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What Now for California Health Care?
by Diana M. Ernst 2/20/08

Last month the Senate health committee dumped the Schwarzenegger/Núñez Model ABX1 1, California's trend-setting gadget for health-care repair. Senator Sheila Kuehl, who chairs that committee, tossed it for more personal reasons, other than the obvious $14-billion price tag and state budget deficit of similar size.

Senator Kuehl wants to bring back her own model, SB-840, a government automaton that will fry any remaining individual choice in California health care.  Governor Schwarzenegger wisely vetoed this legislation in 2006, but it was reintroduced last year and now lurks in Assembly committee. Governor Schwarzenegger vetoed SB-840 because he knows it would create a government monopoly that would tilt the playing field against individual choice, likely past the point of no return.

Diana M. Ernst

Diana Ernst is a public policy fellow in health care studies at the Pacific Research Institute. She contributes opinion editorials to print media, and routinely writes the monthly PRI Health Policy Prescriptions. Prior to joining PRI, Ms. Ernst was an intern at the Heritage Foundation in Washington D.C. in the American Studies and Judicial Studies departments. She was also a Publius Fellow with the Claremont Institute in Claremont, California, and is currently on the board of advisors at the Grassroot Institute of Hawaii. Ms. Ernst is a graduate of Claremont McKenna College with a B.A. in Government and Philosophy.

Pacific Research Institute

Senator Kuehl, ironically, noted that a worrisome aspect of ABX1 1, which aimed for “universal” health care through compulsory purchase of private insurance, was a probable “lack of choice” of doctors and hospitals for patients. But under SB-840, California would implement a Canadian-style, government monopoly, health care system that would simply eliminate patient choice in favor of absolute government control. 

In return for, at most, a reduction of four percent of current health spending, Californians would pay a heavy price for SB-840. The price would include a dramatic drop in the number of California physicians, long waiting lists for medical services costing an estimated $1 billion each year, and abuse of "free" health care, costing as much as $9 billion – much more than the amount saved by eliminating “profits.”

Partisans of big government are touting Kuehl-care but there is a better model, and it is not a toy. Instead, it’s a powerful tool: consumer-directed health care (CDHC). Several persistent legislators introduced good (CDHC) proposals last year, including 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, implementing Health Opportunity Accounts in the state Medicaid program. Another good idea was to relax current restrictions on nurse practitioners’ scope of practice.

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 pre-tax health payments toward the purchase of individual insurance, like Missouri and other states. To reduce premiums, the state should also allow patients to opt out of certain costly government mandates, such as acupuncture or alcoholism treatment, that they may not want or need.

The failure of ABX1 1 is not a mandate for SB-840 or any other government monopoly plan. Instead of capitulating to Kuehl-care, Californians should not give up support for good health care ideas. The governor calls himself a leader who won’t give up, and as he said, a setback is just a setback. It could be turned into an opportunity, if legislators are willing to learn the lesson before it is too late.

Once in place, government monopoly plans are difficult to reform, much less eliminate. Only consumer directed health care will expand individual choice and create more affordable options for all Californians. CRO

copyright 2008 Pacific Research Institute



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