Bipartisan California health insurance plan would *cause* the state more problems than it would *solve*
By Jeff Emanuel Posted in California | Economy | Government-run health care | Health care | Schwarzenegger — Comments (32) / Email this page » / Leave a comment »
Last Friday, after nearly a year of tense negotiations, California Governor Arnold Schwarzenegger (R) and Assembly Speaker Fabian Nunez (D) jointly announced that they had reached a compromise on a plan to add 3.6 million of California’s 5 million uninsured citizens to the rolls of the insured by 2010. Called “an incredible plan” by Speaker Nunez, the proposal – which, if passed by the State Legislature, will appear on the California ballot in November – includes a mandate requiring that nearly all Californians either acquire private health insurance or enroll in a government program which will be expanded to meet the additional demand. Further, the measure would prohibit insurers from denying coverage to people because of existing medical ailments, and would require them to spend at least 85% of premiums exclusively on medical care
Expected to cost $14 Billion annually, the compromise plan agreed upon by Schwarzenegger and Nunez will, if approved by voters, receive funding from four separate sources: a $2.3 Billion tax on hospitals, a new payroll tax of 1% to 6% on businesses in the state, an additional $1.50 to $2.00 per pack tax on cigarettes sold in the state, and $2.3 Billion more in funding from the federal government.
Read on.
The new program is being rushed through California’s state legislature in two parts. The first, which lays out the changes and expansions being made to the state health care system, was presented to the General Assembly Monday and, by Monday night, had been passed by a party-line vote and sent on to the Senate.
The second piece of legislation, which deals with the aforementioned funding of the program, will work its way through the state government more slowly, since, as a tax increase, it requires 2/3 approval to pass. This requirement means that some Republicans must get on board in order for the measure to make it onto the November ballot. To this end, Governor Schwarzenegger, who has already threatened members of the state legislature with a January special session to deal with the health care issue, can be expected to put as much pressure as possible on those members of his own party who can potentially be swayed on the issue.
Despite the cautious approach of state Senate President Pro Tem Don Perata (D), who wants to figure out how best to deal with California’s $14 Billion budget deficit (without shrinking or eliminating entitlement programs) before agreeing to such a massive expansion of government programs, the Governor’s proposal is expected to make its way through both houses of the state legislature before too long.
Unfortunately, this plan to decrease the numbers of the uninsured in bankrupt California is not only inefficient, but will cause far more problems for the health care system and the state economy than it will solve.
First, taxing the state’s hospitals an additional $2.3 Billion – despite the claim that the move is "supported by the industry" – will simply result in a raising of the prices being paid by those who purchase medical services, as the money lost to increased taxes must be recouped by the industry.
Second, funding yet another government program on the backs of tobacco consumers only builds even higher the house of cards on which so many government programs are now being built. Due to the declining number of smokers in California (ostensibly the goal of the state and federal governments when they began levying prohibitive taxes on tobacco products several years ago), the pool of money from which to pull funding for legislators’ pet projects, including state health care, is steadily shrinking – and adding $1.50 to $2.00 per pack in taxes to what is already being charged will just cause that pool to dry up even quicker, as people turn to the black market or out of state sources, or forgo cigarettes altogether.
Third is the payroll tax increase, which will take from small businesses and corporations alike a percentage of their payroll for the purpose of providing health insurance to uninsured workers. While this measure may allow Sacramento to claim a small victory in its quest to move more names into the “insured” column on the state’s rolls, adding to the tax burden felt by small business owners will make less capital available for hiring new workers or paying existing ones.
This will ultimately result in depressed wages and exacerbated unemployment in California, as well as in even more businesses leaving the state (or deciding against coming) due to the oppressive tax climate. Based on tax climate, California already rates as only the 47th best state for business in the country (according to the nonpartisan Tax Foundation). The state’s next-door neighbor, Nevada, ranks third; how long can it be before more of California’s businesses, fed up with subsidizing (along with smokers) every one of Sacramento’s social welfare projects, pick up and move two hundred miles to the east?
Despite the changing economic landscape in the state and in America as a whole, the fact remains that there is no such thing as a free lunch – and that all added costs and taxes are eventually passed along to the consumer and to the taxpayer. Leaving aside the issue of integrity – Governor Schwarzenegger was elected and reelected, at least in part, on the bases of his willingness to take a “no new taxes” pledge – the cost of the Schwarzenegger-Nunez health care plan will be devastating to the citizens of California, who, should this measure pass, will see their quality of health care decline, revenue to the state decrease, and employers leave the state – all for the sake of a state government’s vain desire to claim a Pyrrhic victory over the problem of the uninsured in their state.
Disclosure: Jeff Emanuel is a research fellow for Health Care policy at the Heartland Institute and is managing editor of Health Care News.
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They passed up McClintock. They chose Gray Davis over Bill Simon.
Tom McClintock ran for Lt. Gov., not Governor. It's the Republican Governor at the root of all this.
Gray Davis and Bill Simon have nothing to do with anything.
In other words, your comment is a load of irrelevant spite that shows you out of touch with the subject at hand.
McClintock ran against Arnold during the first recall election.
It is monarchical and aristocratical government only that requires ignorance for its support.
- Thomas Paine, Rights of Man, 1792
In the recall election I was mad when the state party endorsed Schwarzenegger when McClintock was the clear choice of Republicans across the state.
But that's just threadjacky grievance mongering for Anteater to bring it up in this diary.
...for governor.
“.....women and minorities hardest hit”
His negative ratings were pretty high when I lived there (8 years ago now). Has that changed?
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If you were actually following California governance instead of just taking potshots at the state, you'd know we have an election since then, in which Governor Schwarzenegger was uncontested for the Republican nomination, and then easily defeated Insurance Commissioner Angelides to win re-election.
Tom McClintock has nothing to do with it. He wasn't on the ballot. Bill Simon, Dan Lungren, and heck, Ronald Reagan have nothing to do with it, either.
If you California haters have nothing prodcutive to say why don't you go find something else to comment on?
Not a Hater! I think the point was that we chose a moderate Arnold over a conservative McClintock the first go around. Though, without Arnold we probably would have kept Davis or God forbid, ended up with Humpty Dumpty.
It is monarchical and aristocratical government only that requires ignorance for its support.
- Thomas Paine, Rights of Man, 1792
Not trying to be controversial here at all.
My point was that Californians chose a liberal Republican and they are suffering the consequences.
During the CA recall election, Tom McClintock was running for Governor, and so was Arnold, and so was Bustamante. There was that also other guy who financed the recall effort (Issa was his name, I believe) but bowed out. If people had coalesced around McClintock instead of Arnold, he probably would have won, and he probably would still be governor today (and may be even a presidential front-runner).
If Bill Simon won against Gray Davis (and won subsequent re-election), he would be governor today, and probably a presidential front-runner.
Both of them are way more conservative than Arnold.
a $2.3 Billion tax on hospitals, a new payroll tax of 1% to 6% on businesses in the state, an additional $1.50 to $2.00 per pack tax on cigarettes sold in the state, and $2.3 Billion more in funding from the federal government.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
We have already opened an office in AZ. and are ready to move most of our jobs there if this really stupid idea survives. However, the people of CA deserve having the state go broke thanks to the Dems. I will have to say that for all his shortcomings it is hard to imagine that Grey Davis would have done as poorly as Taxanator has performed.
Envisioning when all that is Left is the Right.
Is that some of those Californians are moving to other states and taking their love for liberal tax-and-spend politicians with them. It's definitely having an effect on politics throughout the Southwest and the Rocky Mountain states.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
It's the new "hot" thing for them to build a summer home here in SE Alaska, and, man, do they bring their politics with them! Show up with a private plane, a million dollar boat, and build a million dollar house, then don't want anything that even resembles economic activity within their sight. I want to build a wall around the damned place.
In Vino Veritas
I agree that in the past couple of decades, there seems to be a trend that liberals/ democrats/ socialists in their respective metropolitan areas mess things up so bad with high taxes, regulations, beaurocracies, etc. that they eventually get so fed up with their own policies that they move to more conservative areas.
However, they are not smart enough to realize that it was their own philosophy of governance that caused things to get so bad that they had to move.
So they continue to vote the same way in the new areas where they have moved, resulting in the same policies eventually being adopted.
Socialists are like spreading locusts that go from area to area destroying everything that they come in contact with.
I don't know what the answer is. Maybe a twenty-five year waiting period before a democrat can vote when they change their state of residence.
Schwarzenegger has broken every campaign promise he ever made. He tried to act like a Republican to win that primary, but he is as bad or worse than the average Democrat.
Nothing is worse than liberal Republicans, because they can convince the public that everything they are in favor of is "bipartisan" because they and the Democrats in the legislature agree with them. That's why I'm so terrified of Huckabee being elected. I think we're more likely to get universal health insurance if Huckabee is elected than if Hillary is.
Not patients, pay the bills, so we have the hospitals, as a group, pass $2.3 bil to the pool of insurers who immediately pass it back to the hospitals in increased prices. This makes sense?
Of course, we know that the law will be written so that there are winners and losers within the insurance pool, and winning and losing hospitals. How much do you bet the government-run hospitals and insurers will make out better than the private ones?
The problem with California is the liberal democrat legislature plus a liberal republican governor.Had the republicans been able to get a majority in the legislature it may have acted as a brake on Arnold.California's finances were dire even before Arnold came on the scene and thats the dem's fault.If you look at democrat run state's and major cities you see chaos and ever increasing taxes.If this continues it bodes well for republicans on the state level - if the state organizations can get their act togther.
California doesn't elect anti-abortion people Governor or Senator. It doesn't matter HOW badly the Democrats foul things up.
California is an easy state to gerrymander, what with geographically widely split Democratic and Republican areas. Everyone's happy with their own legislators, so I don't expect a Republican takeover there either.
Especially not with the illegal alien-created rotten boroughs.
That Governor Deval Patrick (excuse me, baby-barf there) will cruise to re-election in 2010, and the entire legislature minus perhaps 1-2 of the few remaining republicans will be returned in 2008, is sort of the anti-proof for this thesis.
Suburban limo libs, union-types, academics and assorted urban pinkos are a shotgun group-wedding made in Hell, but no one has figured out a way to break them up yet.
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Diplomacy is the art of saying 'Nice doggie' until you can find a rock.
... I was talking about the People's Republic of Massachusttts, not California. Sorry.
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Diplomacy is the art of saying 'Nice doggie' until you can find a rock.
...sound vaguely like where we could be going if we elect a certain liberal GOP presidential candidate...
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I definitely do not like the sound of this: "...and $2.3 Billion more in funding from the federal government." If they want to create a disastrous plan that is their problem. Why drag the rest of us with them? This is a prime example of why we need a federalist in the White House.
Our huge Democratic legislative class might try to bring home the bacon, but I'm thinking that plan is mostly a dodge to get around the legal mandate to balance the budget.
Our beloved Republican Governor is getting good at doing things like that, along with the legislative Democrats, to pretend he's not breaking the law.
Presumably, they are arranging the program to qualify under already existing federal programs that provide matching funds.
The problem isn't federalism - which this, in a way, is (the feds putting up some money but letting the states make the decisions on the program). The problem lies with the federal program in the first place - we should not be giving away free money to states so that they can get away with socialism on the cheap.
I hate fedral programs as a general rule - but if the feds are going to spend my tax dollars on programs like this, I want them to at least not cede all the authority to make decisions on how to spend MY money to a bunch of state officials I have no say in electing. Better to eliminate the federal funding (and the taxes that support it) and let the states that want to have cradle-to-grave socialism tax their own citizens under to support it.
a 21st century Boston Tea Party.
The Los Angeles Tobacco Party would be a nice start. I don't smoke but I would sure join in on that party.
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Vista really sucks!
Those of us in California DO try to stop insanity like this, but we are seldom successful due to gerrymandered political districts that result in Soviet-style elections where there is little or no competition. Where I live a Republican cannot get elected to anything.
Republicans could actually win seats here if they would stick to fiscal issues and not drag in the social conservative hot button issues. Those do NOT fly in California. The State GOP continually shoots itself in the foot by putting up social conservatives that moderates won't vote for.