In January California Governor Arnold Schwarzenegger announced his $12 billion health-reform plan, which includes requiring every Californian to have health insurance. It also establishes electronic health records that can be exchanged easily across computer systems on a statewide basis. While details of the plan have yet to be worked out, his proposal is summarized in the ten-page “Governor’s Health Care Proposal.” Following are points that may be of interest to Health Freedom Watch readers. The plan:
- Promotes Evidenced-Based Medicine: The plan would create a new “Healthy Actions Incentives/Rewards” program to encourage Californians to use evidenced-based medical services that are cost-effective and reduce disease. Citizens would pay reduced premiums for using government-approved medical services and engaging in sanctioned lifestyles. The proposal states, “All of the Healthy Actions programs are linked to the completion of a Health Risk Assessment and follow-up doctor visit.” Yet a major problem with state government serving as judge of best medical practices, rather than individuals and their chosen physicians and health-care providers, is that mandatory insurance-coverage policies will be heavily influenced by special-interest groups—the groups with the most money to fund research will be able to lobby the legislature for coverage and mandates of their services.
- Paves the Road to National Medical Screening: The proposal calls for establishing a national model for diabetes screening, prevention and treatment. It would develop “comprehensive” (i.e., everybody in, nobody out) screening for pre-diabetes and diabetes, and “proven interventions” would be directed at the targeted population. However, it is not clear whether the screening will be voluntary or mandatory and how other states will be encouraged to follow this initiative.
- Mandates Electronic Prescribing: In an effort to reduce medical errors, all health-care providers and facilities would be required to prescribe by electronic means by 2010. It remains unclear what privacy and security protections will be provided Californians’ prescription data. If the state is relying on the federal medical-privacy rule, citizens will not be asked permission before their data is shared for many purposes. Thus forcing all doctors and facilities to exchange sensitive information electronically would infringe on people’s privacy.
- Promotes Electronic Data Exchange: The plan calls for appointing a deputy secretary of health information technology (HIT) to coordinate the state’s HIT-related efforts to “achieve 100 percent electronic health data exchange in the next 10 years.” It promotes the use of standardized personal health records that are accessible via the Internet and smart cards that are portable between health plans. It also calls for the Office of Statewide Health Planning and Development to collect and distribute data on health outcomes. However, until citizens are ensured of their legal right to withhold consent before their information is shared, many will continue to oppose electronic medical records and national health tracking.
- Mandates Individual Coverage: The proposal would mandate all citizens to purchase health insurance and provide subsidies for those who cannot afford it. While this sounds benign—even responsible—digging a little deeper leads one to see that mandatory health insurance interferes with citizens’ freedom of choice and of contract. If government says everyone must purchase a certain type of health insurance that excludes an individual’s preferred treatments, he or she would have to buy additional insurance but could not buy a comprehensive policy more to his or her liking.
- Government Would Use State Employment/Tax Records to Enforce the Individual Mandate: The proposal states that “the salary tax withholding and payment process with the [California] Employment Development Department and the state income tax filing process will be utilized to promote compliance with the individual mandate.” Also, “systems will be established to facilitate enrollment of uninsured persons who use the health care system. Providers will play an important role in supporting enrollment by instituting such strategies as on-site enrollment at provider locations, as well as by underscoring the expectation that everyone present a coverage card at the point of service.” Wouldn’t linking health-insurance status to employment and tax records deter many illegal immigrants from seeking preventive and emergency health-care services and thus fail to enroll a large number of uninsured persons?
Mandating health coverage doesn’t mean everybody will comply, stresses John Graham, director of health-care studies at the California-based Pacific Research Institute, in a recent San Francisco Business Times article. “California law requires car insurance, but 25 percent of the state’s drivers remain uninsured.”
Moreover, Graham challenges a key argument Schwarzenegger uses to promote his plan. Schwarzenegger cites a New America Foundation study that asserts the average California family pays about $1,186 a year in “hidden taxes” buried in insurance premiums to cover the uninsured (about $455 for individuals). That’s $9.5 billion a year. But Graham says the claim is misleading.
“First, many uninsured have jobs. One fifth earn more than three times the federal poverty level—about $50,000 for a family of three. By forgoing health insurance, these people are voluntarily paying extra income tax—likely more than $2,000 a year for the family above. Even the governor estimates these extra taxes at $8.4 billion—so the uninsured already pay almost 90 percent of the so-called ‘hidden tax’ as explicit taxes” Graham explains.
“[T]here is a real hidden tax, but it is due to overinsurance, not uninsurance,” Graham says. “Because of bad incentives, insured Californians use 2.5 times more health services than the uninsured—much of it wasted. U.S. Sen. Tom Coburn (R-Okla.), an obstetrician, agrees with economists who estimate that one-quarter to one-third of health care is wasted because almost nobody has the right incentives to use it wisely.”
“It takes a special effort to propose a $12 billion solution to a so-called problem that costs $9.5 billion, then claim that you are reducing the cost of the problem,” notes Graham.
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