California's Historic Healthcare Failure

Governor Schwarzenegger and State Assembly leader Fabian Nunez have hailed their new compromise health care proposal as "historic" and "courageous." It will show the light to the rest of the country. Unfortunately, it will do anything but. It is a blueprint how to fail to reform health care.

Though if I had to choose between "historic" and "courageous," I guess I would have to side with "historic."

The plan maintains the basic structure of the current system--if Americans' disastrous reliance on employers and insurance companies to pay for health care can possibly be called a system. It adds a series of much-trumpeted reforms. It requires people to buy coverage and insurance companies to take all comers. It requires employers to spend a set percentage of their payroll on health care. And it subsidizes California's poorer residents.

That changes the present state of affairs very little, since the plan offers no subsidies to the middle class or even upper-middle class, all of whom can currently be saddled with unaffordable premiums, high deductibles, and uncovered health expenses. Overall, the plan mandates universal coverage, but fails to enact changes that will make coverage adequate, reliable, and affordable.

It fails, first, to closely regulate the cost of premiums or the extent of coverage. Rather, it continues to leave major decisions about the cost and provision of health care in the hands of insurance companies, which have a logical mandate to maximize profits-not health-and which profit only in proportion to the degree that they do not provide health care. The plan does specify that insurers have to spend 85% of premium income on health care-which sounds, at the least, like an incentive for insurers to continue to raise their premiums. And it exempts families from the mandate to buy insurance if the cost of coverage would exceed 5% of their income.
Now that's groundbreaking health-care reform, which we should all get excited about. California's plan assures Americans that they don't have to have health insurance if they can't afford the insurance companies' premiums.

And subsidies to the poor? Well, that's the plan's sole feature that just might make a real difference, by making health coverage accessible to the state's lowest-income residents (and to middle-class Californians who become poorer trying to pay for health care). It should be noted, however, that these payouts will heavily subsidize not just poor Californians but also the not-poor insurance companies, to continue to charge the premiums that the plan assures many Americans they won't be able to afford to buy.

No, with this plan, Californians will continue to enjoy precisely the same two routes to affordable coverage as before (aside from being poor). They can be young and healthy-which even for Californians, alas, turns out to be impossible in the long term. Or they can find jobs in which the employers themselves provide large subsidies for health coverage. And by now requiring all businesses to pay for or contribute to employee health care, the plan legislates and perpetuates the link between employment and health coverage-an artifact of a long-ago post-World-War-II economy-that has generated so much of the anxiety in the current health care crisis.

The plan will continue to constrain smaller employers, especially. It will continue to restrict our choices-often severely-about what work we can do and where we can do it. (As a freelance writer, for example, I can no longer write full-time, for the sole reason that I couldn't afford the $12,000-plus unsubsidized annual premium for individual insurance-and how would Governor Schwarzenegger respond if he could no longer work as governor for the sole reason that he couldn't afford the premiums for health insurance?) This plan continues to tie job security to health coverage-if you get fired or want to quit, you soon lose your subsidized coverage-and to deprive people of their heavily subsidized health plans soon after they become too sick to work.

By failing to regulate the insurance companies effectively (or God forbid do away with their role), and by reinforcing the disastrous link between employment and health coverage, the plan will keep Californians in a mass state of anxiety and insecurity about how to get and maintain and pay for health coverage.

So what, exactly, is "historic" about it? And why should other states-or the federal government--follow suit?

Comments

[clr2]

We are paying BILLIONS in California to provide an education and health care to ILLEGAL ALIENS. Why don't Fabian Nunez and Schwarzenegger do something about that? If they did they would have BILLIONS to use on health care.

[cynara]

Sounds like the immigration "compromise", better it fails and we stick with the current mess, then create an even worse compromise.

[ProudLiberalDan]

The California legislature has passed progressive, real Health Care reform. Sen. Sheila Kuehl (from Doby Gillis fame) is a Godsend on this issue.

It is Arnold who has vetoed it and it's a shame.

Nothing will probably happen in California until the 2008 election is over and we see what if anything the new Federal government will do.

But kudos to any state that is trying to do something on their own. If only one state would adopt single-payer health care, it would catch on like wildfire (but for insurance industry campaign contributions) when other states witness how much more cost effective it is.