Unbiased Analysis of Today's Healthcare Issues

California’s Attempt at Universal Health Care

Written By: Jason Shafrin - Dec• 21•07

On Monday, the California Assembly passed a bill that mandates health insurance for all California’s citizens. The government will provide subsidies households with incomes below 250 percent of the federal poverty level. Those earning between 250 percent and 400 percent of the federal poverty level [FPL] would be able to deduct premium costs that exceed 5.5 percent of their incomes. Health insurance will still be privately run, but the government will pay a larger portion of the premiums.

One odd twist of the legislation is that “some Californians would be granted exemptions if their income is too low to afford premiums but too high to qualify for heavy government subsidies.” Which type of people would fall into this group? The poorest poor have Medicaid. People between with income between 0-250% of the FPL are receiving large subsidies from the government.

One of the major arguments in favor of universal health care is that it creates a more equal society, giving the poor a helping hand. Yet if the working poor are exempted from buying health insurance, why is California spending all this money for health insurance when the working poor don’t have insurance.

Of course, providing these subsidies will be expensive. According to the L.A. Times, California is “about to enter a ‘fiscal state of emergency’ because of a $14-billion budget shortfall.” Who is going to pay for the subsidies?

  • Smokers: The California government will raise the tax on cigarette smoking significantly.
  • Business: Business will have to provide health insurance. If they do not, they will be hit with a tax fine.

Do I think the California plan is a step in the right direction? Maybe one step forward and one step back. Providing means-tested subsidies to help the poor afford health insurance is a step in the right direction for those who prefer a more egalitarian society. Further, although the state is financing much of the insurance premiums, it is leaving insurance to the private market. However, in the presence of a private insurance market, I believe that a minimum standard of health insurance should be established by either the government or decided on by insurance groups. This is not because I think regulation is good in general, but because 1) the insurance contract customers sign is incomprehensible and customers do not know the benefits they are receiving and 2) insurance companies often deny claims that they should pay. Setting a minimum standard with regulation could help to clear up some of this ambiguity while allowing insurance companies to offer more generous, more expensive plans if they choose.

What I do not approve of in the California plan is that health insurance is mandated. Poor families may better be able to use cash to buy food and pay for rent rather than health insurance subsidies. Healthy individuals are forced to buy a product they don’t need. Further, do not be fooled by the Governator’s statements that ‘this plan will pay for itself’; this piece of legislation will be very expensive and increase the utilization of medical care in the U.S.

Here are some news stories covering the issue:

And here is the actual text of the bill.

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  1. jacksmith says:

    Insurance mandates are not universal health care. And politicians should stop calling it that. Nothing is Universal Health Care except “Single Payer Not For Profit Tax Supported Government Managed Health Care” (HR 676). Insurance mandates will be worse than what you have now. And what you have now is a complete, and total disgrace, and horror show. Insurance mandates will (require) you to buy insurance from the private insurance companies that have been ripping you off, and killing you by the thousands.

    The #1 cause of injury, disability, and DEATH in America is, Health Care. More people die now from contact with the American Medical Health Care system than from any other cause of death. More than from Cancer, Heart disease, or Stroke. More than any other country in the world. Many times more than any other people in the world. Contact with the American medical health care system is the #1 risk factor now for injury, disability, and premature DEATH in America. This fact is a catastrophic indictment of the entire US Health Care System.

    Driven by greed. And a rush to profit. Thousands of Americans are killed, and injured daily in America. By compromised health care. Cutting corners. Over, and under treatments. And poisonings with all manor of toxic, poisonous pharmaceuticals. Especially the children. America only makes up 2-4% of the world population. But Americans buy, and consume 50% of all pharmaceuticals world wide.

    This is an emergency. America is in a crisis. And more Americans have died from this health care crisis than have died in all the wars in US history.

    But the tide has turned. And the message is getting out. And taking hold about the fact that we have a very serious, and major health care crisis going on in America. Hurting everyone. Especially our precious little children. Rich, and poor alike. And most all Americans seem to understand now that “HR 676 Not For Profit Single Payer Universal National Health Care For All (Medicare For All)” is the way to go. Like all the other developed countries have done. Americans want government managed, tax payer supported health care Now. Medicare for all. Like other developed countries have. And like older Americans have now. Accept no substitute.

    I am sick and tired of hearing how the candidates, and politicians health care plans are going to protect, and preserve the private for profit health insurance companies that have been killing, and ripping off the American people. And now the politicians want to mandate (require) that every American has to support the private for profit insurance company’s that have been killing, and ripping you off. Or you will be fined, and PENALIZED. Thats right. PENALIZED. Ridiculous! The politicians really think you are all detached idiots. CASH COWS! To lead to the slaughter. Don’t put up with that.

    Just look at what is already happening with Massachusetts insurance mandates. It’s a catastrophe. Financially, and medically for all the people of Massachusetts. And the private insurance companies just raised their rates by as much as 16%. And everyone has to pay now. It’s a slaughter.

    It’s NOW TIME to bring out the BIG GUNS!! The BIG GUNS!! are you. The American people. And anyone else that wants to help. From now until HR 676 is passed into law. I want every person to reach out and touch their fellow Americans every day if you can. I want you to take a phone book. And call at least one of your fellow Americans every day. And ask them to pickup the sword of HR 676 Single Payer Not For Profit Universal Health Care For All (Medicare For All).

    Call more than one each day if you can. And ask them to do the same as you are doing if they can. And also to put maximum pressure on their politicians to get HR 676 done. And to make sure their politicians support HR 676. Accept no substitute. HR 676 is a no-brainer. It’s the best way to go on health care. It’s the only moral, and ethical way to go. That is why every other developed country has done it. Most did it years ago. See sickocure.org, and http://www.house.gov/conyers/news_hr676.htm

    I know that many of you have been doing a fabulous job of spreading the word by talking it up with family, friends, and co-workers. And putting pressure on the politicians to get HR 676 done ASAP. The phone calls to your fellow Americans will increase the pressure. And increase momentum for HR 676 at an astonishing, and exponential rate. And I know many of you have been wanting to do something more to help. The phone calls to your fellow Americans is something you can do every day to help.

    Trust me. It will be something to see. But you have to keep the focus, and pressure on getting HR 676 passed pronto. They will try to distract you. With all manor of other crises, and catastrophes. And other plans. Don’t be distracted. HR 676 Single Payer Not For Profit Universal Health Care is the #1 concern of the American people. Thousands of Americans are dieing daily now. And you or your loved ones could be next.

    There is no good reason HR 676 cannot be passed into law well before the coming elections. And SCHIP should have been passed by now. Even if it was for 3x the 35 billion congress ask for. Do not tolerate delays. If it is not passed before the coming elections. All America will know which politicians are on the side of the American people. And which are not when they vote. Well before the elections. This is supposed to be a democracy. And well over the majority of Americans want tax payer supported single payer government managed health care for free for all Americans as a right. Many of the politicians will be soliciting your financial, and political support for the coming elections. Make sure you send a note telling them that you expect them to support HR 676 if they expect you to support them.

    Everyone can do this. Most of you are well informed about HR 676. This truly is one of those no-brainers. Be considerate of your fellow Americans when you call. But be comfortable about calling. These are your fellow Americans. Some will be receptive. And some will not be. Some maybe rude, and mean. Just thank them, and move on to the next. Most will be with you. And if you get a call from one of your fellow Americans about HR 676. Let them know you are already on board. And thank them for calling. Build them up. And keep them strong. They are fighting for all of us.

    Keep fighting. Pickup that phone, and call your fellow Americans. It’s the right thing to do. You will win. Bless you all…

  2. […] California s Attempt at Universal Health Care On Monday, the California Assembly passed a bill that mandates health insurance for all California’s citizens. The government will provide subsidies households with incomes below 250 percent of the federal poverty level. Those earning between 250 percent and 400 percent of the federal poverty level [FPL] would be able to deduct premium costs […] […]

  3. Jeff Emanuel says:

    The plan concocted by Gov. Schwarzenegger and Speaker Nunez – and passed along by the General Assembly – to decrease the numbers of the uninsured in bankrupt California is not only inefficient, but will cause far more problems for the health care system and the state economy than it will solve.

    Funding yet another government program on the backs of tobacco consumers only builds even higher the house of cards on which so many government programs are now being built. Due to the declining number of smokers in California (ostensibly the goal of the state and federal governments when they began levying prohibitive taxes on tobacco products several years ago), the pool of money from which to pull funding for legislators’ pet projects, including state health care, is steadily shrinking – and adding $1.50 to $2.00 per pack in taxes to what is already being charged will just cause that pool to dry up even quicker, as people turn to the black market or out of state sources, or forgo cigarettes altogether.

    Then there is the payroll tax increase, which will take from small businesses and corporations alike a percentage of their payroll for the purpose of providing health insurance to uninsured workers. While this measure may allow Sacramento to claim a small victory in their quest to move more names into the “insuredâ€? column on the state’s rolls, adding to the tax burden felt by small business owners will make less capital available for hiring new workers or paying existing ones. This will ultimately result in depressed wages and exacerbated unemployment in California, as well as in even more businesses leaving the state (or deciding against coming) due to the oppressive tax climate.

    Finally, there is the additional $2.3 Billion in taxes on the state’s hospitals (which I don’t believe was mentioned in the OP). Levying more taxes on these facilities will simply increase the price being paid by those who actually purchase medical services since, as can be explained by simple economics, additional costs (including taxes) are always passed along to paying consumers.

    An act of government mandating that citizens purchase a certain product is never an economically sound move. The same can be said of rolling out new government programs which are concurrently funded by a declining revenue source (smokers) and a source which will have even more reason to cease being one, should this measure pass (business, which will be even more enticed to leave California for any of the 46 other states which are ranked above it in tax-friendliness).

    In light of the $14B budget deficit California currently finds itself mired in, this proposal — especially at this time — is, in a word, foolish.

    More is available here.

    Jeff Emanuel
    Research Fellow for Health Care Policy, The Heartland Institute
    Managing Editor, Health Care News

  4. Matt Horn says:

    My lord an infomercial for 676! What a disaster this would be. It is the encapsulation of every failed socialist system that has yet been tried. This tired rhetoric is annoying, but the abject lies are infuriating. To support HR676, you must be willfully ignorant on how healthcare is administered and financed. Do you really want to make our top notch providers slaves to the federal government, (I know the real answer, don’t bother.)

    Jeff, great piece. Thanks for laying out the pieces that many have refused to consider in this proposal.

  5. […] Health Care in California? Before you get too excited, read as Jason Shafrin presents California’s Attempt at Universal Health Care posted at Healthcare Economist, saying, “The Healthcare Economist analyzes California’s […]