Friday, October 12, 2007

The disastrous and expensive Schwarzenegger health plan

We now know what the governor has in store for us. Governor Schwarzenegger has revealed more details of the health plan he wants Californians to accept, and it’s not pretty.

The plan starts with the premise that every Californian, legal resident or not, will have health insurance whether they want it or not. Those who go uncovered will be subject to tax penalties. Of course, if you aren’t paying for it, your neighbors are, why you would turn it down? The cost is estimated to be $14 billion, about $2 billion more than earlier versions.

All adults and children, regardless of their immigration status, will be covered through an expansion of the state and federal 'Healthy Families Program'. "If you can't afford it, the state will help you buy it. But you must be insured," said the governor. "That is number one."

Schwarzenegger’s mandatory health insurance plan requires employers to subsidize the ‘poor’. Under the plan, state tax payers pay for government assistance to lower income people to buy the insurance; tax payer money would go to families of four making as much as $72,000 a year (yet this is not enough for union leaders; they want tax payer assistance for income levels up to about $100,000 a year). Believe it or not, Democrats proposed a plan that would cost more than the governor’s proposal; Schwarzenegger said he would veto it.

Massachusetts has a similar program but according to Peter Harbage, a health care consultant with the New America Foundation, "The governor has gone further than the Massachusetts plan and has added doctors, hospitals and health plans to those who must help pay". Hospitals will be assessed 4 percent of their revenues, while doctors will pay 2 percent.

Although Schwarzenegger has not spelled out exactly how he will enforce his health care mandate, his proposal suggests using a version of the Massachusetts plan to enforce it. If so, the California plan will involve requiring all residents to include their health insurance policy number on their state tax returns to demonstrate coverage. People who fail to do that will lose their personal tax exemption the first time around. Continued failure would cause fines that, in Massachusetts, are equal to half the cost of a standard policy (several thousands of dollars).

These fines might still be much cheaper than buying insurance. In that case, many low income families may prefer to pay the fines or avoid filing taxes altogether rather than buying health coverage. In effect, a program meant to help low-income people could tax them or turn them into criminals.

Doctors are complaining that the cost will be passed along to patients, amounting to a tax on sick people. "A jobs tax on employers and a mandate on small business owners are really a deal killer," said Assembly GOP leader Mike Villines.

Republican legislators say the governor's plan raises taxes, which Schwarzenegger promised not to do during his re-election campaign.

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