Gov. Arnold Schwarzenegger is pushing a massive tax-and-spend reform plan premised, in part, on the assertion that the uninsured cost the average California family more than $1,000 a year in increased premiums. In Massachusetts, the model of state health care reform, the government is forcing people to purchase health insurance or face fines on the same premise.

The logic has proven attractive across the political spectrum. The liberally inclined need little persuading to increase taxes and fund public programs. Since all attempts to force people to purchase insurance arrive bundled with much larger boosts in government programs, it's a deal many liberals are willing to accept. Many on the center-right, however, have been attracted to the idea that people should pay their own way. It's the libertarian, not liberal, appeal of not shirking responsibility that attracts them to the cause. Yet aside from bold assertions and two flimsy studies by politically motivated advocacy groups, there is little hard evidence as to how much shift there actually is.

Stanford University business professor Daniel P. Kessler just solved that problem. In a rigorous study that examines hospital-level data in California, Kessler finds that there is very little, if any, cost shifting from the uninsured in California to those with private insurance. It's not the 10 percent that the left-leaning New America Foundation claims, a claim that persuaded Schwarzenegger to call for an individual mandate. It's a mere 1.4 percent. Put in perspective, this is less than the average retail store loses to theft.

The same can't be said for the public sector. “Cost shifting from Medicare and MediCal is substantial,” Kessler finds. If the government paid its way, private insurance holders could have paid 10.8 percent less with no effects on health care provider revenues.

This finding is consistent with other studies on the national level. An academic study in the journal Health Affairs found that Medicare pays $.95 for each $1 its beneficiaries consume and Medicaid $.92. Even the New America Foundation study notes that people with private insurance pay 22 percent more than necessary to make up for the public sector's shortfall.

This reality has profound implications for the latest round of health care reform at both the state and national levels, where the major thrust of most plans involves enrolling millions more in taxpayer-subsidized health care and forcing those ineligible to buy insurance. Schwarzenegger's original plan, for example, promised to load up the MediCal rolls with adults, regardless of family status, who earn less than 100 percent of the federal poverty line, and children in families that earn up to $60,000 a year.

To the degree that politicians are successful at expanding Medicaid, they will exacerbate the cost shift, prompt private premiums to increase, and cause people to lose private insurance. To the degree that uninsured actually purchase insurance, this increase in the so-called insurance pool is not likely to have a large effect on premiums.

This much is certain: With higher premiums, higher taxes and more uninsured, the next round of health care reform will focus on single-payer government solutions.