There’s No Shortage of Swell Ideas for Health Insurance Reform

Published July 1, 2007

Just about everyone in California is coming up with a swell idea for creating a new health insurance system.

Though Gov. Arnold Schwarzenegger’s (R) swell ideas have yet to be written into legislative language or even defined very well, an article in the Sacramento Bee indicates he would require only “universal” coverage of a $5,000 deductible plan that would cost $100/month.

That’s not a bad idea, though it is still puzzling why he needs to mandate it. California is currently one of only a handful of states that has not conformed its income tax law to allow a state tax deduction for Health Savings Account (HSA) contributions, which would seem to be a better first step.

Massachusetts Mishap

The article also notes Massachusetts has already given up trying to cover everyone, deciding instead to allow 20 percent of the uninsured to remain so.

Meanwhile, the Democrats in the California Legislature aren’t waiting around for Schwarzenegger to better-define his plan. Both Senate President Pro Tem Don Perata (D-East Bay) and Assembly Speaker Fabian Nuñez (D-Los Angeles) are pushing their own proposals, neither of which tries to cover everybody, according to the Los Angeles Times.

Like Schwarzenegger, they have no idea how much their plans would cost.

“Nuñez’s plan would not cover single, childless, and unemployed adults,” the Times reported. “And his requirement that all employers contribute to coverage would exempt the self-employed as well as businesses that employ only one worker, have payrolls of less than $100,000, or have been operating for three years or less.”

The Times further reported, “Perata’s plan mandates that everyone earning more than 400 percent of the federal poverty level be insured. He would require employers to provide coverage, but the self-employed would be exempt. Both plans would insure all children, substantially extend coverage to impoverished families, and help small businesses obtain affordable coverage from private carriers.”

Clear Illegality

The three California leaders have something in common. Apparently none of them has ever heard of the Employee Retirement Income Security Act (ERISA), the federal law that prohibits states from enacting any law that “relates to employee welfare benefit plans.” This is the same law that caused the 4th U.S. Circuit Court of Appeals to strike down Maryland’s employer mandate last year.

All the California proposals are flagrant violations of ERISA and would take about 30 seconds to be overturned in any federal court. By the way, so would the Massachusetts law that requires employers to pay $295 per employee per year if they don’t provide coverage–but the business community in Massachusetts has apparently decided the costs of litigation aren’t justified by a $295 per-employee assessment.

The Times suggests the legislature’s leaders may be in a stronger position than Schwarzenegger in expected negotiations. It is their proposals that will be the basis for negotiations; all they have to do is give Schwarzenegger enough to avoid a veto.

That seems fairly likely, and then it’s on to court.

Sources: “Health care proposals due to reach lawmakers,” by Clea Benson, Sacramento Bee, April 22, 2007,

“Calif. Democrats go their own way on health care,” by Jordan Rau, Los Angeles Times, April 22, 2007,,1,418507.story?ctrack=3&cset=true

Big Government Conservatives

Paul Mulshine is a rare jewel in the American media. A columnist for the Newark Star-Ledger, he manages to cut through political hyperbole, as seen in a couple of recent articles.

The first, “Romney Health Plan Enough to Sicken a True Republican,” takes on much of the Big Government Republican establishment.

“Imagine some poor schlub trying to raise a family in high-cost Massachusetts on a take-home paycheck of $800 a week,” Mulshine writes. “And now try to think of how that guy can afford to shell out $200 or so a week for health insurance. I can’t. But Romney can.”

Mulshine then notes, “these days such ideas seem to be mainstream in the Republican Party. Its house organ, the National Review, recently carried an article on Romney’s program offering the view that once the necessary market reforms are in place ‘then there are no more reasonable excuses for anyone not buying health insurance.’ No excuses? How about this one: It’s a free country.”

The problem, though, isn’t just Romney, Mulshine observes. He notes former Health and Human Services Secretary Tommy Thompson’s Web site states, “We must use the private sector and the public sector to require health insurance for all.” This heavy-handed mandate, according to the Web site, “isn’t a heavy-handed mandate,” Mulshine points out.

Mulshine reports Thompson disavowed the statement once he was called on it. Two weeks later, Mulshine updated that story, reporting how Thompson’s campaign removed the wording from the site–“one down and several thousand more to go,” he notes.

Unaffordable Insurance

In New Jersey, state Sen. Joe Vitale (D-Middlesex) also wants to impose mandatory coverage, explaining to Mulshine, “If we don’t get everyone in, then the ship doesn’t sail.” Extending the metaphor, Mulshine suggests the ship is more likely to “run aground on the same rocks where past vessels have foundered.”

Mulshine quotes Michael Tanner, director of health and welfare studies at the Cato Institute in Washington, DC, as observing, “even before the plan takes effect this summer, Massachusetts officials are proposing exceptions that would exempt about 20 percent of the uninsured from the mandate.”

Mulshine goes on to cite Dr. Alieta Eck’s experience in providing care to the uninsured. She notes many of her patients would be able and willing to buy a catastrophic policy to supplement the services she provides, but New Jersey has made such coverage unaffordable–$1,900 a month for a single male–by imposing insanely costly mandates on insurance carriers.

Sources: “Romney health plan enough to sicken a true Republican,” by Paul Mulshine, Newark Star-Ledger, April 10, 2007,

“The great health insurance hoax,” by Paul Mulshine, Newark Star-Ledger, April 26, 2007,

Greg Scandlen ([email protected]) is founder of Consumers for Health Care Choices, a membership group based in Hagerstown, Maryland.