California Pushes Government Takeover of Health Care System

Published June 1, 2006

On April 11, I had the privilege of participating in a public forum sponsored by the Mendocino County Health Planning Council. We debated the merits of the so-called California Health Insurance Reliability Act, which would impose single-payer, government-monopoly health care in California.

Last spring, state Sen. Sheila Kuehl (D-Los Angeles) introduced S.B. 840, which passed the Senate in May 2005 on a 25-15 party-line vote. Six weeks later, the State Assembly’s Health Committee passed the bill 9-4 and referred it to the rules committee, where it remains at press time. S.B. 840 is largely a rerun of the California Health Security Act outlined in Proposition 186–which went to a special ballot in November 1994 and which California voters defeated by 73 percent.

The advocates of government-monopoly health care have waited 12 years to resurrect this proposal. Legislators believe such a bill enhances their political traction, but it better serves as something else: a shocking testament to their willingness to take away Californians’ freedom to choose whatever health care best suits them. While the bill sits in legislative limbo, S.B. 840’s advocates have acted tirelessly to move the climate of public opinion in favor of a government takeover of health care.

Direct Debate

One tactic has been to get California’s county governments to pass resolutions supporting S.B. 840. Fortunately, a free-market-leaning public servant in Mendocino County convinced her political superiors not to pass a resolution without discussion, and to host a public debate where both advocates and critics of the bill could speak to the people directly.

S.B. 840 advocates at the debate included representatives from Health Access California, Kuehl’s office, and a retired physician from Ukiah. Mark E. LaRose, president and CEO of the Ukiah Valley Medical Center, spoke from his perspective as a hospital manager. Richard E. Ralston, executive director of Americans for Free Choice in Medicine, a grassroots organization that advocates rolling back government control of U.S. health care, joined me in opposing the bill, which is loaded with absurdities.

S.B. 840 makes promises the state of California cannot possibly keep. If you worry that government bureaucracy will end up costing too much, don’t: The bill limits administrative costs to a maximum of 5 percent of the system’s spending. If you worry about losing access to your doctor, the bill takes care of that, too: It “guarantees” you the choice of your own doctor. What happens when your doctor moves to Nevada or Arizona to escape government-controlled health care is unclear.

Conflicting Reports

S.B. 840 is supported analytically by a report from the Lewin Group, a consulting firm in Virginia. The Lewin Group’s report claims S.B. 840 will result in small monetary savings of about 4 percent of the state’s total health costs. Remarkably for an economic analysis, the Lewin Group report avoids estimating added costs the government monopoly will impose on health care.

Even more curious, in 2000 the same Lewin Group wrote an analysis critical of single-payer health care in Canada, warning Americans against adopting such a system because “the cost savings could be associated with a decline in quality of care and an upsurge in negative public opinion.”

S.B. 840’s advocates simply dismiss a better way to reform California’s health care: getting the money out of the hands of the government and into the hands of the people who need it. We are in the third year of federally tax-advantaged health savings accounts and high-deductible health plans for working people. But the state still does not allow Californians to deduct health savings aebeccount contributions from their state taxable income, with the result that millions of dollars that we would otherwise be able to spend on our own health care sits in state coffers.

Sadly, doctors approve of S.B. 840 because it would simplify their billing procedures. I cannot fault them for that: Current regulations make insurance billing impossible for anyone to comprehend. Other people favoring the bill had a similar perspective: Simplicity is good. They fail to understand that our health system’s complexity and waste comes from too much government control, not too little.

Policymakers here in California show an inability to develop measures that reduce costs and increase accessibility. I fear the people will simply give up from a sense of sheer exhaustion and let the government take the whole thing over.

John R. Graham ([email protected]) is director of health care studies at the Pacific Research Institute in San Francisco.