Economy & Budget

Why Arnold Is Wrong And The Free Market Is Right

“The Governor’s vision for health reform is an accessible, efficient, and affordable health care system that promotes a healthier California through prevention and wellness and universality of coverage.”

–Governor’s Health Care Proposal

As a resident of Southern California I am the fortunate beneficiary of nearly year-round clement weather, picturesque beaches and majestic-yet-accessible mountains. The downside of living in the Golden State is that I am subjected to ghastly, quasi-socialist political ideas — not just from the Democrats in state government, but also from my Republican governor.

Case in point is Arnold Schwarzenegger’s health care proposal, which boasts the rather innocuous yet creepily jingoistic moniker, “Stay Healthy California.” The governor — I’ll refrain from abusing the clichés of “Ahhnold” or “the Governator”– unveiled his plan on Jan. 8 of this year, and though not yet introduced officially as legislation he is currently working with legislators to create support for the plan.

The Stay Healthy California proposal suffers largely from the false notion that all would be right with health care in the state if only we all just had insurance coverage. Indeed, it’s this crusade for “universality” that is the linchpin of the Schwarzenegger proposal.

This so-called “individual mandate” aspect of the Stay Healthy California plan requires every California resident to purchase health care. I don’t know about you, but I always get scared when government requires me to do anything with my own money. I thought that the ideal in America was economic freedom? Apparently, this isn’t the case, especially if you live in Cali.

And why is the governor so intent on covering Californians, one and all? The ostensible answer is cost containment. The measure seeks to reduce the cost of care for uninsured Californians who receive treatment in the state’s emergency rooms. The governor argues that the individual mandate is the best way to curb these costs, which ultimately get passed on to the taxpayer.

This is the so-called “free-rider” problem, and although it is a real issue, the cost of uncompensated care is hardly a crisis. According to The Council for Affordable Health Insurance, uncompensated care is about 2.5 percent of health care spending nationwide. These figures may be higher in California, maybe as much as 5%, but still not the kind of cost issue that requires radical government mandates.

The real issue here is politics. According to Michael Tanner, director of health and welfare studies at the Cato Institute, “Schwarzenegger’s plan is driven almost entirely by a desire to achieve universal coverage. If he can get everyone in California a piece of paper saying they have insurance, he will claim success, no matter what the cost in lost jobs, higher taxes, and a wrecked health care system.”

The cost in lost jobs, higher taxes and a wrecked health care system is difficult to quantify at this stage, but some estimates are as high as an additional $12 billion in additional state revenues just to make sure everyone is covered.

In order to fund his plan, the governor will have to impose new taxes on health care providers and small businesses, including a requirement that every business with 10 or more employees provide its workers with health insurance or be forced to pay a four percent payroll tax.

These costs will inevitably take their toll on an already overtaxed Golden State. How overtaxed? According to the Taxpayers Foundation, California is ranked 15th highest in the nation when it comes to state and local tax burden. It’s favorability toward business is ranked a dismal 45th.

But for me the real outrage of Stay Healthy California is not the additional cost to taxpayers. The real crime here is philosophical. The “we’re in this together” socialistic language of the plan assumes that society at large is responsible for providing health care for everyone. The underlying assumption operating here is that health care services are the birthright of the state’s citizenry, and because of that right the government is justified in imposing whatever laws necessary to make sure we get what’s coming to us.

This Michael Moore-esque vision of the world is insulting to every American who values freedom, independence, hard work and individualism. Health care is not a right, but a good or service just like any other.

Nobody would argue for the “right” to a new Corvette, a luxury condo on the beach or a personal trainer. These are goods and services that entrepreneurs invest capital to create, and hope to sell at a profit. Why should we assume health care goods and services should be treated differently?

Furthermore, the real reason why health care costs are so high today is because of the ubiquity of insurance coverage. A person with coverage — either through private insurance, an employer paid plan, Medicare or Medicaid — does not really have to consider the cost of the health care goods and services they are purchasing because in essence, somebody else is picking up the tab.

When somebody else is paying the bill, costs go up. As the great Milton Friedman once said, “nobody spends somebody else’s money as wisely or as frugally as he spends his own.” My corollary to Friedman’s words: nobody spends your money as foolishly as the bureaucrats in government.

Until the governor, who ironically was mentored by Milton Friedman, recognizes that it is every Californian’s responsibility to pay for his or her own health care, the problems in our state — and the country at large — will inevitably persist.

If the governor wants to reduce the cost of health care, the only solution is to eliminate government mandates, reduce taxes on the industry and repeal the overbearing regulations currently foisted on the system. The cure for what ails the health care system is less government, not more insurance coverage.

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