By Miki Liviakis
Copyright © 2004 by University of the McGeorge School of Law
JD, McGeorge School of Law, University of the Pacific
to be conferred December 2006
B.A., Political Science, Pepperdine University, 2003
Proposition 67, the 911 Emergency and Trauma Care Act of 2004, increases funding for the reimbursement of physicians, hospitals, and other emergency practitioners for uncompensated emergency medical care. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004). It accomplishes this by imposing a 3 percent surcharge, in addition to the existing surcharge, on telephone calls made within California. Id. The 3 percent surcharge would not apply to calls made outside of California. The surcharge paid by residential customers would be limited to 50 cents per month to each telephone bill they receive. Residential service users of lifeline telephone service are not subject to the surcharge. The 50 cents per month limit would not apply to cellular telephone services or to business telephone lines. Id. Revenues from the increased surcharge would be deposited into a new 911 Emergency and Trauma Care Fund, and be allocated to the following new accounts: Emergency and Trauma Hospital Services Account, Emergency and Trauma Physician Uninsured Account, Community Clinics Urgent Care Account, Emergency and Trauma First Responders Account, and State Emergency Telephone Number Account. These accounts would be administered by various state agencies. Id. In total, according to the Legislative Analyst’s Office, Proposition 67 would increase state revenues approximately $550 million annually. Legislative Analyst’s Office, Proposition 67, The Emergency and Trauma Care Act, http://www.lao.ca.gov/ballot/2003/030933.pdf (accessed Sept. 9, 2004). These revenues would probably grow in future years. Id.
“Under state and federal law, all persons seeking emergency care must be provided the care, regardless of their ability to pay.” Id. Emergency care is the only source of guaranteed outpatient care for millions of underinsured and uninsured Californians. Unfortunately, California emergency centers may not be able to continue to meet the demand for these services. As emergency resources are lost, a wide spectrum of citizens are affected. Many citizens that rely on emergency clinics for regular health care will have nowhere to turn. Also, in times of crisis, citizens will face dangerously long access times, leading to a higher probability of death or health complications.
Proposition 67 is designed to aid hospitals and physicians who provide emergency care, and are not fully compensated for the services provided. Physicians and hospitals reported that, in 2000-01, their cost for this care was approximately $540 million. Legislative Analyst’s Office, Proposition 67, The Emergency and Trauma Care Act, http://www.ss.ca.gov/elections/bp_nov04/prop_67_entire.pdf (accessed Sept. 5, 2004). The goal of Proposition 67 is to keep emergency medical care readily available. This can be achieved by keeping local hospital emergency rooms and trauma centers open in communities throughout California.
A. Existing Law
Telephone service customers in California currently pay a monthly surcharge that supports the State’s 911 emergency telephone number system. Id. California law mandates that the surcharge rate may be set up to 0.75 percent of the customer’s monthly bill for telephone services for calls made within the state. Id. The surcharge applies to each separate telephone bill a customer may receive. The State has currently set the surcharge rate a 0.72 percent. Id.
Revenues from the surcharge are deposited into the State Emergency Telephone Number Account (911 Account), which is available for expenditure upon appropriation by the Legislature. Id. The revenues are used to reimburse government agencies and telephone companies for equipment and related costs associated with California’s 911 emergency telephone number system. Due to an increase in the number of cellular phone accounts, the 911 Account has maintained a reserve that has ranged from $15 million to $80 million in recent years. Id. The revenue received from the surcharge in 2002-03, was $139 million. The Department of General Services and the Board of Equalization are responsible for administering the 911 Account. Id.
Hospitals are responsible for establishing their own billing policies, which includes those patients that lack insurance coverage. However, many of these uninsured patients lack the ability to compensate the hospital for the services provided to them. This trend has caused a serious financial crisis for emergency hospitals and clinics, to which state and local governments have provided only limited relief. In 2001-02, the State provided $30 million, and $20 million in 2002-03. Id. This funding, however, has been eliminated from the state budget. In addition, sparse funding has been derived from both the Maddy Emergency Services Fund and Proposition 99. Legislative Analyst’s Office, Proposition 67, The Emergency and Trauma Care Act, http://www.ss.ca.gov/elections/bp_nov04/prop_67_entire.pdf (accessed Sept. 5, 2004).
2. Proposition 99
The Tobacco Tax and Health Protection Act (Proposition 99, enacted by the voters in 1988) assessed a $0.25 per pack tax on tobacco products. Cal Prop. 99, § 4 (1988). In 2004-05, the State is expected to collect approximately $334 million in Proposition 99 revenues. California Budget Project, What Would Proposition 67, The Emergency and Trauma Care Act, Mean For California?, http://www.cbp.org/2004/0408prop67.pdf (accessed Sept. 6, 2004). However, the State only assigns roughly $32 million in Proposition 99 funds to help uncompensated doctors and hospitals who provide emergency medical care. Id. Moreover, the number of tobacco users is declining. Currently, the state uses Proposition 99 funding for a number of health-related purposes, including tobacco education and prevention efforts, tobacco-related disease research, environmental protection and recreational resource programs, and health care services for low-income uninsured persons.
3. The Maddy Emergency Medical Services Fund
The Maddy Emergency Medical Services Fund is subsidized with specific criminal fines and penalties. Cal. Health & Safety Code, § 1797.98(a). Approximately 58 percent of revenues in the fund are used to reimburse physicians for uncompensated emergency and trauma care, 17 percent is used for other emergency medical services, 25 percent is used to reimburse hospitals for emergency services, and 10 percent may be used by counties to administer the fund. Id. Annually, revenues from the Maddy Emergency Medical Services Fund have only covered a small fraction of the cost born by doctors and hospitals. Id.
B. The Effects of Proposition 67
Proposition 67 would increase the monthly surcharge that California telephone customers currently pay from 0.72 percent to roughly 3.75 percent. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004). Revenues from the higher surcharge would result in a revenue increase from $139 million (2002-03) to an expected $550 million (2004-2005). Id.
In response to the increasing costs of emergency medical care, Proposition 67 allocates $550 million dollars in expected revenue as follows:
A. 0.75 percent for technological and service improvements to the basic emergency telephone number system. This account will be administered by the Department of General Services.
B. 3.75 percent for training and related equipment for firefighters, paramedics, and other first responders. This account will be administered by the Office of State Fire Marshall.
C. 5 percent for nonprofit clinics providing urgent care services to the uninsured. This account will be administered by the Office of Statewide Health Planning and Development.
D. 30.5 percent for reimbursement claims filed by physicians who are not employed by hospitals, and who provide uncompensated emergency services to patients. This account will be administered by the Department of Health Services.
E. 60 percent for hospitals providing uncompensated emergency and trauma care. This account will also be administered by the Department of Health Services. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004).
Proposition 67 requires that the State continue to allocate approximately $32 million in Proposition 99 funds to reimburse doctors and hospitals for uncompensated medical care. Id. Proposition 67 also requires that each county establish a Maddy Fund, whereby a portion of the funds would be transferred to the State for the reimbursement of each county’s emergency physicians. Counties would consequently convey much of their authority over the funds to the State. Where a county determines that it will require immediate access to its revenues raised in the Maddy Fund, it may apply to the State for permission to allocate certain funds locally without state government intervention. Id.
Proposition 67 includes a severability clause which seeks to preserve and uphold the
remaining valid provisions of the Act in the event that any of the provisions are considered invalid or unconstitutional. People’s Advoc., Inc. v. Super. Ct., 181 Cal. App. 316, 319 (1986). The initiative is presumed constitutional, and the severability clause is thought to strengthen this presumption. Id. The severability clause of Proposition 67 states in part:
“If any provision of this act, or part thereof, is for any reason held to be invalid or unconstitutional, the remaining provisions shall not be affected, but shall remain in full force and effect, and to this end the provisions of this act are severable. In addition, the provisions of this act are intended to be in addition to and not in conflict with any other initiative measure that may be adopted by the people at the same election, and the provisions of this act shall be interpreted and construed so as to avoid conflicts with any such measure whenever possible.” California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004).
A severability clause, however, is not determinative by itself. People’s Advoc. 181 Cal. App., at 319. In order to sever the valid portions from those that are held invalid, several tests must be satisfied. If the Act contains invalid or unconstitutional portions which are not severable from the valid portions, then the entire Act is held void. Id. at 330. For an Act to be severable: a) the language must be mechanically separable by sentence, paragraph, phrase, or clause when necessary, b) once separated, the remaining portions must be functional and capable of independent application, without reference or application of the severed and invalid portions, and c) the remaining valid portions must have garnered sufficient attention from the electorate, so as to say with confidence, that the electorate would have adopted the remaining valid portions had the electorate foreseen the severance. Gerken v. FPPC, 6 Cal. 4th 707, 714-718 (1993).
Proposition 67 is well written, and probably meets the requirements of severability. Generally, the provisions are arranged in a way that would allow them to be mechanically separated. Depending on the portion of the Act to be severed, the remaining portion may or may not be capable of independent application. Most portions of the document are clearly self-sufficient, and may be functional without reliance on other possible invalid portions, although section 2.2 may raise a severability issue. Section 2.2 specifically allocates moneys to various funds on a percentage basis to the prescribed distribution bodies. It is not clear whether the remaining portions of the proposition would remain operable if section 2.2 of Proposition 67 were invalidated. Sections (6.2-7.1) of the proposition clearly have a direct relationship to this section. Sections (6.2-7.1) state how the various administrative bodies referred to in Section 2.2 are to be constituted and managed. Whether or not the relationship is one of profound reliance would be a judicial determination. However, since this particular section, specifically section 2.2, does not seem to raise any constitutional issues, it is unlikely to be stricken from the text of the initiative. The judicial determination of severability will depend on whether certain remaining portions of the document would have been approved by the electorate absent any stricken provision. Id. Whether the remaining portions would garner sufficient attention from the electorate if Section 2.2 were invalidated, would depend on how Proposition 67 is largely perceived by the electorate. Section 2.2 is less comparably less noticeable than other sections of the measure which have drawn more public attention; the electorate would probably have still adopted the remaining portions of the measure.
B. Future Changes
Proposition 67 specifies that the proposed 911 Emergency and Trauma Care Act may only be amended by the Legislature to further the purposes of the initiative, and that any legislated changes must be approved by a four-fifths vote of the Legislature. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004).
Proposition 67 funds would not be subject to the regular budget process. All revenues would be automatically appropriated. California Budget Project, What Would Proposition 67, The Emergency and Trauma Care Act, Mean For California?, http://www.cbp.org/2004/0408prop67.pdf (accessed Sept. 6, 2004). As a result, resources would not be subject to appropriation by the Legislature through the normal budget process. Id. Consequently, it would be complicated to make adjustments to the allocation of funds even if program needs and priorities change. Id. To adjust the allocation percentages subsequent to voter approval, a four-fifths vote of the Legislature would be required. Id.
Portions of an Act regulating the Legislature's internal rules, its selection of officers and employees, and the selection and powers of its committees are invalid as violative of the California Constitution. People’s Advoc., Inc. v. Super. Ct., Ct., 181 Cal. App. 3d 316, 319 (1986). At first glance, Proposition 67 seems to be in conflict with Cal. Const., art. IV, § 12, which provides that “the Legislature's power of appropriation includes the power to withhold appropriations, and neither an executive administrative agency nor a court has the power to require the Legislature to appropriate money.” Cal. Const., art. IV, § 12. The California Constitution also provides that “the initiative is the power of the electors to propose statutes and amendments to the Constitution and to adopt or reject them.” Cal. Const., art. II, § 8. However, the question is whether Proposition 67 deals with funds that are within the control of the California Legislature, and if so, whether the Legislature’s ability to appropriate funds is affected. In this case, Proposition 67 is created in harmony with Cal. Const., art II, § 8, and its portions pertaining to the administration of funds act as amendments, and not revisions to the State’s Constitution. Proposition 67 creates its own revenues and earmarks their destination, a practice that is acceptable given that the funds are not combined with funds of the General Fund. Moreover, the Legislature does not lose the ability to appropriate funds to the accounts provided for under Proposition 67, nor does it lose the ability to appropriate funds to other sources as they determine. Due to the fact that all funds are automatically appropriated and not subject to the budget process, a strict directive of funds is permissible. In addition, this issue is distinguishable from the issues raised in People’s Advoc., Inc. v. Super, where a proposition infringed on the Legislature’s exclusive power over its own affairs, and its power to appropriate money for the support of the government. People’s Advoc., Inc. v. Super. Ct., Ct., 181 Cal. App. 3d 316, 319 (1986). In contrast, Proposition 67 does not raise these same issues.
A. Federal Constitution
Proposition 67 does not raise any federal constitutional issues.
B. State Constitution
1. Single Subject Rule
Under the California Constitution, “an initiative measure embracing more than one subject may not be submitted to the electors or have any effect.” Cal. Const., art. II, § 8(d). “An initiative measure does not violate the single-subject requirement if, despite its varied collateral effects, all of its parts are ‘reasonably germane’ to each other, and to the general purpose or object of the initiative.” Raven v. Deukmejian, 52 Cal.3d 336, 346 (1990). The single subject rule deters the inclusion of numerous provisions which are unrelated to the central theme of the proposition, and which might otherwise go unnoticed by the electorate. Senate v. Jones, 21 Cal. 4th 1142 (1999).
Proposition 67 probably does not violate the Single Subject rule. All of its parts are reasonably germane to each other and to the general purpose of the initiative, which is to improve the quality and availability of emergency services. In particular, Proposition 67 seeks to “create an ongoing fund to improve the 911 emergency telephone system; to improve the training and equipment of firefighters and paramedics; and to improve, and to preserve and expand access to, trauma and emergency medical care.” California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004).
A potential, although unlikely, single-subject issue may arise as to the relatedness of the infrastructure required by 911 telephone operators compared to the uncompensated emergency services which doctors, hospitals, and clinics provide. Potentially these two areas addressed by the measure could be viewed as distinctly separate subjects. More likely though, the two subjects will be viewed as reasonably germane to the general purpose of Proposition 67.
2. Constitutional Amendment or Constitutional Revision
Although the electors may amend the Constitution by initiative, a revision of the Constitution may be accomplished only by convening a constitutional convention and obtaining popular ratification, or by legislative submission of the measure to the voters. Cal. Const., art. XVIII, § 3. Determining whether the proposition effects a revision or an amendment requires a judicial examination of the quantitative and qualitative effects of the measure on the constitution. Raven, 52 Cal.3d at 350.
Proposition 67 amends, repeals, and adds sections to the Health and Safety Code, the Revenue and Taxation Code, and the Welfare and Institutions Code. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004). Although there are multiple changes imposed by the measure, the scope and effect of the provisions are fairly limited. Therefore, because the changes are not widespread, and they do not affect numerous constitutional articles, the quantitative effect of the proposition is probably reasonable. The qualitative effect of the proposition is probably minimal because the basic government plan is essentially unaffected. Raven, 52 Cal.3d at 351-352. Proposition 67 most likely qualifies as a constitutional amendment, and not a constitutional revision.
The Legislature may not send the Governor a budget bill that would appropriate from the General Fund a total amount that would exceed the revenues for the General Fund for that year. Cal. Const., art. IV, § 12. As to Proposition 67, the measure does not directly affect the Legislature’s capacity to submit a budget bill pursuant to the California Constitution. Proposition 67 revenues are not combined with revenues in the General Fund and they are not derived from the General Fund, to which the Legislature maintains control. California Secretary of the State, California Official Voter Information Guide, Analysis of Proposition 67 (2004). Instead, revenues are derived from a telephone usage surcharge, and those funds are allocated to specific accounts not connected to the General Fund. Id. Therefore, Proposition 67, although it can only be changed by certain prescribed methods, does not seem to conflict with the budget scheme that is stated in the California Constitution.
Proponents of Proposition 67 believe that the California Emergency system is in critical condition. “The hospital industry, citing seismic retrofit requirements, managed care and shrinking reimbursements, has predicted that up to 150 of the State’s hospitals will close in the next few years.” Office of the Attorney General, May 9, 2001, “Financial Problems Most Common Reason Cited for Recent California Hospital Closures” http://www.saveemergencycare.org/main.html (accessed Sept. 1, 2004). Emergency divisions are closing at an alarming rate because doctors and hospitals continue to provide services without compensation, and without a change in the current revenue structure the trend will continue. “Patients often wait for hours in overcrowded emergency rooms for treatment. Critically ill and injured patients are being sent from one hospital to another because emergency rooms are full.” Coalition to Preserve Emergency Medical Care, http://www.cmanet.org/publicdoc.cfm/688/207/PRESS/271 (accessed Sept. 8, 2004). Proponents of Proposition 67 are largely made up of doctors, nurses, paramedics, firefighters, and patients. Id. Emergency services are far too valuable of a resource not to protect. Id. Emergency medical care transcends the divisions of class because whether an individual has health insurance and can pay for health care or not, that individual benefits from an adequate supply of emergency medical services. Id. However, for many Californians, emergency rooms offer their only viable source of healthcare. In fact, in the last ten years over 60 hospital emergency rooms and trauma centers have closed. Save Emergency Care, Proposition 67, The Emergency and Trauma Care Act, http://www.saveemergencycare.org/main.html (accessed Sept. 7, 2004). If these facilities are no longer available children, families, and seniors will lose access to doctors, nurses, critical medical equipment, medicines, and essential emergency care. Id. Fewer hospitals and emergency rooms mean longer ambulance rides for victims who experience medical emergencies. Id. “For many emergency patients, rapid-response treatment is the difference between life and death.” Id. If hospitals continue to close, these citizens will be left with no local healthcare available. California Budget Project, What Would Proposition 67, The Emergency and Trauma Care Act, Mean For California?, http://www.cbp.org/2004/0408prop67.pdf (accessed Sept. 6, 2004).
Proposition 67 imposes a reasonable tax of 3 percent on in state phone services, with
a 50 cent charge being the highest any residential customer will ever be charged in
a single month. The 50 cent limit would not apply to businesses and cell phone uses,
however, a 3 percent tax on the average cell phone bill of 50 dollars a month would
result in a roughly $1.50 charge. Given the benefits that all Californians will receive
from the additional revenues generated, the tax is quite modest. Legislative Analyst’s
Office, Proposition 67, The Emergency and Trauma Care Act, http://www.ss.ca.gov/elections/bp_nov04/prop_67_entire.pdf (accessed Sept. 5, 2004).
Proposition 67 helps alleviate the burden of emergency medical practitioners by raising funds that are channeled directly to local hospitals, emergency rooms, and trauma centers. “I believe Proposition 67 is less about emergency physicians as it is about patients having access to complete and timely emergency care.” Lifeline, A Newsletter and Forum for the Emergency Physicians in California, http://www.calacep.org/pdfs/904%20September%2004%20Lifeline_Web%20Proof5.pdf (accessed Sept. 5, 2004). These funds make emergency health care available and reliable within local communities. This is important because the ability to receive immediate medical services in times of emergency is essential to saving lives. Medical response times are also enhanced by Proposition 67, due to the funds provided to 911 system services so that they can train personnel and purchase new technology to allow the fastest response times to callers. Id.
The funds from Proposition 67 will only be used to preserve emergency medical and trauma care, and these funds cannot be exploited by the Legislature to use for other purposes. The contributions and the utilization of these funds will be closely and exclusively monitored by state agencies. Additionally, hospitals must submit to audits in order to qualify for reimbursement. These measures ensure that the funds made available from Proposition 67 will be used properly. Save Emergency Care, Proposition 67, The Emergency and Trauma Care Act, http://www.saveemergencycare.org/main.html (accessed Sept. 7, 2004).
Opponents of Proposition 67 argue that the measure is a gross tax increase that provides only modest benefits. In particular, opponents are critical of the fact that less than 1 percent of the funds will go to the emergency 911 System, even though the measure has been widely promoted as having a significant impact on the 911 System. Small businesses, 911 emergency dispatchers, phone companies, and the California State Sheriffs’ Association are among those groups opposing the measure. Stop the Phone Tax, http://www.stopthephonetax.com/ (accessed Sept. 2, 2004).
The tax amounts to roughly $540 million in state taxes which are already among the highest in the nation. This additional phone surcharge is actually a 400 percent tax increase. For cell phone users and businesses, the more they talk, the more they have to pay. Id. According to the California Chamber of Commerce, Proposition 67 is harmful to the State’s economy, and it will ultimately deter businesses from California. California Chamber of Commerce, http://www.calchamber.com/index.cfm?navID=471 (accessed Sept. 7, 2004).
Opponents are against this measure because there is already a similar phone tax in place which raises more than $130 million annually. These funds have been mismanaged, and therefore additional funding would be inappropriate and unfair to California taxpayers. Id.
Opponents also argue that taxpayers should not be held responsible for illegal aliens who are receiving healthcare, and place a burden on the California economy. “Providing free emergency treatment to illegal immigrants costs Los Angeles County alone $350 million annually.” The Right Idea, Proposition 67: Phone Tax Funds Illegal Immigrant Healthcare, http://www.laurisa.net/archives/prop67-2004.html (accessed Sept. 10, 2004). Thus, uninsured medical care has already cost California enough, and making medical care more accessible to these types of patients will only create a larger burden on taxpayers. Proponents believe that Proposition 67 will be an ineffective means to improve the quality of health care for uninsured individuals. Id. An article written by Dan Stein, Executive Director of The Federation for American Immigration Reform, estimates that “unpaid health care costs for illegal immigrants will cost California over $3 billion over the next five years. Over 90% of Prop 67 revenues will be used to compensate the health care industry for uncompensated emergency care, a large portion of which results from treating illegal aliens.” Id. Therefore, the real beneficiaries of Proposition 67 are illegal aliens, who typically do not pay taxes to support the healthcare system in California. Id.
There are no mechanisms within Proposition 67 to ensure that the funds are appropriated for their designed purposes. Under this measure, 90 percent of the funds will go to health care corporations and other special interest groups. Opponents label profit making hospitals as special interests groups, a term that is less significant given that most hospitals are profit making at this time. Apparently, without safeguards, opponents believe that there is a high probability of potential waste, and fraudulent use of Californian’s taxpayer’s money. Opponents would like to see certain safeguards in place, such as mandatory financial audits by an independent agency, and caps on the amounts that may be appropriated to specific accounts. Stop the Phone Tax, http://www.stopthephonetax.com/ (accessed Sept. 2, 2004).
On November 2, 2004, the voters will decide whether the emergency healthcare system is in as critical a condition as the proponents of Proposition 67 claim. If the voters accept the notion that emergency healthcare in California is in jeopardy, then they must decide whether the 3 percent phone tax raised by Proposition 67 adequately addresses the problem. Proponents think that the tax is reasonable, and it is the only way that Californians can protect the emergency system which all citizens benefit from. Opponents are concerned that the measure will not do what it says because there are not enough safeguards in place. Additionally, even if it does help uncompensated emergency practitioners, Californian taxpayers are not the cause of the huge crisis in the first place, and therefore they should not be burdened with further taxes. Proponents, however, view emergency health care as a necessity that everyone should help to ensure is in place for children, parents, and the elderly alike.