1 bad health plan dies; another looms

A real alternative to government control would be a system driven by consumer choice

The state Senate Health Committee voted overwhelmingly last month to trash the universal health care plan promoted by Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez. Supporters of the plan, known as ABX1 1, murmured about the “real” reasons for its failure, but we all know the reason was Democratic Sen. Sheila Kuehl, who chairs the Senate Health Committee.

She tossed ABX1 1 for reasons more personal than the obvious: It carried a $14 billion-plus price tag at a time the state is already running a deficit also in the $14 billion range. She wants to bring back her own plan, contained in Senate Bill 840.

Although Gov. Schwarzenegger has always said he supports bipartisan reform, he didn’t stick his neck out for SB840 two years ago. He wisely vetoed the Kuehl plan because he knew it would create a government monopoly in health care that would tilt the playing field against individual choice, likely past the point of no return. SB840 was reintroduced last year and now lurks in Assembly committee.

Ironically, even Kuehl acknowledged that a worrisome aspect of the Schwarzenegger-Nuñez plan, which aimed for “universal” health care through compulsory purchase of private insurance, was a probable “lack of choice” for patients of doctors and hospitals. But Kuehl’s plan would implement a Canadian-style, government monopoly health care system, simply eliminating patient choice in favor of absolute state control.

Large government programs have not helped the problem of the uninsured as we know it. Recent studies have shown that the average uninsured patient consistently pays higher prices in California emergency rooms compared with Medicare patients.

In return for, at most, a reduction of 4 percent of current health spending, Californians would pay a heavy price for SB840. The price would include a dramatic drop in the number of California physicians, long waiting lists for medical services and abuse of free health care, costing as much as $9 billion – much more than the amount supposedly saved by eliminating “profits” from the system.

Backers of big government are touting Kuehl-care, but there is a better model: consumer-directed health care (CDHC), which encourages competitive behavior among medical providers to serve individual patients better, give them more choice of services and greater ownership of their health care dollars.

Several persistent legislators introduced good CDHC proposals last year, including one to create state income-tax deductibility for Health Savings Accounts (to align with federal tax deductibility), a California health insurance exchange to allow employers to pay for workers’ individually purchased health insurance and implementing Health Opportunity Accounts in the state Medicaid program. Fewer restrictions on nurse practitioners’ scope of practice was another good idea.

The state needs to make individual insurance affordable for patients by having health insurers compete for their dollars, not by subjecting both patients and insurers to more state control. Instead, we could allow employers and employees to direct pretax payments toward the purchase of individual insurance, like Missouri and other states do. To reduce premiums, the state should also allow patients to opt out of some of the costly services that government mandates be covered, acupuncture, for instance, that they may not want or need.

Meanwhile, ABX1 1 has failed, so what is next? Instead of capitulating to Kuehl-care or other expensive, mandate-ridden models, Californians should not give up support for more lasting health-care tools. These should be based not on a government monopoly but increased patient choice and low-cost options, without putting our state even further into debt.

The governor calls himself a leader who won’t give up, and as he said, a setback is just a setback. Sheila Kuehl’s scheme would set us back for good. Once in place, government monopoly plans are difficult to reform, much less eliminate.

If legislators learn that lesson, before it’s too late, they can turn this quandary into an opportunity. They should adopt a consumer-directed plan that will create more affordable health-care options for all Californians.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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