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Schwarzenegger Plans to Strong-Arm Everyone Into Crappy Health Care

This sounds like a bad idea in so many ways.

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. He campaigned for reelection on an anti-tax platform, but his administration argues that so many more people would have insurance that medical providers would make more money.

Tax on employers, tax on doctors, tax on hospitals. I particularly like the tax on businesses, which incentivizes them to stay under 10 employees. That'll help job creation.

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.

Two basic parts of the insurance business model out the window. The OC Register: "If you think premiums are high today when carriers can avoid high-risk customers, you haven't seen anything yet."

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. That works out to about $60,000 for a family of four.

A state health care program, paid for by you, to serve illegals. That oughtta go over well. Anyone remember Prop. 187? Also, note government assistance for anyone making less than three times the poverty level.

And Schwarzenegger said his plan would require every Californian to have health insurance.

"If you can't afford it, the state will help you buy it," he said, "but you must be insured."

More mandates and more taxes! OC: "Sadly, the governor's solution piles on more of what created the health care mess in the first place: government mandates, government-imposed costs and government regulations, which all artificially restrict the market, drive up costs and, ultimately, limit medical care, rather than expand it."

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."

Now, we're going un-hide the tax and lower the quality of your health care. Sound good? Capt. Ed doesn't think so:

One needs only look at the incentives to see what will happen with his proposal. Health care providers will decline, since taxes provide a disincentive to the market; doctors will find other venues in which to practice, and the best will capture the most lucrative economic positions, none of which will now be in California.

Small businesses, which will have to start paying an additional 4% of their payroll if they employ 10 or more people, will simply work hard to avoid that cap -- perhaps by outsourcing some of their functions to services in other states, which will expand to meet the market demand. Otherwise, small businesses will have to raise prices to cover the additional cost, which will make them less competitive than larger businesses and force more of them out of business altogether. That will result in inflationary pressure and a drop in employment, which will force taxpayers to spend even more money to insure the uninsured.


Kip Esquire dubs it a "war on physicians:"

How insane does one have to be in order to believe that the way to increase the supply of a scarce resource is by taxing the very people who are providing it?

Apparently Schwarzenegger is borrowing a page from the Michael Bloomberg book and hoping that living in California is so irresistible (i.e., that demand is so inelastic) that physicians, nurses and other health care professionals won't simply pack up and leave the state, no matter how impossible the health care socialists make it to function there. Recent evidence suggests otherwise.

Kevin M.D. agrees that docs won't like it.

Predictably, it's not enough for the Left, even at $12 billion:

Many aspects of the Governor's plan are praiseworthy, but the individual mandate and the plan's tax breaks for the wealthy should be rejected by the legislature. These proposed measures come shortly after the Governor called for deep cuts to welfare that will impact children. Shifting spending from the basic needs of poor children while handing out tax breaks to the wealthy is cynical politics and poor public policy.

Crush the health care system by taxing those who provide health care! Do it for the children!

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