Investor's Business Daily, June 22, 2006

HEALTH CARE: Is it a "moral obligation" for a city to provide universal health care for its residents? San Francisco Mayor Gavin Newsom thinks so. He might instead ponder the morality of chasing jobs out of town.

Newsom presides over the bluest of precincts in the Golden State, where the legislature might defy Gov. Arnold Schwarzenegger to veto a Canadian-style health plan before the November election. Meanwhile, the governor's Democratic opponent, state Treasurer Phil Angelides, plots with the mayor to offer up a municipal model as well.

So this week Newsom unveiled his plan to provide primary care to the 82,000 adult San Franciscans now estimated to be uninsured and who earn too much to qualify for federal help. Immigration or employment status? Irrelevant. Paternalistically, City Hall already covers children.

The mayor insists his "Health Access Plan" will not replace private health insurance. Rather, he claims, its comprehensive and catastrophic care will keep the uninsured from treating the city's strapped emergency rooms as substitute insurance.

Nice try, but as the Pacific Research Institute's Sally Pipes warns, such a plan can only swell the number of takers and push up the costs. Pipes, one of the nation's leading health care authorities, can look out her window in San Francisco's business district and recall when major institutions called the city home.

Because of the city's growing hostility to business, Chevron has moved to the suburbs and, most poignantly because of its long San Francisco identity, Bank of America has high-tailed it to North Carolina. The entrepreneurial exit continues, and the trend won't reverse unless the business climate changes.

Since 2000, San Franciso's population has shrunk 4.8%, for a loss of about 37,307 people, newly released Census data show. The city is in serious demographic peril. Newsom's plan won't help.

Newsom was at first coy about who would shoulder the estimated $200 million yearly cost. But his teammate, Supervisor Tom Ammiano, promptly filled in the blanks. Unsurprisingly, it turns out both residents and businesses, following a progressive formula, would pay fees.

The absence of serious cost controls, notes Pipes, would eventually prompt the government to throw up its hands and opt for "complete socialized medicine." A more sensible approach: revisit rigid insurance rules and open up the industry to more competition.

One dissenting member of Newsom's special business-labor-philanthropic council, which approved the plan, sees only further economic agony ahead.

An owner of three restaurants, Laurie Thomas told The Associated Press she already pays her employees' health insurance. Under Ammiano's formula to charge her $1.60 an hour per employee no matter how many hours worked, she'd be forced to shut down.

Newsom's constituents didn't seem to mind the loss of big oil and big banking. We wonder how they'll feel when they start losing their famous cuisine — and thousands more of their citizens.