NCPA - National Center for Policy Analysis


July 10, 2007

If Gov. Arnold Schwarzenegger manages to get his universal health care package past the California Legislature, he will become a real action hero.  He would be a superhero if he found an honest way to pay for it, says columnist Debra J. Saunders.

Under the governor's plan:

  • The state would provide health care for poor children and free care for adults whose income falls below the federal poverty level through Medi-Cal.
  • Those with incomes of up to 250 percent of the poverty level will be eligible for subsidized coverage through a state-run insurance pool.
  • Adults who earn more than that would have to buy private coverage.


  • The plan would encourage employers to provide health coverage through private HMOs and insurers.
  • Those employers with 10 employees or more who don't provide health care for their workers would have to pay a 4 percent payroll tax (officially it's an "in-lieu fee") into a state health-care insurance fund.

However, Gov. Schwarzenegger opposes any general tax increase to fund the plan. Thus, he proposes paying for his plan with fees. In addition to an employer fee, the governor proposes a 4 percent tax on hospital revenues and 2 percent tax on doctors' revenues.

This cost-shifting will not work, says Saunders.  The state continues to spend more than it takes in every year, yet somehow Schwarzenegger and the Democratic Legislature think they can provide universal health care without asking all Californians to pay for it.

Source: Debra J. Saunders, "Healthy Plan, but Expanding Waistline,", July 9, 2007.


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