The Pacific Research Institute Offers Five Steps Towards Universal Choice in 2007
1.3.2007
SAN FRANCISCO – Governor Arnold Schwarzenegger will present his health care proposals to improve Californians’ access to high quality health services in his State of the State address on January 9. The Pacific Research Institute, a free-market think tank based in California, recommends reform methods based on market incentives rather than increased government-control. “Curing California Health Care: Five Steps Towards Universal Choice in 2007”, co-authored by John R. Graham, director of Health Care Studies, and Diana Ernst, PRI policy fellow, proposes the following five steps, listed in increasing order of complexity and difficulty, to break free from the current inflexible and expensive status quo. - Repeal the California “Sick Tax”. The “sick tax” refers to the fact that California is one of the last states that continues to tax residents for their out-of-pocket health spending. Since January 2004, the federal government has allowed every working age American to deposit pre-tax dollars into a Health Savings Account (HSA). The state needs to give health care dollars back to the patients who need it.
- Health Opportunity Accounts(HOAs) for Medi-Cal. California has some innovative Med-Cal programs, but the state has not signaled a willingness to take advantage of HOAs, which are basically HSAs for Medicaid. The federal government recently authorized these as pilot projects for 10 states that want to empower Medicaid beneficiaries to make good health decisions. California should be one of the 10 states.
- Free Low-Cost Medical Clinics to Compete. In other states, entrepreneurs are opening hundreds of convenient “storefront” medical clinics where straightforward, transparent pricing makes health care more accessible and affordable. In California, over-regulation of the profession of nurse practitioner prevents these innovators from competing and denies important choices to California patients.
- Free Health Insurers to Compete. California’s over-regulation of health insurance
increases prices by about 30 percent, contributing greatly to the numbers of uninsured in the state, especially among the middle class, which could and likely would buy health insurance if it were more price competitive.
- Design a “California Connector” to Increase Choice in Health Insurance. The federal tax code connects health insurance to employment – something that Americans would likely not tolerate for any other area of their private lives. Massachusetts has recently instituted a “Commonwealth Connector” (or Health Insurance Exchange) into which employers’ contributions can be credited to a worker’s choice of individual health insurance. The Massachusetts plan has many drawbacks, including a significant tax increase (also called a “mandate” or “pay or play”), but a narrowly defined “Connector” that allows uninsured, employed, Californians to use pre-tax dollars to pay premiums has significant merit.
“California can vastly improve its health care system and become the free-market model nationwide if it reduces dependency on ever-growing government programs and make health care more patient-focused and less bureaucratic,” said Mr. Graham. “Let’s promote competition among providers, and empower Californians with tax deductible savings, choice, and quality health care. California is ready for change. It’s called universal choice in health care.” ### | Contact: | For more information or to set up an interview with one of PRI’s policy analysts, please contact Susan Martin at 415.955.6120 or email smartin@pacificresearch.org
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About PRI
For 28 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at www.pacificresearch.org
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