Unbiased Analysis of Today's Healthcare Issues

Terminator on Health Care: Part I

Written By: Jason Shafrin - Jan• 09•07

Last December, Governor Arnold Schwarzenegger held a press conference detailing some of the problems in the California health care system. For instance, there are 6.5 million California residents without insurance; the governor claims that individuals insurance premiums are about $500 higher (or $1200 for a family or four) than they would be if these uninsured were not treated. Schwarzenegger says:

“Tackling the problem of the uninsured is not only about expanding coverage, it’s about addressing this hidden tax on healthcare that Californians can no longer afford.”

The New America Foundation has a complete report which expounds on the governor’s comments.

A cursory economic evaluation would show that having the government pay for these millions of uninsured would likely decrease an individual’s health insurance premiums by $500 but would increase the average resident’s tax burden by $500. In fact, the tax burden may increase even more than $500 if one is take into account the moral hazard phenomenon.

It may, however, be possible to finance insurance for the uninsured for less than the $500 cited. The New York Times reports in October (“Hospitals try free basic care for uninsured“) that some hospitals are offering free primary care to area residents in order to cut costs. By providing medical care up front—especially in the preventative and chronic care settings—hospitals can save costs from fewer expensive ER visits. I am doubtful that providing insurance to the uninsured will save money, but it is possible that costs will be lower than expected; especially since many of the uninsured are younger adults who require fewer medical services.

You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.


  1. […] Over the past week, I have discussed California’s proposal to extend health insurance to all individuals. Today, I will examine—in my mind—a superior plan developed by former Republican Rep. Curt Gielow. According to a concept paper from the Wisconsin Health Plan website, the reforms will have the following impact: “All eligible Wisconsin residents receive a “Premium Credit,â€? which the participant uses to purchase health insurance from competing, qualifying health insurance plans. In addition, all adults (age 18-64) also receive a Health Savings Account (HSA), funded at $500 each year.” […]

  2. […] Shafrin, on the Healthcare Economist blog, reviewed Governor Schwarznegger’s plans for universal health insurance in California, and wondered if they […]