Thursday, August 25, 2011

Flood of Bad Health Reform Plans Not Subsiding in California

You know it's a bad day for liberty in California when AB 52 being approved by the Senate's Appropriations Committee (as reported by the Sacramento Bee's Torey Van Oot via Twitter) isn't the worst health-policy news of the day. That comes to us in this report by the San Francisco Chronicle. Apparently, a Santa Monica-based consumer-rights lobby isn't satisfied with the looming bureaucratic monstrosity known as Obamacare, and wants California to implement something even worse.

According to the Chronicle, the group Consumer Watchdog, which created 1988's Prop 103 to regulate car insurance in the state, has a new ballot initiative in the works for the state's health care industry. At the core of the proposal: the formation of a government-run "public option" insurance plan, a 20% rollback of insurance premiums, and provisions that mimic AB 52's state regulation of insurance premiums. Apparently, efforts to repeal Obamacare a were significant motivating force for the group, which wants to shift the terms of the debate in an abruptly leftward direction. According to Consumer Watchdog's Executive Director, "This will be a bellwether for America. If California passes a 20 percent rate rollback and the right of citizens to bypass private insurances in favor of a public plan, then every other major state will do that, too."

Aside from all the problems with AB 52 that would be problems for this initiative's rate regulation component (e.g., high staffing costs and conflicts with the state's Health Benefit Exchange), do we really need to point out all the problems with this plan? For one thing, the plan's public option is explicitly intended to destroy the private insurance market; considering that private insurers like Kaiser Permanente, United Health Group (which bought PacifiCare), and Anthem Blue Cross are major California employers, a sizable chunk of middle-class jobs in the state would be wiped out. For another, the premium rollback would almost certainly be passed on to consumers (in the form of higher deductibles and cost-sharing) and providers (in the form of lower payments). Most importantly, though, public insurance invariably crowds out private options (letting others pick up part of the tab is much easier than you or your employer picking up all of it, after all), and, you know, California is out of money. Requiring Sacramento to pick up the tab for the health care costs of 37 million people would sink the state's finances like a stone.


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