The mere fact that this plan is even being proposed is almost too depressing for me to respond to.

Gov. Arnold Schwarzenegger today proposed upending just about every portion of the healthcare industry in one of the country’s most elaborate efforts at holding down medical costs and expanding insurance to those who don’t have it.

Expanding coverage and holding down costs seem mutually exclusive.  Sure, you get some efficiency benefit, but the net increase in demand will likely overwhelm the healthcare supply in the state.

Schwarzenegger’s plan, which he publicly unveiled at noon, would require employers with 10 workers or more to buy insurance for their workers or pay a fee of 4% of their payroll into a program to help provide coverage for the uninsured.

Schwarzenegger would tax doctors 2% of their gross revenue and place a 4% tax on hospitals.

For those of you who think that Schwarzenegger is putting the financial burden on companies instead of people think again.  Companies don’t pay taxes.  People do.  That 4% payroll tax will come out of employee’s paychecks in the form of depressed wages or out of consumer’s pockets because of higher prices.  Ditto for the doctor and hospital taxes.

The governor also wants to ban insurers from refusing to offer coverage to some individuals because of their prior medical conditions. Insurers would also have to spend at least 85% of their premium revenues on patient care, a move that would limit the amount companies spend on administrative costs and profits.

Capping the profitability of companies is a great idea - if you want to have less efficient companies.  The way it sounds the 15% remaining for profits and admin costs will have to cover the salaries of workers.  By capping their salaries the governor will force the company to hire less talented people than it otherwise might have if it were able to pay them what they were worth.

In an effort to cover all Californian children, including ones in the state illegally, Schwarzenegger’s plan would expand the state’s Healthy Families program, providing insurance to children whose parents make less than three times the poverty level.

Covering illegal aliens.  That is a fantastic idea, especially for a border state.  I’m sure that will do nothing to encourage more people to make a run for the border.

“If you can’t afford it, the state will help you buy it,” he said, “but you must be insured.”

Schwarzenegger called the delivery and payment of healthcare in California “disastrous,” noting that nearly 1 in 5 residents is uninsured.

“The problem with that is, of course, that the rest of the people who have insurance pay for them,” said the governor. “Those that are fortunate enough to have coverage — we are paying a hidden tax.”

The governor is correct.  This plan may have been something of a foregone conclusion from the time hospitals were required to treat people without proof of capacity to pay.  Consumers pay for that largesse.

The push toward government mandate/provided “universal” health care is almost unstoppable.  A free market system has provided a wealth of spoils to Americans unknown to many others throughout the world.  Many people now take our excesses as a given, not as the result of our economic system that rewards and punishes based on one’s merits and efforts.  People are starting to think that we have what we have simply because we exist and that those riches should be evenly distributed.  It reminds me of one of my favorite quotes:

“The inherent vice of capitalism is the uneven division of blessings, while the inherent virtue of socialism is the equal division of misery.”

– Winston Churchill

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This entry was posted by Brian on Tuesday, January 9th, 2007 at 8:14 am and is filed under Health Care. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.