NCPA - National Center for Policy Analysis


March 15, 2007

Rejecting Calif. Gov. Arnold Schwarzenegger's call to overhaul the state's health care system, Assembly Republicans on Wednesday proposed a series of incremental reforms to relax government regulations they say make insurance expensive and hard to obtain.

The Republicans' plan would:

  • Allow people to create tax-free spending accounts for health-related expenses.
  • Invite out-of-state insurance companies to do business in California, a move they say would create competition and lower costs.
  • Give insurers flexibility to offer less expensive, scaled-back benefit plans tailored to young and healthy people who currently are uninsured.

"We're saying, 'Let the market do it,'" said Assembly Republican leader Mike Villines of Clovis, "not a socialized or government-run program."

The proposal -- a collection of 17 individual bills -- is a stark departure from the plan offered by the GOP governor.

Schwarzenegger would force businesses with 10 or more employees to provide coverage, and impose fees on doctors and hospitals to help pay for insuring the 6.5 million Californians who now lack insurance.

There is some overlap, however.

  • Schwarzenegger also has embraced tax-free health savings accounts, and he and the GOP Assembly members agree that doctors and hospitals are not being reimbursed enough for treating poor and disabled patients enrolled in the state MediCal program, which means higher costs for other patients to make up the difference.
  • While Schwarzenegger aims to cover all 6.5 million uninsured Californians, the Republican plan might cover two-thirds of them, Villines said, if all the measures became law.

Source: Mike Zapler, "GOP plan for health care uses baby steps; Assembly members defy governor by relying on market for changes," Contra Costa Times, March 15, 2007.

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