NCPA - National Center for Policy Analysis


December 21, 2006

California Senate President Don Perata has a plan to provide all uninsured working Californians with health insurance at an estimated cost of $5 billion to $7 billion without a tax increase.  Unfortunately it will not work, says Jon Coupal, president of the Howard Jarvis Taxpayers Association.

According to the Perata plan:

  • Businesses that do not provide health insurance through a payroll deduction would have to pay into a state agency that would attempt to negotiate "affordable" coverage. 
  • Additionally, when paying taxes, workers would have to show proof of medical insurance.

Even if the plan did stick to the estimated cost without raising taxes -- which is unlikely -- says Coupal, the program would be anything but free:

  • Compelling businesses to lay out more for labor than its market value is a tax on those businesses; it will cost businesses and, as the increased costs are passed on, it will also cost consumers, too.
  • Employees, many working at low-wage jobs, will see a reduction in their paychecks; just like the other taxes they pay, this health insurance charge will translate into less take-home pay.
  • As the cost of employment goes up, workers are likely to face a second problem: fewer jobs.

The real problem with health care costs in California, says Coupal, is that illegal immigrants are "outsourcing" their health care demands.  As long as the federal government takes a lackadaisical approach to border enforcement, this problem will continue.  And the financial obligation will continue to fall on small businesses, their work force and California taxpayers.

Source: John Coupal, "Health care plan recipe for disaster," LA Daily News, December 19, 2006.


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