PERSPECTIVES ON PROPOSITION 186 : This Is the Wrong Prescription : A ‘single-payer’ health-care delivery system won’t work; it would be an economic and medical disaster.

As banker to millions of California residents and businesses and one of the state’s largest employers, Bank of America believes it is important to ensure that high-quality health care is accessible to all Californians, that the spiraling costs of health care be contained and that a delivery mechanism be designed that will not stifle economic growth. Proposition 186, we believe, is not the answer.

Congress has grappled with these issues and has so far been unable to resolve them. Now, Californians are faced with a ballot initiative, Proposition 186--the so-called single-payer proposal. Its supporters say Proposition 186 will make high-quality health care accessible to all without increasing costs. It is tempting to believe such a glowing scenario, especially after the disappointment over congressional inaction. Unfortunately, Proposition 186 cannot work as its supporters envision. In fact, its passage would cause serious deterioration of the state’s economy, ultimately leading to significant cutbacks in health care.

At best, Proposition 186 threatens to derail California’s long-awaited economic recovery. At worst, it could virtually disable the state’s health-care delivery system. As such, 186 violates the first tenet of the medical profession’s Hippocratic Oath: Do no harm.

The plan’s proponents would have us believe that for the same number of health-care dollars Californians pay now, Proposition 186 would give us a greatly improved system, including universal coverage, long-term care, prescription drugs, mental, dental and eye care. As the saying goes, if it sounds too good to be true, it probably is.

The financial facts tell us that Proposition 186 cannot deliver what it promises. Authors of the plan themselves estimate that a $40-billion tax increase will be needed to replace the private-insurance premiums individuals and employers now pay. This tax increase would be the largest ever imposed in any state. Much of it would come from new state income taxes--a minimum of an additional 2 1/2% of an individual’s total income. This may not seem like much, but the numbers add up quickly. For example, a family of four with a $32,000 income, applying the standard deduction, would incur a 230% increase in its state income-tax bill--from about $296 to about $976.

In addition to new income taxes on individuals, California employers would be subject to a payroll tax increase of between 4.4% and 8.9%. In the state’s current economic climate, few if any employers could afford to pay those new taxes without making offsetting adjustments elsewhere. Those adjustments would take the form of reduced pay rates, additional staff reductions or both. Many employers would be forced either to downsize or to move. An independent study commissioned by the state’s nonpartisan Office of the Legislative Analyst predicts that nearly 300,000 California jobs would be lost by 1998.

That study also demonstrates that even with a $40-billion annual tax increase and a tripling of the state’s general fund, the single-payer plan would produce a state budget deficit of $48 billion by 1998. UC Berkeley’s Graduate School of Public Policy and Health and Medical Sciences predicts funding shortages of $14.5 billion to $27.5 billion a year. This deficit would have to be made up by raising taxes further, reducing services or both.

The options available for dealing with these potentially immense financing shortfalls would be limited and wholly inadequate. Californians could not afford the kinds of tax increases that would be continuously necessary. The state’s credit rating would be imperiled, dramatically increasing our cost of borrowed money.

In short, unless the benefits offered under the health-care system were dramatically reduced, our economy would spiral downward. Not even a robust state economy could withstand such rapidly escalating financial burdens. And California’s economy is far from robust.

No Californian can afford to take the risk that Proposition 186 will fall short of delivering on its promises. The single-payer system would dismantle the existing infrastructure of private health-insurance providers, and if it fails, California would be left with a gaping health-care delivery void.

As much as we might like to believe that a health-care utopia is within reach, unfortunately, it is not. Congress has just demonstrated the complexity of designing an affordable and workable health-care system. Such a task is too great, too important and too complicated to attempt via an all-or-nothing ballot initiative. Only a comprehensive and public legislative process can adequately address an issue of this economic and social magnitude.