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Proposition 186: Should California Be a Guinea Pig? : Initiative would establish an unwise state health care insurance system

PROP. 186: A look at a key issue on the Nov. 8 ballot. One in a series.

October 09, 1994

Proposition 186, the ballot initiative that would establish a new system of paying for health care in California, sprang from a deep well of understandable frustration over the crazy-quilt system that exists now. Americans for the last two years have heard President Clinton articulate what's wrong with the nation's health care insurance system: too expensive, too unreliable, too exclusionary. That said, Proposition 186 is a mix of medicines that no good doctor would prescribe: Some of it works but a lot of it is inadequately tested.

Proposition 186, called the California Health Security Act, would provide health insurance to all legal residents of California starting in 1996. Health insurance cards would allow Californians to get care from "any willing professional provider"--much the way Medicare works now, proponents say. The range of benefits would be comprehensive--more generous than those offered under Clinton's ill-fated Health Security Act. The significant costs of Proposition 186 would be covered, according to the initiative, by $40 billion to $50 billion generated annually by hikes in payroll, income and cigarette taxes. Proponents suggest the costs are no more than what Californians already are paying in health insurance premiums, co-payments, deductibles and insurance company paperwork and overhead costs. The proposition would also create a powerful statewide elected official, the health commissioner, who would be responsible for overseeing the new health care system.

The notion of a health care system that covers everyone and jettisons layers of insurance paperwork is viscerally appealing, but 186 contains some serious drawbacks.

THE UNKNOWN: Although it often is compared to Canada's well-tested single-payer insurance system, Proposition 186 would in fact be an untested massive government program for a single state. In contrast to the situation in Canada, where all of the provincial (state) governments participate, Proposition 186 would affect California alone among the states--at least in the short term; in actuality, the long-term political purpose behind 186 is to use California as the guinea pig for national single-payer insurance.

The independent state legislative analyst's office points out that the state would need permission from the federal government to include in any new health care system those programs currently supported in whole or in part by federal money (such as Medi-Cal and Medicare). Also, the state would probably need a congressional exemption from a federal law governing employers that provide worker benefits; without the exemption the proposition's 4.4%-to-8.9% payroll tax could be void. And without that payroll tax revenue, there wouldn't be enough cash to finance a wide-ranging state system.

Even if all proposed taxes were implemented and collected smoothly, there's hot debate among health economists as to whether Proposition 186 would generate enough money--especially during lean economic years--to provide comprehensive care to every legal Californian. (The definition of "legal resident" itself is uncomfortably murky.) And while the opponents' estimate of 300,000 lost jobs may be too high, there's no doubt that the payroll tax indeed would be another incentive for business to downsize or simply move to another state.

THE KNOWN: The health commissioner, as the post is set forth in Proposition 186, would be a politician to be reckoned with. He or she would negotiate rates, fees and prices with doctors, hospitals and other health care providers. And if those fees and prices couldn't be agreed on, the commissioner could single-handedly set them.

The first commissioner would be appointed by the governor and confirmed by the Legislature; thereafter the commissioner would stand for election every four years and have little or no obligation to respond to government's normal checks and balances. To advise on medical policy issues there would be a Health Care Policy Advisory Board, which the commissioner would appoint; to oversee regional contracts and budgets there would be regional administrators, appointed by the commissioner; to investigate complaints there would be regional consumer advocates, also appointed by the commissioner. Good deal for whoever would become health commissioner. But we're not persuaded that Proposition 186 is a good deal for California, and thus we urge a "no" vote.

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