Schwarzenegger Should Terminate His health Care Plan

I didn't anticipate that when I commented on the plan in California to impose taxpayer-financed universal health coverage that it would prompt a correspondence exchange between Congresswoman Marsha Blackburn (R-TN) and Governor Arnold Schwarzenegger. But that's what happened following my article in January here at The American Thinker, "Governor Schwarzenegger Should Go to Nashville."

In his state-of-the-state message, Gov. Schwarzenegger announced his intention to implement a state health insurance plan to cover all residents, including illegal aliens. I noted that a similar plan, TennCare, had been tried in the state of Tennessee, nearly pushing the state into bankruptcy and taxpayers into open revolt. If anything was universal about TennCare, it was that the program was universally reviled, even by recipients, as reports of rampant fraud and gross abuse were commonplace in the Tennessee media.

When taxpayers learned of the plan to push through a state income tax plan to keep the TennCare program alive in the waning days of the 2000 legislative session, they literally laid siege to the State Capitol, forcing lawmakers to quickly abandon the income tax and leave town, effectively putting TennCare on terminal life support to die a slow death without the massive tax increases necessary to keep it afloat.

One of the heroes of the Great Tennessee Tax Revolt of 2000 was Marsha Blackburn, who was then a state senator. As a member of the minority party in the state legislature, she and her small band of colleagues had to battle hostile Democratic leaders in both houses and a clueless Republican governor in order to beat back the state income tax plan and simultaneously demand accountability for the uncontrollable increases in TennCare. Her leadership on these two issues made her one of the most popular political figures in the state, and she was overwhelmingly elected to Congress in 2002 for Tennessee's 7th District - the first woman in Tennessee history to be elected to Congress in her own right. She is regularly mentioned as a top contender for the 2010 gubernatorial nomination.

In her respective tenures in both Nashville and Washington DC, Blackburn has had to grapple with the consequences of TennCare. So several weeks after my article in January, a member of Congresswoman Blackburn's staff forwarded me a letter that was sent by her to Gov. Schwarzenegger to second my warnings of the catastrophic effects of Tennessee's experiment with universal health coverage. She notes that the long-term result of the program has been the lowering of the quality of health care for all Tennesseans:

In 1994, Tennessee implemented managed care in its Medicaid program and used savings anticipated from the switch to expand insurance coverage to the uninsured and uninsurable adults and children. Since then, the state has faced financial peril and numerous unsuccessful attempts to recover the state's runaway health care system. State spending accelerated from $2.5 billion in 1995 to $8 billion in 2004 on TennCare alone.

Combined state and federal funding could not sustain TennCare's rising costs, and the program effective lowered the quality of health care in Tennessee. Since the program's inception, Tennessee's doctors and hospitals charged that the $8 billion program was underfunded by the state and federal governments, forcing providers to bear disproportionately high costs. Due to overwhelming dissatisfaction with the program, doctors and hospitals dropped out of managed care organizations or TennCare altogether, and hospitals were put out of business. Employers dumped employee coverage to save money, handing over employee coverage to the state. The poor could not find providers to take them and lost access to care due to cost-cutting measures. Furthermore, rampant fraud and abuse plagued the program.

Then last week, Rep. Blackburn's office forwarded me a copy of Gov. Schwarzenegger's reply:

As you well know, this is a complex issue and it will be a challenge for us to strike a balance for businesses, employees and providers that will allow us to fix a broken health care system, while maintaining a strong business climate and a sound fiscal strategy for the state. Although we've proposed some big changes in California, our reforms will ultimately improve the health care market for both payers and providers and stimulate the forward-looking businesses that are the backbone of our economy. We estimate that employers would see a major reduction of the $14.65 billion in hidden taxes they currently pay each year. In addition, our plan is revenue neutral for the state, as a result of the dramatic reduction, in cost shifting and the billions of additional dollars that will be brought to the system through universal coverage and Medi-Cal rate increases. The difference with our plan is that we're asking all sectors, not just employers or the state, 20 share: responsibility for fixing a broken system.
The British writer, G.K. Chesterton, once defined insanity as repeating an action in the hopes that that you can achieve a different result. This response is an indication that Gov. Schwarzenegger, or at least his policy advisors, have descended into madness. Despite all evidence to the contrary (which Rep. Blackburn already had identified), Schwarzenegger not only believes that universal health coverage will improve the quality of health care in the state, but that he can do it without any tax increases and while dropping billions in taxes for California businesses. Apparently he has First Lady Maria Shriver-Schwarzenegger locked up everyday in the basement of the Governor's Mansion spinning straw into gold to assure that his plan will be "revenue neutral".

But before Gov. Schwarzenegger runs off the cliff with all of the other universal health care lemmings (if he hasn't already), he might want to take additional note of the proceedings last week in Springfield, Illinois, where Gov. Rod Blagojevich was forced to come out against his very own universal health coverage plan after Democrats abandoned it wholesale, including Chicago Mayor Richard Daley and Jesse Jackson.

As the Wall Street Journal noted earlier this week ("Illinois Tax Implosion"), everyone recognized that the 3% payroll tax increase that was going to be needed to get the plan going would have a devastating effect on the state's economic welfare. The Tax Foundation estimated that it would cost an additional $550 per year for every man, woman and child in the state - and that was probably just the beginning of the tax increases.

There are political implications of last week's universal coverage meltdown in Springfield, as well as the Marsha vs. Arnold policy debate. The first is that the real-world working experiment in TennCare and how it has destroyed the health care system in Tennessee should be an effective cautionary tale in the larger public policy debates. Secondly, as Gov. Blagojevich found out, attacking businesses is not a very effective strategy to ratchet up the universal coverage rhetoric when employers can easily move across state lines and international borders to escape higher taxes and burdensome regulations.

Thirdly, the political disaster in Springfield is an indication that universal health coverage advocates are going to have to abandon the state-by-state strategy begun with TennCare in 1994 and return to proposing a national single-payer program, notwithstanding what's done in Sacramento. Getting majorities in the House and Senate in Washington DC will be exponentially easier than fighting it out in every state capital. This makes Hillary's presidential candidacy all the more important for them.

Finally, if Gov. Schwarzenegger and California legislators are hell-bent on universal health coverage, they had better prepare as well for the mass exodus of businesses and workers (read: taxpayers) that is certain to follow. As the TennCare disaster has proved, trying to improve the quality of health care by expanding coverage without having to resort to continual tax increases will be just as successful as trying to defy the laws of gravity. Good luck with that, California!

Patrick Poole is an occasional contributor to American Thinker.  He maintains a blog, Existential Space.
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