The Scientific Activist

Like Governor, Like Health Care Plan

What is big and flashy, capable of generating plenty of press, and claims to be the solution to all (or at least a sizeable chunk) of California’s problems?

(a) Arnold Schwarzenegger
(b) his new health care proposal
(c) all of the above

You can decide for yourself, but from my perspective, the bold new semi-universal health care plan that Schwarzenegger is pushing for the state of California reminds me quite a bit of the Governator himself. And, like Schwarzenegger–whose policy agenda is largely shaped by external forces outside of his control due to the fact that he is a Republican governor in a blue state with a Democratic legislature–so too will the this new expansion of health care access be hindered by the fact that it will still operate in an incredibly inefficient and ineffective market-based U.S. health care system. The primary difference here is that while these external factors diminish the likely effectiveness of the health care proposal, they seem to have made Schwarzenegger a surprisingly palatable governor. But, that’s beside the point.

On Monday, Schwarzenegger announced a sweeping new plan to provide health care coverage to nearly all of California’s residents. If approved by the state’s legislature, California would be the fourth state to adopt such a plan. Due to its size, any move by California in that direction would likely be emulated by other states as well. His proposal contains a complex hodge-podge of strategies, programs, and stipulations (much like the complex web of private health insurers that confuses Americans on a day-to-day basis) that hopes to approximate global health coverage in California by extending existing government programs, forcing employers to either provide health insurance for their employees or pay into a fund for the working uninsured, expanding access for illegal immigrants, limiting the percentage of insurance company profits that can be taken out of the health care system, improving doctor compensation, and, ironically, levying additional taxes on doctors and hospitals.

It is a bold plan, and one that should overall benefit the residents of California. Unfortunately, though, its effectiveness will be limited by several factors. The overwhelming problem, and the factor that will most prevent it from approaching the full potential of universal health care, is that does not actually change the current system, rather it just tries to work within it. Instead of addressing the fundamental issue by moving toward a single-payer type system, the California plan–much like the similar Massachusetts plan–acts more like a Band-Aid. It’ll ease some of the pain, but it’s not a long-term solution.

As is the case across the U.S., large amounts of the money going into the California health care system will continue to be siphoned off in profits and overhead (the hallmarks of private insurance). The California plan does attempt to address this, though. According to The New York Times, insurers will be “required to put 85 percent of their profits directly into health care services.” The exact meaning of this statement, however, is a little unclear to me, and this could make a pretty significant difference. As it stands right now, on average private insurers take out about 13% of income to pay for profits and overhead (as opposed to 1-2% in government programs). If the article actually means that insurers would be required to put 85 percent of their income back into the system, then that would really be setting the bar quite low, and I would not expect such a stipulation to have a major impact. If, however, the article actually means that 85 percent of profits (as it says) will go back into the system, this would be quite a sweeping and impressive change, although I find it somewhat unlikely. This point will need further clarification.

The California plan will also stick with the status quo in still depending largely on employers to provide health insurance for their employees and will tax them if they don’t. This is becoming an increasing strain on employers nationwide, and many of the costs are filtering down to individual employees. I still find myself incapable of seeing why we are so set on the idea the employment and health care–two unrelated endeavors from what I can tell–should be so inextricably bound together. In perpetuating this strange marriage, though, we’re hurting both employers and employees, and much of this burden would be removed by a more efficient single-payer system.

There are two aspects of the U.S.’s health care system that make it particularly expensive and inefficient. The first is the inherent inefficiency of market-based health care, as discussed above. The second is the burden placed on the system by its reactionary nature, relying heavily on treating already established conditions (and providing expensive emergency care to those who can find health care nowhere else) instead of focusing on more cost effective preventative care. The good news is that by providing near universal health insurance for its residents, California should decrease the costs associated with the aspect of the system, as emergency room care will hopefully no longer be a source of primary medical care for a large chunk of the population.

Don’t get me wrong: Schwarzenegger’s proposed health care plan would be a great improvement for the state of California, and it could potentially benefit the lives of millions. But, is it a step forward? Not likely. It’s more of a sidestep, if anything.


  1. #1 Brett
    May 8, 2007

    Found you over at I enjoy your lucid arguments on current scientific and political controversies, and plan to become a regular reader. Cheers,
    Brett Keller