Dan Walters: Rush to fix health care dangerous

By: Dan Walters, Sacramento Bee

Arnold Schwarzenegger and legislative leaders may be approaching the dangerous phase in their negotiations over how to extend health care insurance to millions of low-income Californians – the phase in which the urge to get something done overcomes common sense.

We see a version of that syndrome every year on the state budget, once various legal deadlines pass and the Capitol’s politicians come under intense media and public heat, or so they think, to enact a new spending plan.

For some reason known only to those who practice the black arts of politics, the passage of the budget – any budget – outweighs the seemingly more important consideration of writing a good budget, as this year’s version of the annual fiscal dance demonstrated anew. And that dynamic has meant that the state’s multibillion-dollar operating deficit continues to grow.

Back to health care. It, like the budget, is a process of weighing and trading off the demands and objections of the myriad stakeholder groups, in this case advocates for greater access to care for the poor, hospitals, doctors, health insurers, labor unions and employers to name but the most prominent – with the caveat that there are many splinter interests within the bigger categories.

Insurers, for instance, say they are willing to cover all customers, regarding of pre-existing health conditions, only if everyone is required to have insurance. But the mandate faces stiff opposition from labor unions and other groups, saying it will force consumers into paying whatever the insurers charge, and they want regulation of insurance rates as an offset.

Democratic lawmakers eventually placed mandatory coverage into their version of the legislation, thus drawing a cool response from the unions and consumer activists, but the mandate is so weak that it could be easily evaded, which makes insurers wary.

Another example involves financing. Schwarzenegger originally proposed a combination of federal funds, levies on hospitals and doctors and a relatively low employer contribution mandate on employers. Hospitals signed on only after being promised that they’d get back more than they put in. Employers were split, and doctors generally opposed their tax, at least those who didn’t have backlogs of uncompensated care.

Some employers suggested a sales tax as the financing mechanism, but that went nowhere. Schwarzenegger dropped the doctor tax and plugged in revenues from the state lottery that presumably would increase were it to be leased to a private operator, but the education community raised red flags because it now gets exclusive use of lottery profits. Democrats then suggested that instead of a tax on doctors or a revised lottery that the state’s tax on cigarettes be boosted by $2 a pack.

A cigarette tax is questionable on its face because cigarette sales have been dropping, in part because of steep increases in taxes and prices, while health care costs continue to rise. And more than tripling the cigarette tax would certainly drive consumption down even more.

All of this has the air of desperation, of politicians groping for some way out of the box into which they placed themselves by promising a health care fix in the first place, and giving little thought to the long-range and/or unanticipated consequences of their actions – just like the budget.

Actually, a more accurate analogue may be the 1996 scheme to partially deregulate electric utilities, drafted in semi-secrecy and presented as a no-lose fait accompli to the Legislature, which enacted it unanimously. It turned out to be a monumental pile of unintended consequences.

If health care – or the budget or utility deregulation – is worth doing, it’s worth doing right. It’s time for those involved to step back, take deep breaths and stop this madcap rush to do something just to say they did something.

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