One Step Forward, Ten Steps Back: How California Will Make Health Care Much More Expensive

by | Feb 11, 2007

California is a huge state with a huge population, a huge economy and a huge, rapidly growing government. Any attempt by that government to address health care issues draws the aggressive lobbying attention of a huge number of corporate, union, religious and political advocates. While there is some hope for creating conditions that would lead […]

California is a huge state with a huge population, a huge economy and a huge, rapidly growing government. Any attempt by that government to address health care issues draws the aggressive lobbying attention of a huge number of corporate, union, religious and political advocates. While there is some hope for creating conditions that would lead to affordable health insurance, Governor Schwarzenegger would provide a strong push in the wrong direction. There is a great threat of moving toward a system that would increase both government and individual spending on health care.

Some good ideas have been put forward about expanding tax-free accounts for individuals or employees through their employers. Allowing larger amounts to be set aside in such accounts, allowing them to be used to pay insurance premiums as well as out-of-pocket expenses, and freeing them of all federal and state income and payroll taxes could help to put the cost of health care back in the ballpark for hundreds of thousands of Californians. Another positive development is the promise to lift current regulations in California restricting nurse-practitioner health clinics in retail stores.

However, while the other proposals of the Governor may be well-meaning and serious attempts to address the issues, the consequences of virtually all of them would be devastating. They would immediately and substantially increase the cost of insurance and the amount of health care spending:

  1. Mandating that individuals buy insurance is as simplistic as mandating that everyone buy the food they need or the houses they live in. Income tax penalties are unlikely to force people to buy insurance if they don’t want to pay for it or think they don’t need it. There would still be many uninsured.
  2. Government-provided health care to all children necessitates both higher and unmanaged spending. Who will determine the exact nature of the health care that every child really requires–including every child of illegal immigrants? The parents, who pay nothing? Or the doctors or the providers or the insurance companies billing the government? Or the government itself? Or anyone who cares what it costs? However implemented, it will take a lot of new spending.
  3. Although prevention is very important, insurance companies should not be required to provide “wellness” coverage. That means they must pay your gym membership. And your bills from Weight Watchers. And your stop-smoking clinic. On top of the huge list of specific treatment mandates already on current health insurance, will “wellness” coverage bring the cost of insurance down?
  4. How about the new “provider tax” of 4% on the revenue of hospitals, and 2% on physicians? We are told they should be forced to pay the tax because they will save money by no longer having to provide care to those without insurance. Sure, let’s add a new tax to the costs of those who provide health care. Who do we think will ultimately provide the money to pay those new taxes? Will the hospitals or dentists print it in a little back room?
  5. Government-funded clinics in elementary schools would put schools in the health care business, which is infinitely beyond their competence. It would distract the schools from what they are already finding to be a very challenging job–education. Such clinics would be a bonanza for public employee unions. They would most likely be less convenient and less available than the new health care clinics in stores like Target and Wal-Mart. And who could doubt that they would be more expensive to operate?
  6. The tax of 4% on businesses that do not provide health care to their employees may encourage many to simply pay the tax, drop the insurance in the face of rising premiums and save the cost of administration. Employees who now receive insurance as a tax-free benefit will then have to find their own money from after-tax income to pay their share of premiums. Their cost of health insurance will go up.

The really bad news is what the list of proposals will look like after the California Legislature works them over and adds more dubious ideas over the next few months. If you want to know, go to Massachusetts and see.

Unfortunately, expensive ideas that won’t work well are not the worst of the problem. More fundamentally important is that, in a free society, many of the proposals should not even be given a try. They go against the proper moral and political context of a country that is based on and upholds the rights of the individual.

Apparently, if people need health care, we must assume that is all that matters, and it must be seized and given to them with no regard for anything or anyone else. Give everyone all the health care they want, no matter what it costs or who must be forced to provide it. Take away everything else: individual rights, private property, privacy of medical records, personal choice. A need for health care must obliterate even the concept of freedom.

At the root of this is ideological hatred for free enterprise and all business as such, and the idea that health care costs are out of control because insurers and providers make a profit. In reality, it is the very requirement to make a profit that necessitates the primary restraint on costs. Why do the critics blame insurers so bitterly about the administrative mechanisms to monitor and control costs?

Drawing on an endless source of tax revenue and borrowing, government medical care does not bother about such things as cost control or fraud–and thus we have seen a geometric expansion in government medical spending for forty years. If the government is so much more efficient than corporations, why not eliminate all private commerce and have the government nationalize and run everything? Didn’t somebody try that? Did it work?

Those who admire socialized medicine in other countries often add to this a veneer of contempt for any uniquely American values. Other nations may not have a Bill of Rights, or a Constitution, or any concept of inalienable rights. But a cosmopolitan admiration of all things foreign, collectivist, or even tribal, is too often rooted in contempt for America. They think that Europeans and Canadians, as one aspect of their political and moral superiority, have turned their health care over to government–so Americans must follow. Is that why people came to America? To make it just like the old country?

At least Governor Schwarzenegger loves America and loves California. But as much as he wants to make health care more affordable in California, his proposals will make it more expensive. If you think he wants to help, then you are going to have to help him first by making sure most of these proposals never see the light of day. Then we can focus on what the government can really do–or in many cases stop doing–to make health care affordable for free people.

Richard E. Ralston is Executive Director of Americans for Free Choice in Medicine.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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