Gov. Arnold Schwartzenegger positioning himself as a pseudo-liberal (a girlie-man?) to resuscitate his comatose poll ratings? Maybe on some issues, but not if we're to judge from the governator's veto yesterday of the single-payer health insurance bill passed by the Democratically-controlled Sacramento legislature last month.
The text of the veto message was instructive because it uses every Big Lie that is thrown against progressives when they point out that a national single-payer plan as the only real solution to the U.S. health care financing crisis. Here's just one paragraph:
Socialized medicine is not the solution to our state's health care problems. This bill would require an extraordinary redirection of public and private funding by creating a vast new bureaucracy to take over health insurance and medical care for Californians - a serious and expensive mistake. Such a program would cost the state billions and lead to significant new taxes on individuals and businesses, without solving the critical issue of affordability.
Nearly every phrase in that paragraph is untrue. Let's go over them one by one.
Socialized medicine? Every time my elderly, ill mother visits a doctor at her nursing home, the private physicians, hospitals and the nursing homes that bill Medicare for her care are a mix of for-profit and not-for-profit health care providers who definitely are not employed by the government. The provision of health care under Medicare is a private affair. When Medicare was passed in 1965, the American Medical Association attacked it as socialized medicine. It wasn't then. It isn't now. Another way to describe single-payer health insurance is Medicare for all. As in the current Medicare, as in Canada, the provision of most health care will be by private sector actors.
Create a vast new bureaucracy? Every time I go to the doctor, the dentist or my eye doctor, I fill out a separate set of forms reflecting the different insurance companies that pay for those services. My various doctors maintain huge staffs simply to manage the dozens of insurance systems they must bill in order to get reimbursed for services.
Analyses of single-payer health care plans estimate the one-time cost savings from eliminating the vast bureaucracies that dominate our current health care system at 10 to 20 percent of total costs -- a potential $200 billion one-time windfall.
Cost billions and lead to significant new taxes? One private analysis of the California bill, conducted by the respected Lewin Group, estimated the state's single-payer plan would reduce total health care payments in the first year while insuring everyone who is currently uninsured.
The only half-truth in that veto message was the statement that single-payer health insurance would involve an extraordinary redirection of public and private funding. The original bill, later stripped of its financing provisions (which turned it into a mere symbolic measure), called for substituting payroll taxes on employers and individuals for the current system of employer-provided health insurance coupled with individual co-pays and deductibles.
I don't know if payroll taxes are the best way to go. But for the sake argument, let's look at what the impact of such a shift might be on individual businesses and households. Would they be worse off or better off from a financial standpoint?
The short answer is that it all depends. If you own a business that currently provides your employees with very good health insurance with very low co-pays and deductibles (a shrinking share of the U.S. business community), then a single-payer plan financed through payroll taxes would probably make your business slightly better off and your employees slightly worse off. You'd get a huge break by not having to buy health insurance anymore, which would be largely, but not entirely, offset by a payroll tax. (Example: it might cost you 10 percent of the average employee's pay to provide him or her with health insurance; the employer payroll tax might be 8 or 9 percent.)
But what if you owned a business that didn't provide health insurance for many or any of its employees (the Wal-Marts of the world). You wouldn't save much by eliminating your insurance bill. But you would be stuck with the new employer payroll tax. In other words, all businesses would now be on a level playing field, no longer competing through the benefits they provide.
How about individuals? If your employer provides you with a Lexus plan with very low co-pays and deductibles or you are a high income worker, the individual health care payroll tax of 2 or 3 percent would probably increase your health care payments (assuming you're relatively healthy).
But if you are like most employees today with employer-provided health insurance, your out-of-check co-payments for health insurance are approaching $100 or more a month. On top of that, you're paying $10 or $20 for every doctor's visit, ditto for prescriptions and face a large deductible if you wind up in the hospital. Most families easily pay $1,500 a year or more in health care bills. A person would have to earn over $75,000 a year before their payroll tax equalled that amount. And you could rest assured that, in the case of a medical emergency, you would never be faced with a bankruptcy-inducing hospital co-pay.
As I said, I'm not sure that a payroll tax is the best way to go. Eliminating health insurance payments for businesses and all employers is like handing out a $600 billion-a-year tax break -- by far the largest in U.S. history. If the nation ever had an honest discussion about "redirecting" the way we pay for health care that was fair for everyone concerned, we certainly would want to consider making income taxes and possibly even a value-added tax a part of the mix.
But the governator's rhetoric yesterday suggests honest discussions about health care reform is not on anyone's agenda -- especially if you are a Republican governor with rapidly sinking poll numbers looking to burnish his liberal credentials in all the wrong places.