California governor opens door to universal health insurance
The governor of California has now announced his health care initiative. Yes, it's flawed, underfunded and may create perverse incentives for employers to lower the sums employers pay for health care. However, the initiative provides the perfect opening for Shiela Kuehl's plan for universal coverage. Unlike Schwarzenegger's plan, which continues to rely on employer mandates, Kuehl's plan separates employment from health insurance--a much needed reform that frees individuals from having to stay with a company based upon medical insurance coverage. Also, unlike Schwarzenegger's plan, Kuehl's plan promotes a direct choice of one's doctors, among other benefits. On the cost side, Kuehl's plan is better thought out because, through the creation of a government-run insurance group, the costs are much, much lower than the administrative costs of economically inefficient insurance companies. Trust me on this as a lawyer who has sued insurance companies for not providing benefits owed under their policies. Insurance companies are far more faceless and inefficient than Medicare--and privately-owned insurance companies spend upwards of 20% and higher on admin costs, while Medicare has admin costs of 2%.
Democrats in California's legislature passed Keuhl's bill last year, but it was vetoed by Schwarzenegger. It is time to immediately bring back Kuehl's bill and put it side by side against Schwarzenegger's plan. The beauty of Schwarzenegger offering a plan is that now Senator Kuehl's plan can be compared and contrasted with a specific proposal--and hers kicks butt compares to anyone else's specific plan.
Please read the above linked and well-written LA Times article on the governor's plan--and then read Shiela Kuehl's op-ed from the Times comparing her plan to Schwarzenegger's and the two other competing plans. The time is now for telling medical insurance companies that they will now have to compete with a lower cost and more humane government plan (we like competition, don't we?)--and finally separating employment from health insurance, something that business folks are starting to agree with, too.
Economics alert ahead: For those who call Kuehl's plan "socialism," let's look at it this way: The capitalist style of health insurance is clearly inefficient, has created perverse outcomes, and ends up forcing people into HMOs where they can't choose their own doctors. Kuehl's so called "socialized" system, however, allows people the choice of their own doctors. It also creates economies of scale in terms of administration efficiencies and the purchase of medications from Big Pharma. There is also an economic advantage in terms of creating more dynamic forces in our economy. How? Because freeing individuals from jobs they keep because of medical benefits allows people to take risks with new enterprises. For an admittedly unusual example of how social programs create wealth, think of J.K. Rowling, who went on welfare in England, and wrote Harry Potter, and is now richer than the Queen of England. And yes, she now pays big money in taxes to the nation she adores for providing her a chance to succeed. Macroeconomically, think about how the New Deal created the roads, buildings and other superstructures that helped business explode with development after World War II.
No plan is perfect, no system is perfect, we are not perfect. But a universal coverage plan such as the Kuehl plan makes the most sense and is likely to produce the best societal outcomes. Thank you, Governor, for inadvertently reviving Kuehl's plan!