by John M. Curtis
(310) 204-8700

Copyright Jan. 9, 2007
All Rights Reserved.

etting his priorities straight, California Gov. Arnold Schwarzenegger rocked the political establishment announcing a bold new plan to insure all the state's residents, including undocumented aliens. Arnold's plan would require all employers with 10 or more employees to buy coverage or pay 4% of payroll to cover the state's expenses. Battling some of the state's most entrenched interests, Arnold wants to tax physicians 2% and hospitals 4% of their gross revenue, a kind of referral fee for the expected windfall of insuring all Californians. Arnold's priority contrasts sharply with the White House anticipating spending an additional $100 billion on Iraq. When Arnold talks about doing the peoples' business, he's not kidding, promising health insurance for all the state's residents. President George W. Bush “new” plan promises more amenities to Iraqis, not U.S. citizens.

     Unlike former first lady and now Sen. Hillary Rodham Clinton's (D-N.Y.) 1994 “universal” healthcare plan, Arnold's proposal makes use of private insurers to provide coverage. By collecting new fees from employers, physicians and hospitals, Schwarzenegger hopes to finance health coverage for the state's 5-7-million uninsured residents. His plan would create a kind of statewide MediCal program through the private sector, requiring insurers to cover all residents regardless of insurability. Like all group plans, there's no proof of insurability, i.e., medical exams, to qualify. Insurers would be required to insure all residents, regardless of medical histories or preexisting conditions. Insurers writing individual plans normally reduce risk by excluding preexisting medical conditions, rating up policies, establishing high deductibles or refusing to write policies.

     Arnold believes that health insurance should be mandatory in California. Health insurers would compete for the state's business, offering competitive benefits and pricing. Insurance policies would guarantee minimum amounts of coverage for a wide variety of medical and mental problems. Insurers couldn't arbitrarily exclude certain conditions, or, for that matter, decide to limit payouts or the use of medical benefits. Today's managed care system currently allows gatekeepers to restrict the use of medical benefits, something prohibited under Arnold's plan. To minimize game-playing, insurers would be required payout 85% of premium dollars, allowing 15% to cover profits and administrative overheard. While the devil's always in the details, Arnold's plan may not offer enough profit for insurers to jump on the bandwagon of providing statewide coverage.

     Expanding California's Healthy Families program, the state would provide coverage for all uninsured children. “If you can't afford it, the sate will help you buy it,” said Arnold, “but you must be insured.” Like auto insurance, all Californians would be required to have medical insurance, reimbursing the costs currently absorbed by the state's emergency rooms. California law requires ERs, regardless of costs, to cover all medical care. Calling the current system “disastrous” Schwarzenegger wants to provide reimbursement to ERs and physicians currently writing off uncollected bills for the uninsured. Arnold must convince physicians and hospitals that his plan would augment their bottom line. Today's managed care industry has consistently eroded revenues to physicians and hospitals by gate-keeping, reducing reimbursements and rationing medically necessary benefits.

     Republicans see Arnold's plan as a new tax on California businesses. “If we put any form of mandate on business, we are seeing a jobs tax,” said Assembly Republican Leader Mike Villines (R-Clovis). “This is a jobs discussion. This is the difference between employees having a job and a jobs tax that says no to that,” convinced that Arnold's plan will drive businesses out of the state. Already over-taxed, Republicans believe that more red tape and government regulations will harm the state's economy. Shifting the financing burden on physicians and hospitals might violate the state's constitution, singling out one group unfairly. It's one thing to ask employers to buy health insurance, it's another to demand specific groups to pay for it. Any way you cut it, California will have to raise taxes or sell bonds to finance the biggest government expense in the state history.

     Tackling the thorny issue of healthcare in California, Arnold invites all out war with his own party. Supported by the Democratic legislature, Arnold's plan opens the national debate in advance of the 2008 presidential elections. Taxpayers around the country find far more objections to subsidizing the Iraq war than providing health insurance to hard-working taxpayers. Arnold's plan rearranges national priorities, reminding voters that there's nothing shameful about spending tax dollars on something worthwhile. Depleting the treasury on rebuilding Iraq infuriates voters, refocused on how different priorities would improve the U.S. standard of living. Heading into '08 campaign, Arnold raised new possibilities for alternative uses of tax dollars. While Bush announces his “new” plan for Iraq, Schwarzenegger opens new awareness into the novel goal of helping working people.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

©1999-2005 Discobolos Consulting Services, Inc.
(310) 204-8300
All Rights Reserved.