Thomas Elias: Well-meaning health-care plan needs overhaul
Never before has an American political leader tried anything as audacious in the field of health care as Republican Gov. Arnold Schwarzenegger attempted over the last year, aided by his Sancho Panza-like sidekick, the soon to be termed-out Democratic Assembly Speaker Fabian Nuñez.
This was the first realistic attempt ever made to bring universal health care to any large state. True, it came more than 120 years after Otto von Bismarck brought something very similar to Germany and long after most Western democracies adopted various Bismarkian plans. It even follows a similar effort adopted by Massachusetts.
But that didn’t make this plan any less audacious. It aimed to assure than no one in California would ever be uninsured again. That’s an idea whose time ought to be near. In fact, it’s something that should have been done years ago.
But this plan needed both state Senate and voter approval before becoming reality, and the Senate demurred, despite the powerful political personalities pushing it.
For as salutary an idea as universal health care may be, with its inclusion of an estimated 3.6 million of the currently uninsured, the plan had serious flaws. It’s anyone’s guess whether those obvious defects will be fixed in time to get another plan voted on in 2009 or 2010.
For sure, the flaws will not be ignored when universal health care comes back before the Legislature. They are too fundamental and too obvious to be missed, so there will have to be some effort to fix them.
The main defect here was that Schwarzenegger & Co. asked voters and state senators to buy a pig in a poke – another way of saying no one could be sure just what kind of health coverage this measure would produce or how much it would cost. As Democratic state Sen. Elaine Alquist of San Jose put it before voting no in a Senate committee, “There are a lot of projections here, but no facts.”
Sure, the overall price tag was pegged at $14 billion, with much of that presumed to come from the federal government and a new $1.75 per pack cigarette tax. But the plan, known while in the Legislature as ABX1 1, demanded that every person in the state buy health insurance whether or not their employer provides it and regardless of their eligibility for Medi-Cal, the program that now offers care to most of the indigent who bother to apply.
What’s more, there were no caps on what insurance companies could charge for coverage nor any minimum coverage demands on insurance companies. Which means those companies might offer low-cost policies to poor or economically marginal Californians without including much in them.
They could contain deductibles of $2,000 or more per year, requiring an individual to spend that much before any coverage kicked in. They could exclude many surgical procedures and drugs. This would all be purely up to the insurance companies, rarely known for extravagant generosity.
Then there was a new disincentive the program gave employers who now provide health insurance as a standard worker benefit. In today’s reality, many employers spend amounts equal to 10 percent or more of their total payroll on health care. But this bill required them to put out only about 1 percent to 6.5 percent of their payroll expense for health care. Any employer not providing health care could just pay that money into a state fund, with employees then forced to buy coverage from the state (and whatever insurance companies would have administered the plan).
How many employers would take advantage of this provision and save big money by cutting out health benefits they now offer? How much worse would the health care then offered to employees become? The answers to these questions are anyone’s guess.
Then there’s the matter of how much this could cost. Any family with income over 400 percent of the federal poverty level (this would now be about $80,000 for a family of four) would have no cap on premiums or out-of-pocket expenses.
That’s a potential disaster for the middle class. Families with income between 250 percent and 400 percent of the poverty level (between $50,000 and $80,000 per year for a family of four) would get a tax credit if their premiums went above 5.5 percent of the family income. But that offset provided no help for deductibles, co-pays or drugs. Since there was to be no limit on where insurance companies could set these expenses, there was also no way any family could know how much all this might cost.
And these are just a few of the problems.
All of which means this well-meaning plan needs a serious overhaul before anyone takes it back before the Legislature or tries to put it on the streets as a potential ballot measure.
Thomas D. Elias is a syndicated columnist who writes about California issues. Contact him via e-mail at firstname.lastname@example.org.
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