NCPA - National Center for Policy Analysis


March 2, 2007

Health policy experts have responded to Gov. Schwarzenegger's health insurance plan with horror, saying it will not guarantee access to health care for all Californians and will cost taxpayers nationwide, according to

Under the Governor's proposal:

  • Medi-Cal, the state Medicaid program, would be expanded to include working families earning twice the federal poverty level as well as middle-income families.
  • Other families would be required to purchase individual insurance policies if their employers do not provide one.
  • In addition, "fees" would be levied on health care providers and hospitals as one means of raising $3.7 billion for the new $12 billion system.
  • Physicians would be required to pay 2 percent of their gross revenue, hospitals 4 percent.

Twila Brase, president of the Citizens' Council on Health Care pointed out several problems with universal coverage plans:

  • Universal coverage institutionalizes the problems that have led to high prices and kept people from buying health insurance, she says.
  • It exacerbates the consolidation of the health insurance market, the prevalence of expensive prepaid health care, and the availability of government programs the uninsured can tap into when they get sick.

And the expenses pointed out by Brase won't be borne by Californians alone.  Contrary to published reports, says Michael Cannon, director of health policy studies at the Cato Institute, Schwarzenegger's plan would have taxpayers in other states pay for 77 percent of the new spending.  That's a perfect example of the moral hazard that makes our health care system unsustainable.

Source: Editorial, "Schwarzenegger Health Insurance Plan Would Drive Up Costs,", March 2, 2007.

For text:


Browse more articles on Health Issues