Yesterday Governor Arnold Schwarzenegger announced
his plans to drive California into third world status. 

Officially a Health Care Reform plan if adopted it would:

• Require all employers with 10 or more employees to provide insurance or pay 4% of their payroll into a government program designed to provide coverage to the uninsured.
• Tax Doctors 2% of their Gross Revenues.  Tax Hospitals 4% of the Gross Revenues.  Note this is not 2% or 4% of their profit, but of the gross.
• Cover all children whose families make less than 3 times the poverty level through the states Healthy Family program.  For a family of 4 in California that is approximately $60,000.  The median income for a family of 4 in California is $67,000.  That means approximately 50% of the families in California would be covered by this provision.
• Ban insurance companies from refusing to offer coverage based on preexisting conditions.
• Require insurance companies to spend at least 85% of their premium revenues on patient care.  This is essentially another tax as it effectively limits profit to 15% of income minus whatever the overhead costs are.  There is no possibility of growth.
• Mandate insurance coverage for all Californians.  This effectively negates the first provision of the plan since no employer in his right mind is going to offer insurance when the state is already doing it. 

Effectively Governor Schwarzenegger’s plan will, in my opinion:

• Restrict economic development.  New businesses will look twice before opening in California, existing businesses will think twice before expanding.
• Contribute to unemployment.  If you can make due with 9 workers and avoid the mandates why keep a tenth on.
• Force insurance companies to leave the state.  If the potential for profit is dimished why stay?
• Bankrupt the state – This is really conjectural at this point but if insurance is mandatory and you can’t be turned down what is to prevent people requiring expensive care who can’t afford it from moving to California? 
• Decrease access to care.  I predict a diaspora of doctors if the 2% tax on gross revenues should pass.  Especially since many doctors have hundreds of thousands of dollars in loans that will not be usable as a deduction under this plan.

Of course if it does pass I am quiting my job and moving to California for free health care.

This entry was posted on Tuesday, January 9th, 2007 at 8:51 pm by Chad and is filed under California Schemin'. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.