to $130 million. We are still in negotiations with other city unions, and I’m hopeful that they will follow the example set by the Coalition Union members to help us eliminate this remaining shortfall.

You may have heard that the early retirement program will put a greater strain on an already overburdened pension fund. I too am concerned about additional liabilities in our pension fund, and that’s why we are taking a data-driven approach. This agreement was based on two previous actuarial studies in addition to hundreds of hours of research and discussion. Further, we are awaiting a third actuarial report that we expect to receive in the next three weeks. This agreement will not take effect unless the third report supports the previous conclusions.

As I’ve said before, transparency in our governing process is important to me. This agreement has not received final approval, and will not receive final approval until the study been presented to the public and until 30 days for public comment has elapsed. The study will by posted on LACity.org when it is complete, and I encourage everyone to take a look.

Everyone should also be aware that there is currently a $600 million long-term shortfall in the city’s pension fund, which is largely a result of the significant stock market losses that have occurred in the past year. While this shortfall has no impact on this year’s budget, it will rapidly become a problem if we do nothing. However, we are actively working to address this issue with the implementation of tiered benefits for future employees. Stay tuned, as it will continue to be discussed in the coming months.