Expert Comments: Proposed California Health Care Expansion Will Over-Burden Taxpayers

Published December 18, 2007

(CHICAGO, Illinois – December 18, 2007) On December 14, California Gov. Arnold Schwarzenegger (R) and Assembly Speaker Fabian Nunez (D) proposed legislation that would expand health insurance by increasing state payroll and cigarette taxes.

Experts contacted by The Heartland Institute offered the following comments about the proposal. You may quote from this statement or contact the experts directly at the phone numbers and email addresses provided below.

“Governor Schwarzenegger’s proposal is going to come as a shock to many Californians who have been told that ‘universal’ health care is ‘free.’ These same folks will wake up to also discover that ‘universal’ care is really ‘government’ health care. And that’ll be a rude awakening.”

Peter J. Pitts
Center for Medicine in the Public Interest
[email protected]
(919) 483-0492

“A tax increase is not health reform. For almost a year now, Gov. Schwarzenegger and the Democratic legislative leadership have wrangled over how much and whom to tax to throw more money at what the governor himself calls a ‘broken system.’

“Real health reform will cost less, not more, than the status quo. This includes state income tax deductibility for Health Savings Account contributions, deregulating health insurance so that premiums drop, deregulating the scope of practice of nurse practitioners and other health professionals, and legislating a way to allow Section 125 payroll deductions to be directed to pay for individual health insurance.

“The proposed tax hike will achieve none of these goals.”

John R. Graham
Director, Health Care Studies
Pacific Research Institute
[email protected]
(415) 989-0833

“The Schwarzenegger-Nunez plan is going to place a tremendous burden on employers if it becomes law after the passage of a funding initiative in November 2008.

“The state is already facing a projected budget deficit of about $14 billion, so placing more burdens on employers through a mandate is bad for attracting new business and expanding existing business. It also will encourage existing businesses to consider whether they want to continue to be employers in California.

“Mandates such as this are not the answer to the problem of the uninsured. They are costly and are not working in Massachusetts. What California needs is universal choice in health care.”

Sally Pipes
Pacific Research Institute
[email protected]
(415) 989-0833

“A tax on employers is ultimately a tax on consumers or workers; any employer tax is passed on to consumers in the form of higher prices, and on to workers in the form of lower wages, lost compensation, or even job loss.

“A tobacco tax, aside from being dramatically regressive, is a thoroughly unreliable stream of revenue for health care expansion; at the end of the day, you will need more smokers or the imposition of higher taxes on workers and consumers.”

Bob Moffit
Director, Center for Health Policy Studies
The Heritage Foundation
[email protected]
(202) 544-5421

“Oregon voters sent Californians a message in November when they voted down a new 84.5 cents per pack cigarette tax to pay for children’s health insurance. The vote was 60 percent against and 40 percent in favor in this blue state that many thought would easily pass such a proposal.

“Voters apparently weren’t willing to saddle just smokers with the cost of this expensive new government program, and they didn’t buy claims that a declining revenue source could cover rising health insurance premiums for very long.

“As Oregon’s Democrat Governor Kulongoski warned, ‘If you can defeat it here in Oregon, you send a chilling message to the rest of the country.'”

Steve Buckstein
Senior Policy Analyst and Founder
Cascade Policy Institute
[email protected]
(503) 242-0900

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