NCPA - National Center for Policy Analysis


August 15, 2007

After Gov. Arnold Schwarzenegger unveiled his universal health-care plan for California in January, almost everyone was lauding the bipartisanship measure.  What a change seven months later, with the plan on the cusp of collapse. There's a lesson here about health-care "bipartisanship" when it's merely a cover for bad policy, says the Wall Street Journal.


  • The plan's viability was contingent on $3.7 billion in annual subsidies the Governor has been requesting to expand MediCal (Medicare) and "Healthy Families," part of the State Children's Health Insurance Program.
  • This money is unlikely to materialize, given that the 2006 federal budget called for $4.6 billion in health-care cuts to California over the next decade.

The plan also ran into a buzz saw because of the damage it would do to California's employment and insurance markets, says the Journal:

  • In what's called "play or pay," businesses would have to cover their employees or pay a 3.5 percent payroll tax to fund a new state-run insurance program for low-income workers.
  • Doctors would be required to pay 2 percent and hospitals 4 percent of gross revenues to fund the same -- assuming they could stay in practice at all.

Gov. Schwarzenegger's "bipartisanship" also provided an opening for state Democrats, who have long desired, but have usually been frustrated in passing, a liberal overhaul of the health-care system.  They saw his plan and raised, proposing a 7.5 percent payroll tax -- another example of "play or pay" becoming "pay or pay."  It would also compel onerous insurance regulations like mandated coverage levels and premium ceilings, says the Journal.

Source: Editorial, "Arnold's Health Flop," Wall Street Journal, August 15, 2007.

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