CALIFORNIA COMMENTARY : Getting a Jump on Health Care : Do away with private insurance, make the state the ‘single payer’--this could be the biggest consumer revolt ever.

Like a stealth bomber, Proposition 186 is headed our way. It’s packing a mighty wallop and approaching rapidly, but it has yet to appear on news media radar.

If it passes in November, Proposition 186 will provide cradle-to-grave health-care coverage for all Californians, coverage that can never be taken away, including medical expenses, long-term care at home or in a nursing home, prescription drugs, mental health and dental benefits, even eyeglasses.

Proposition 186 would accomplish this by eliminating the hundreds of private health insurance companies, each with its own duplicative forms, salespeople, advertising, executive salaries and profits, recovering the 27% of our health-insurance premiums that is wasted on these nonessential and non-medical expenses.

Proposition 186 would put the $40 billion-a-year California health-insurance industry out of business, and use the more than $10 billion in consumer savings to pay for expanded coverage. A new state agency would collect tax money instead of premiums and pay 100% of medical bills. Individuals would never see a medical bill or insurance form for covered care again.

This is arguably the biggest, most important, most far-reaching initiative ever placed before voters. Its financial impact would far exceed that of Proposition 13. Even Proposition 103, the strongest initiative attack on insurance to date, stopped far short of so drastic a solution, seeking only to regulate, not dismantle, its target.

Yet, despite its importance, Proposition 186 has received scant press coverage. Unless that changes substantially and soon, voters will be left at the mercy of sound bites and unreliable advertising. Hardly the best way to make a decision with severe financial and health implications for us all.

To get the debate under way, let’s look at some of the claims and counterclaims. Proponents of Proposition 186 argue that what we already spend on health insurance could buy complete coverage for every Californian. We don’t get that coverage because of the $10 billion a year gobbled up by insurance company overhead and profit. Under a single state agency, the industry’s 27% overhead could be reduced to 2%.

Opponents scoff at this claim, but supporters counter that Medicare runs on exactly that margin, and is the one government program most like a “single payer” plan. In any case, Proposition 186 sets an absolute maximum of 4% on administrative costs.

Proponents say that Proposition 186 is the only way to preserve our private health-care system. Insurance companies are placing increasingly stringent limitations on which doctors patients may see, and what treatments doctors may prescribe. Under Proposition 186, every Californian would receive a benefits card that could be used to get care from the doctor, hospital or HMO of his or her choice.

Proposition 186 makes health insurance, but not medicine, a publicly administered function. Any doctor could maintain a private practice, any hospital could remain privately owned, and all HMOs would be free to offer care; all health providers would have to compete on the basis of quality, not price.

Opponents argue that Proposition 186 would create a vast, impersonal and unwieldy state bureaucracy, leaving us with a health-care system that combines the efficiency of the post office with the humanity of the Internal Revenue Service. Savings would be eaten up by government waste; state bureaucrats would come between us and our doctors.

Proponents counter that it is the bureaucracy and duplicative paperwork of the insurance companies that would be eliminated. And while the health-insurance system would be streamlined and made more efficient, the health-care system would be left intact. The single state insurance agency would collect new tax money and use it to pay everyone’s bills, after negotiating fees with all health providers to control costs. The agency would not tell doctors what services they may or may not provide, as health insurance companies now do.

Opponents complain that Proposition 186 includes the largest tax hike in history: a 2.5% surcharge on taxable income, a payroll tax ranging from 4.4% to 8.9% depending on number of employees, and a $1-per-pack cigarette tax. Businesses would be hurt, jobs would be lost, and California’s economy would go into an even deeper tailspin.

Proponents complain that opponents never reveal that these new taxes are more than offset by the fact that no business or individual would ever pay insurance premiums again. All premiums, all deductibles, all caps on expenditures and most co-payments and out-of-pocket expenses would disappear. Businesses would benefit because the new payroll tax would be less than their current health-insurance costs, just as the new income tax would be less than what most families now pay for health insurance.Businesses also would benefit from reduced workers’ comp premiums, since a third of that coverage is health-related. Opponents say that Proposition 186 would be an open invitation to medically indigent immigrants and out-of-staters to come to California for free care. Proponents point out that only California residents (as defined by the Legislature) would receive benefits cards. While there may be some minor abuse, the advantages of granting health insurance to the 5 million Californians currently without it far outweigh the disadvantages.

Opponents argue that Proposition 186 is too good to be true. Proponents say that they are biased, and cite official disclosure reports revealing that 92% of their funding comes from the same health-insurance lobby that is spending so heavily to block reform in Washington.

Whether Congress changes our health-care system or not, voters across the nation will ponder reform for a long time to come. But only in California will they actually make the decision about the kind of reform they want.