SACRAMENTO -- Confronting the latest challenge to his effort to reshape California's healthcare system, Gov. Arnold Schwarzenegger argued Friday that the state's rapidly deteriorating financial outlook is extra impetus for action, not reason for pause.
"Some have said we shouldn't tackle healthcare reform with this year's shortfall," Schwarzenegger told a gathering of Latino healthcare advocates in Los Angeles. "I happen to totally disagree with that. There is a real correlation between fixing the healthcare system and fixing our budget."
Schwarzenegger's assertion that his plan to insure all Californians would help the economy -- and therefore the state's finances -- was questioned by leading legislators from both parties and by some independent analysts.
"If everything turns out in the governor's favor, that's one scenario," said Shawn Martin, who directs the health department of the nonpartisan Legislative Analyst's Office.
The analyst's office issued a report last month saying the state could end up with as much as $3.2 billion in additional costs if some of Schwarzenegger's assumptions don't pan out.
"If everything went wrong here, it would create, I think, more of a budget problem, but there's no way of knowing," Martin said.
The $14-billion healthcare plan the Republican governor favors would be built on new employer and hospital taxes, extra money from the federal government, selling off management of the state lottery, and requiring that all Californians obtain insurance. Schwarzenegger says the plan would pay for itself.
But even if the governor's proposal is enacted, it will not kick in until 2010, two years too late to affect the state's upcoming fiscal year, when officials anticipate a $10-billion shortfall.
The Assembly Republican leader, Mike Villines of Clovis, said the state's fiscal troubles require retrenchment, not ambitious new programs.
"I think it's a stretch to argue that a tax increase and a large government-run system is going to be a benefit to the state budget that we're coming into," said Villines, who has opposed the governor's plan.
Democrats in the Legislature have advanced their own healthcare proposal, which they also say will pay for itself. On Friday, Assembly Speaker Fabian Nunez (D-Los Angeles), the author of one such plan who has been working with the governor to reach a compromise, said he doubted Schwarzenegger's logic that the plan would bolster the state's business environment.
