Hard questions about health plan 

The hard questions over Gov. Arnold Schwarzenegger’s universalhealth coverage plan are now being asked in open legislative hearings. This is a good thing. California taxpayers need to know how realistic is the governor’s $12 billion cost estimate for his ambitious package.

The nonpartisan Legislative Analyst’s Office last week warned that the plan could cost as much as $3.2 billion more than advertised — this due to shaky assumptions about the amount of federal and county funding that could be expected, plus underestimates of medical inflation and the number of uninsured.

The governor’s own analysts disputed the legislative analyst’s figures, arguing that the critique did not adequately factor in potential economies of scale from expanding California’s insurance pool. The plan is supposed to bring down insurance costs and extend coverage to the 6.5 million Californians without health care

Schwarzenegger seeks to ease the burden of health care costs by spreading them among more payers. Individuals not insured at work would be required to purchase coverage similar to automobile insurance. Employers who did not provide insurance would have to pay 4 percent of payroll into a state insurance pool. Doctors and hospitals would also be charged a percentage of their revenues, on the grounds that expansion of the Medi-Cal low-income patient pool would ultimately pay them billions more.

Insurers would gain several million new customers as every Californian became required to carry health insurance. In return, the companies would have to accept a cap on their administrative costs and could no longer deny coverage or raise payments for people with existing health problems.

Naturally, every single element of the plan already came under fire at the first official hearing of the Senate Health Committee last Thursday. It is hard to imagine a more skeptical committee chair than Sen. Sheila Kuehl, the Legislature’s No. 1 proponent of a Canadian-style single-payer system operated by the state.

Kuehl’s primary objection was that, although every resident would have to buy insurance, the public had no protections against being gouged with unfair premium pricing. But she also praised Schwarzenegger for pushing health care expansion to the forefront of this year’s legislative business and said she favored some parts of the plan.

In terms of possible real-world outcomes, the best case would be for Sacramento to hammer out a compromise that gives nobody all they want, but everybody can live with it. Last year’s final public works bond package bore little resemblance to the original Schwarzenegger proposal, but it offered genuine progress toward fixing a pressing problem.

The worst-case scenario would be a replay of the botched and misnamed 2000 energy deregulation bill that managed to make all the wrong choices and opened the door for unprecedented price manipulation. Nobody should want that again, so let’s keep those hard questions coming.

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Staff Report

Staff Report

A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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