The debate over statewide health care reform continued in California’s Legislature this week, at the same time the nation’s first city health care program, “Healthy San Francisco,” took another step toward implementation.

Last week, Republican Gov. Arnold Schwarzenegger called a special legislative session to continue work on health care reform and water issues, left unresolved because of basic disagreements and because the legislative process was sidetracked during a 51-day budget standoff.

The Assembly and Senate, both led by Democrats, passed AB 8, which would extend health coverage to about half the nearly 7 million Californians who now lack health coverage at least part of the time.

The governor, who announced his own proposals in January but could not get any legislators to introduce them as a bill, had long said he would veto AB 8. A third proposal, state Sen. Sheila Kuehl’s SB 840 single-payer bill, which passed the Legislature last year only to be vetoed, will carry over to the next legislative session.

While continuing the role of private insurers, AB 8 would greatly expand public coverage to include children and parents up to 300 percent of the federal poverty level (about $60,000 for a family of four). Employers would contribute at least 7.5 percent of their payroll, either through providing coverage or paying into a state purchasing pool. Workers earning less than 300 percent of the poverty level would pay no more than 5 percent of their income. Insurers’ ability to deny coverage over “pre-existing conditions” would be curbed.

AB 8 has aroused controversy among advocates of health care reform. Among its backers are the Health Access Coalition of over 200 organizations and the California Labor Federation. Among opponents are the California Nurses Association, the grassroots One Care Now program and Physicians for a National Health Program.

AB 8 “is a compromise measure,” Assemblyman Mervyn Dymally, who chairs the Assembly’s Committee on Health and who co-authored Sen. Kuehl’s single-payer measure, said in a telephone interview. “It’s a measure to get things started, in the hope that next year there will be improvements.”

Dymally said the special session will take up a two-track approach, with the Legislature determining policy and financing being determined through a ballot measure. Dymally expressed hope that agreement could be reached on the policy issues, but was less optimistic about the fiscal side.

“We don’t think we should be trapped into false choices,” said Health Access Coalition Executive Director Anthony Wright, whose organization strongly supports both AB 8 and SB 840. “AB 8 provides real aid to California health care consumers, immediately,” he told the World. “If it will help consumers, we need to be in support.”

Wright said the coalition will evaluate any compromise that emerges during the special session.

Both underscored the importance of AB 8’s provisions assuring affordability, also a key issue for the California Labor Federation.

The California Nurses Association said in a statement that AB 8 parallels the governor’s proposals “in its reinforcement of the insurance-based system as opposed to a guaranteed health care plan that ends insurance industry profiteering and denial of care.” CNA’s views were shared by Physicians for a National Health Program, which charged that the bill would bring result in a rash of private plans with affordable premiums but minimal coverage, resulting in an “explosion” of underinsurance.

The governor would require all residents to carry health insurance, and would only require employers to pay 4 percent of payroll toward health care, with hospitals paying 4 percent of revenue and doctors paying 2 percent.

Meanwhile, after a two-month pilot program at two community clinics, Healthy San Francisco expanded to 20 additional locations around town, effective Sept. 17. The largely city-financed program now serves uninsured adults through 14 city health clinics and eight affiliated community clinics. It is not insurance, because participants are covered only for services within the city. (A separate city program serves youth up to age 24.)

Next year, San Francisco plans to bring private medical providers into the system. Now, enrollment is limited to those living below the federal poverty line, but in November the program is slated to open on a sliding-scale basis to anyone uninsured for at least 90 days, regardless of income or immigration status.