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We are pleased to present this outstanding commentary from Diana Ernst with the Pacific Research Institute.
The California legislature is in a special session on health care expected to last until mid-November, summoned by a governor who refuses to appreciate that tax hikes don’t equate with health reform.
Thankfully, the governor recently vetoed Assembly Bill 8, which would have mandated that employers pay at least 7.5 percent of payroll towards health care, a tab that that many businesses find too expensive.
However, the governor’s "Health Care Security and Cost Reduction Act" betrays similar flaws, including a tax hike and mandatory "universal" health coverage. The governor would be wise to consider a patient-centered package recently offered by Senate Republicans that is completely devoid of new taxes and mandates.
The governor has said he wants to return to the negotiating table, but this will be impossible unless he gives up his proposed spending spree, now $14 billion. That’s up from $12 billion when he first proposed a version of this plan in January. The governor then failed to convince doctors that they should give up two percent more of their revenues in taxes. Now he proposes that California’s soaring deficit lean heavily on lottery funding.
The governor’s new plan still emphasizes "collective" responsibility for health care, which amounts to a shared strain on California’s workers, providers and individuals to insure the state’s uninsured. All Californians would be forced to buy health insurance, insurers would not be able to reward healthy patients with lower premiums, and hospitals would still be under the gun to hand over four percent of revenues to the state. This is only because the California Hospital Association stipulated that hospital taxes would be kept separate from California’s general fund. They would first go to leverage federal matching funds to increase their Medi-Cal payments, and only then to California’s uninsured.
Can we blame them? Medi-Cal owes California providers $750 million in reimbursements. Two long-term care facilities have filed suits against the state for under-funding the state Medicaid program, and fewer doctors are participating. Nevertheless, Governor Schwarzenegger wants to expand Medi-Cal and related programs for 900,000 more Californians.
The governor’s new plan is actually tougher on small business than the January version, which only taxed employers with more than 10 workers.
Now, if the business’s payroll is more than $100,000 and it doesn’t already offer health benefits, the employer will pay a health-care tax on a sliding scale up to four percent.
But tax hikes do not fix health care. If he gets a bill passed, Governor Schwarzenegger is working towards a funding proposal for the November 2008 ballot. Perhaps instead of groping for the middle ground, the governor should seize the high ground. By dropping both the tax hike and the hyped notion of universal coverage, he could secure bipartisan agreement on many of the reforms that the Senate Republicans propose, and that he personally favored in his January proposal.
The Senate Republican legislative package has more than 20 bills that promise to free insurers and businesses to create health plans that serve their own interests, not those of government regulators, make Health Savings Accounts (HSAs) more attractive through tax reform, and boost price transparency for patients. The state should also reform "scope of practice" laws affecting nurse practitioners, who are qualified to provide basic health care. This would allow Californians to take advantage of retail-based "convenient clinics," a competitive answer to emergency rooms for basic services.
These common sense steps will fix, rather than force, health insurance.
California’s leaders must not yield to utopian health-care visions under pressure from media, and with the expectation of political acclaim.
California needs a reliable health-care system defined by choice, quality and cost-effective care. That will require time, basic reform, and courage on the part of leadership.
ABOUT DIANA ERNST
Diana Ernst is a public policy fellow in health care studies at the Pacific Research Institute. She contributes opinion editorials to print media, and routinely writes the monthly PRI Health Policy Prescriptions. Prior to joining PRI, Ms. Ernst was an intern at the Heritage Foundation in Washington D.C. in the American Studies and Judicial Studies departments. She was also a Publius Fellow with the Claremont Institute in Claremont, California, and is currently on the board of advisors at the Grassroot Institute of Hawaii. Ms. Ernst is a graduate of Claremont McKenna College with a B.A. in Government and Philosophy.
You can contact Diana Ernst, via the FR, here.
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