A bill sponsored by Senate President Pro Tem Kevin de Leon, D-Los Angeles, would have added three members to the South Coast Air Quality Management Board, which regulates air quality in Los Angeles, Riverside, San Bernardino and Orange counties.

And while that probably seems as dull as watching paint dry to nearly everyone who just read it, the measure had major implications for Republicans, local governments, business interests, environmentalists and residents of the broad district that has some of the most toxic air in the nation.

De Leon introduced the board-packing plan shortly after Republicans engineered a takeover of the board, swinging the focus from environmentalists to business interests. In December, the board disregarded SCAQMD staff recommendations and instead adopted rules on refineries backed by the oil industry, and in March it ousted the the longtime director who had been seen as anti-business.  

Representatives to the board are local city council members and county supervisors, appointed locally. De Leon’s bill would have added three seats to the 13-member board, appointed by the the Senate Rules Committee (which de Leon chairs), the Assembly speaker and the governor.

During floor debate, proponents argued that the measure was about adding diversity to the almost all-white board that had no Latinos, which defies the demographics of the heavily-Latino region. 

“Needless to say, I’m disappointed,” de Leon told CalWatchdog on Thursday. “Any time people of color are excluded from decision-making processes directly tied to their health and wellbeing, fundamental change is needed. This is a textbook example of institutional racism.”

De Leon added that Los Angeles County Supervisor Mike Antonovich, a Republican who also sits on the SCAQMD board, is termed-out and will soon be replaced by “someone far more progressive on the matter,” likely shifting the balance of power back to the environmentalists. 

However, of the current board’s ethnic composition, and the persistent lack of diversity, belies the fact that it’s largely been in Democratic, or environmentalist, control for years. De Leon did not say whether he’d reintroduce similar measures in the future.

Local control

Many opponents of the measure argued that the bill was a power grab by state policy makers at the expense of local control. And the large bloc of Democrats who either voted no or abstained suggest that the matter is not purely partisan.

“State versus local, that’s what this is about,” said Mike Madrid, a GOP strategist who helped devise the SDAQMD takeover. “It happened to be Republicans, but it was a state/local fight.”

But it was still a big win for Republicans, who are steadily slipping in their share of voter registration throughout the state, face the very real possibility of a Democratic supermajority in the Legislature next year and are not considered a consistent threat in any statewide election. For Republicans, local offices are where they can have a policy impact.

And despite several major policy victories for environmentalists, the defeat of the de Leon measure is a big win for the advocates of economic development. 

John Husing, the chief economist of the Inland Empire Economic Partnership, has been studying Southern California’s economy since 1964. His research suggests a correlation between the rise of poverty and the rise of environmental regulations in the state. Husing argues that while the policies have had a positive impact on air quality in the region, the policies are imbalanced in relation to business development and subsequently drive poverty, which affects health. 

“The whole air-quality, green initiative is having detrimental effect on moving people out of poverty and into the middle class,” Husing said of the SCAQMD region and the neighboring central valley.

Environment v. economy

Environmentalists have often said that any job loss associated with these air-quality policies would be offset by job creation in green sectors. However, Husing says statistics say that isn’t true, at least not in areas with high unemployment, like many communities in the SCAQMD.

Citing data from the California Employment Development Department and the U.S. Bureau of Labor Statistics, Husing said from 2010 to 2016 the U.S. added 836,000 manufacturing jobs, compared to California which added 42,500 — a mere 5.1 percent. While the growth rate is on pace with with the national average, it lags by over 50 percent behind the state’s share of gross state product.

Husing said that the sluggish growth of manufacturing jobs in the state is attributed to three factors: Companies leaving, companies growing beyond the state’s borders and out-of-state companies refusing to grow in the state.

“Whose affected by that? It’s not the companies,” Husing said. “They’re doing fine some place else. It’s workers whose jobs are never created. … So you’re basically cutting off routes to the middle class for those workers.”

The vote

The measure failed just before the stroke of midnight on Wednesday, 30-36. And while it is seen as a victory for Republicans, the measure was largely defeated by the 14 assemblymembers, all Democrats, who didn’t vote.

Those who didn’t vote were Luis Alejo of Watsonville, Joaquin Arambula of Fresno, Kansen Chu of San Jose, Jim Frazier of Oakley, Rich Gordon of Menlo Park, Adam Gray of Merced (who was not present), Kevin Mullin of South San Francisco and Shirley Weber of San Diego. The six who didn’t vote and live in the region were Ian Calderon of Whittier, Eduardo Garcia of Coachella, Mike Gipson of Carson, Roger Hernandez of West Covina, Chris Holden of Pasadena and Patrick O’Donnell of Long Beach.

“AB339 is designed to ensure consumer access to vital medications,” said the bill’s author, Assemblyman Rich Gordon, D-Menlo Park, on the Assembly floor June 3. “Californians with cancer, HIV/AIDS, hepatitis, multiple sclerosis, epilepsy, lupus and other serious and chronic conditions, need high-cost, specialty drugs. Today, consumers with these serious health conditions can be asked to pay as much as $6,600 for a month’s prescription for a single drug. AB339 limits what a consumer pays to $275 per 30-day prescription.”

The updated version of the bill reduces that to a $250 copay limit for a 30-day supply, with the exception of those with bronze insurance plans who would be liable to pay up to $500 for a 30-day drug supply.

“The California Health Benefits Review Program, which analyzed AB339, found that there’s a preponderance of evidence from studies that persons who face higher cost sharing for prescription drugs are less likely to maintain meaningful levels of adherence than persons who face lower cost sharing,” said Gordon. “And poor adherence to prescription drug therapy for chronic conditions is associated with higher rates of hospitalization and emergency department visits.”

Actual Effect of Cost Sharing

The actual effect of cost sharing may be more nuanced, according to the legislative analysis prepared for the Senate Health Committee’s July 15 hearing: “[T]here is some evidence that the effect of cost sharing may differ depending on the specific disease and specific specialty drug. There is a preponderance of evidence that cost sharing has stronger effects on use of health care services by low-income persons compared to high-income persons. However, this was not observed in a recent well-done observational study from Massachusetts.”

Gordon responded to the concern that his bill would increase insurance premiums by pointing out that CHBRP “found that premium increases are estimated to be only 0.3 percent for enrollees with group insurance and 0.7 percent for enrollees with individual market policies. As demonstrated by this data, the benefits of this bill increasing medication adherence far outweigh any negatives. Join me in supporting these important consumer protections, which ensure that Californians are better able to afford their prescription drugs and that drug benefit designs are not discriminatory.”

He was in fact joined by most of the Democrats in the Assembly where the bill passed, 48-30, with no other discussion. It also passed along party lines in the Senate Health Committee, 7-2, after witnesses testified to its pros and cons.

Advocacy Organizations Tout Effectiveness of Medicinal Improvements

“This is a bill about basic consumer protections,” said Sawait Seyoum, representing the advocacy organization Health Access California. “A recent study found that the average consumer has about $2,300 in liquid assets in their checking or savings account. Today we expect the average constituent to pay over half of what they have in their account for a single prescription in the first month.

Touting the effectiveness of medicinal improvements was Anne Donnelly, representing Project Inform, which advocates for those with HIV and hepatitis C.

“Over the years since we started working on HIV, people with HIV have started moving from a life expectancy of about 43 days to a normal life span, and we have ended the transmission of HIV from HIV-infected moms to their babies,” she said. “And that’s in large part due to the effectiveness of HIV drugs. Now we have an HIV drug that when used appropriately can stop new infections.

“So the hope of ending this epidemic really depends in large part on these drugs being accessible and affordable to Californians living with and at risk for HIV. We need AB339 to ensure that everybody with a serious health condition or at risk for one, not just people living with HIV but including people living with HIV, have access to the drugs they need at a price they can afford.”

Opposition to Bill Focused on Increased Premiums

But the bill might actually have the opposite effect, according to Nick Louizos, representing the California Association of Health Plans.

“Our opposition to this bill is fairly simple,” he said. “Legislatively designing health benefits increases premiums. We can legislatively create the best benefit packages in the world, but if no one can afford them, that’s pretty useless from our perspective. This has been demonstrated time and time again. The independent analysis of the introduced version of this bill does show premium increases of close to $400 million on individuals and employers.”

That analysis, which was done before the bill’s scope was reduced to include only prescription drugs providing essential health benefits, estimated it would result in a $162 million increase in employer-funded premiums in the private insurance market and a $216 million premium increase by individual purchasers.

But there may be big costs associated with the current version of the bill. The analysis states that it may include “unknown, potentially significant fiscal impact on the private health insurance market. By requiring coverage of single-tablet regimens and extended release prescription drugs, carriers lose negotiating power, leading to unknown higher drug costs.”

Louizos said that the state health benefit exchange, Covered California, has estimated “that over a three-year period, prices could increase by 3 percent. And that’s a pretty significant percentage from our perspective, considering all the cost drivers in the health care system.”

John Caldwell, representing Pharmaceutical Care Management Association, is also opposed:

“[It} appears to require the brand pharmaceuticals that have been on the market the longest, and thus most often prescribed, would get favored status,” he said. “In some cases this would be the most expensive, in some cases it may not be. So we don’t see the reasoning behind that. We think it’s just going to require redoing the [cost] tiers on an annual basis based on what is the most popular drug.

 

“Another issue: AB339 essentially forces coverage of more expensive brand HIV pharmaceuticals that are in single-tablet form when less expensive brands or generics in multi-tablet form are available. As the Assembly Appropriations Committee analysis noted, the burden of proof to refuse coverage of these drugs, according to the bill’s provisions, appears very high, essentially meaning they would have to be covered. This provision would completely eliminate any incentive for the manufacturers to negotiate on plan formularies.”

Further Discussion Encouraged

The only committee comment came from the chairman, Sen. Ed Hernandez, D-West Covina:

“I agree that there are conditions that need to be dealt with, especially very expensive ones. I believe that we need to make sure that the consumer doesn’t have to go bankrupt.

 

“But there’s something that I think we really need to really have a discussion. There’s an underlying problem, and it still deals with overall controlling costs to the health care system – and that’s the increasing cost of prescription medications. At the end of the day what’s going to happen is that you’re going to have lower payments to the consumer, but yet if you have escalating drug costs, guess what, all of those costs are going to be passed onto the consumer in the form of premium increases throughout the entire system.”

AB339 will next be considered by the Senate Appropriations Committee.

A state lawmaker wants to double the reporting threshold for political campaigns in California — allowing major donors to contribute more money and campaigns to spend more money before filing a disclosure report.

Under the Political Reform Act of 1974, as modified by later laws, candidate and independent expenditure committees must file disclosure reports after accepting $1,000 or more in a calendar year. Similarly, the state requires major donors to file campaign reports after contributing $10,000 or more in a calendar year.

Assemblyman Richard Gordon, D-Menlo Park, believes it’s time to increase those disclosure limits. Assembly Bill 594 would require candidate and independent expenditure committees to file a disclosure report after spending $2,000 or more in a calendar year. The reporting threshold for major donors would increase from $10,000 to $20,000 or more.

Political amateurs punished by campaign finance laws

Since his election to the state Assembly in 2010, Gordon has carved out a special niche in campaign finance legislation with bills to increase regulation and disclosure requirements. In 2012, Gordon authored Assembly Bill 481, which added new reporting requirements for independent expenditure and major donor committees. Last year, Gov. Jerry Brown signed Gordon’s bill, Assembly Bill 800, to give the Fair Political Practices Commission “the authority to conduct immediate audits when political campaigns are suspected of illegal activity and requires subcontractors and sub-vendors to disclose their donations.”

State-level political campaigns continue to be big budget blockbusters. According to the Sacramento Bee’s analysis of campaign finance reports, “candidates and independent groups collectively spent at least $150 million on Assembly and Senate contests statewide over the two-year election cycle.”

Why would a Democratic politician with a record of authoring campaign finance laws seemingly aid money in politics? Like his previous campaign finance proposals, Gordon’s current legislation has support from the state’s campaign watchdog, which argued that low campaign spending limits reduce political participation.

In a memo obtained by the Los Angeles Times, Erin Peth, executive director of the FPPC, said that the current campaign finance rules “can be a barrier for those individuals who wish to participate, but who will not be raising or spending large amounts of money in connection with an election.” Peth also argued, “Committee qualification thresholds have not been updated since at least 1987 and the proposed increases in the bill are intended to adjust the thresholds with the rate of inflation.”

According to the Inflation Calculator of the U.S. Bureau of Labor Statistics, when adjusted for the rising in the cost of living, $1,000 in 1987 is the equivalent of $2,066 today.

The rationale for higher limits is supported by pro-freedom campaign finance experts, who strongly defend political contributions as a protected form of political speech. Complex campaign finance laws force average citizens to seek legal counsel before engaging in political organizing.

“While serving on the FEC from 2000 to 2005, I kept a file of letters from political amateurs caught in the maw of campaign-finance laws,” Bradley Smith, a law professor and former chairman of the Federal Election Commission, wrote in 2007. “Many of these people had no lawyers; none had the least intent to corrupt any officeholder; and all thought that they were fulfilling their civic duty by their involvement in campaigns.”

Top Two Primary could lead to more low-budget upsets

A higher campaign reporting threshold also increases the chances that those amateurs turn pro. Aided by California’s Top Two primary, which was passed by state voters in 2010, unknown candidates have been able to exceed political expectations, even achieve remarkable upsets, with low-budget campaigns. With higher reporting levels, these candidates will be able to operate in the dark for longer without tipping off incumbents.

Last November, unknown community activist Patty Lopez failed to report any expenditures in the primary campaign, despite spending a few thousands dollars. That failure to report resulted in a $400 fine by the FPPC. In the general election, she went on to upset fellow Democrat, Asm. Raul Bocanegra.

“I made a few mistakes, and I paid the price for that,” Lopez said after the election. “Most of the people on my team, we’re not in the political arena.”

Lopez’s campaign finances weren’t managed by a campaign professional, just a family friend who was willing to serve as treasurer. That’s exactly the type of grassroots campaign political watchdogs hope to encourage with relaxed campaign finance regulations.

Her victory is proof that low-budget long-shots have the potential to win. Although it’s unlikely that Bocanegra would have been intimidated by a few thousands dollars of campaign spending, some political observers believe the lack of campaign finance disclosure contributed to the perception that she wasn’t a serious threat.

Opportunity for political professionals to exploit

By aiding political amateurs with higher reporting levels, state regulators also could empower creative political professionals to exploit the outcome of primary races. In multi-candidate primary elections, political professionals could spend just under $2,000 in online ads or automated calls backing a decoy candidate.

Such a scenario has already played out in this year’s special election for the 7th State Senate District. A Democrat-led political action committee, the Asian American Small Business PAC, spent $46,380 on behalf of Michaela Hertle, a Republican candidate who had dropped out of the race.

By backing the lone Republican candidate, the political action committee hoped to thwart moderate Democrat Steve Glazer, who had built his campaign strategy on appealing to Republicans and independent voters. Glazer ultimately advanced to the May run-off against fellow Democrat, Assemblywoman Susan Bonilla. But Hertle had an impact, garnering 15 percent of the vote.