Unions Stop Universal Health Care in California

Unions Stop Universal Health Care in California January 31, 2008

From the Wall Street Journal:

On Monday, California Gov. Arnold Schwarzenegger’s “universal” health-care plan was shot down by a committee in the state’s Senate, 7-1. The most vociferous opponents were not fiscal conservatives, but labor unions that launched a last-minute revolt against its most crucial feature: an individual mandate that would have forced everyone to buy coverage.

This defeat has national political implications. Hillary Clinton, for example, has denounced Barack Obama for refusing to include an individual mandate in his health-care plan. Yet many California unions argued that a mandate would force uninsured, middle-income working families to divert money from more pressing needs toward coverage whose price and quality they cannot control.

The unions are correct: This is exactly what is happening in Massachusetts, where Mitt Romney enacted a similar plan two years ago as governor. (And Mr. Romney’s plan is the inspiration for both the Schwarzenegger and Clinton plans.) The experience in the Bay State deserves a lot more scrutiny than it has been getting.

Massachusetts uses a sliding income scale to subsidize coverage for everyone up to 300% of the poverty level — or a family of four making around $60,000. Everyone over that limit is required to pay for their own coverage if their employers don’t provide it. All this has inflated demand, which, combined with onerous regulations on insurance suppliers, has triggered premium increases of 12% for this year — double last year’s national average.

No one is escaping the financial sting. The state health-care bill for fiscal 2008-2009 is expected to touch $400 million — 85% more than originally projected. Still the state won’t be able to fully shield those it subsidizes from the premium increases. But uninsured folks who don’t qualify for government help really get pounded. Before the hike, the cheapest plan for uninsured couples in their 50s cost $8,200 annually. Now, unless government bureaucrats hand them an exemption, they might well find it cheaper to pay the penalty — up to half the price of a standard policy — than purchase insurance. That is, pay to remain uninsured. This is legalized extortion: TonySopranoCare.

More. (HT: Arnold Kling)

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