MariaCare or SheilaCare? Both miss the point

In their debate on the California health care initiative, both Daniel Zingale and Anthony Wright think that big government is the solution to our healthcare woes.

Zingale, Maria Shriver’s chief of staff, represents Gov. Arnold Schwarzenegger’s solution: The state orders you to get health insurance, to go to the gym, to eat your vegetables, and so on. Mr. Wright, executive director of Health Access California, has a much more direct approach: complete government monopoly over health care, via state Sen. Sheila Kuehl’s SB 840.

The real difference between them, however, is that Wright understands where his vision will go, whereas Zingale does not.

Through a massive tax hike that will hit every Californian, “MariaCare” hopes to reduce a so-called “hidden tax” caused by uninsured patients who apparently have nothing better to do than sit around emergency rooms consuming treatment for which the rest of us pay. Although this cost is real, it is relatively minor when weighed against other unnecessary costs the government has already laid on the system.

Indeed, the “uninsured crisis” itself is properly regarded as a symptom, not a cause, of high costs. The insured consume two and a half times as much health care as the uninsured. This massive consumption is largely a result of being insured, and therefore immunized from the direct cost of health care. It’s as if you paid a $10 co-pay for a tank of gas and your car insurer paid the balance. The roads would be even more congested than they are now! Further, one third to one half of this spending does not contribute to better health. The blunt fact is that most of us are overinsured—but few of us are prepared to accept that fact, so most politicians ignore it.

This overinsurance has created a vicious cycle of cost increases, which causes people who think they won’t have high health costs to avoid insurance. Indeed, 80 percent of the uninsured self-report good, very good, or excellent health. And, because California government mandates require coverage for dozens of items (including alcoholism, contraceptives and blood-lead poisoning), these folks are forbidden from buying insurance that only covers catastrophically expensive illness. So their costs are even higher than they need to be.

Ignoring these facts, the governor intends simply to order us all into health insurance that is inflexible and out of touch with the needs of an increasing number of Californians. That’s why his plan will increase—not decrease—health costs. You don’t have to be a great health economist to figure out that if the cure for a “hidden tax” of $9.5 billion is an explicit tax of $12.1 billion, we are better off with the hidden tax. Worse, the governor has embraced the two most catastrophic regulations possible for health insurance.

In group markets, “guaranteed issue” and “community rating” are bad enough. In the individual market, they are a death-knell. They allow people to wait until they get sick to buy insurance, and force insurers to set premiums for everyone at the cost of the most expensive beneficiary, resulting in a “death spiral” as healthy, young people opt out of insurance. That’s why premiums in the individual market in New Jersey are three times as much as in California.

Mr. Wright and his ideological soul mates are willing to play along with the governor for now because they know that his plan will lead to a very frustrated, angry, and unhealthy population. That’s why Sen. Kuehl re-introduced her horrific SB-840 last Wednesday. This bill would replace private insurance with a government monopoly. If you think your health plan is miserable now, wait until the state government decides how much each doctor is paid, which pills you can take, how much hospitals can invest in new equipment, and when you will get your surgery. (Within four or five months, judging by the single-payer experience in Canada.)

Our health-care system lets anyone but the patient decide how health dollars are spent. It has to change, but in favor of less—not more - government control. The status quo and the alternative of Zingale and Wright are all profoundly un-American. Like the governor, I’m an immigrant and I can see that. Why can’t he?

John R. Graham is director of Health Care Studies at the Pacific Research Institute, a free-market think tank based in California.