While Governor Schwarzenegger's health reform plan crashed and burned this week on the legislative highway, it confirmed once again that using mandates to achieve universal coverage is a failed model for reform.
The take home lesson: America's health insurance industry is the problem. Any reform based on the private health industry will fail. Experience has proven that private insurers can neither control costs nor assure universal coverage; they are simply too bureaucratic and expensive. The administrative overhead in the current private-based system is 31%. Single-payer systems have overheads that are only about half that.
As the members of the California Senate also learned, expanding coverage to the uninsured without also controlling costs is a non-starter.. This means health reformers must take on the politically daunting task of ousting the insurance industry profiteers.
The mandate model has failed in the six states that have tried it (and is currently failing in Massachusetts). . Each of these state reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.
The "mandate model" for reform rests on political surrender: avoid challenging insurance firms' stranglehold on health care while coercing the uninsured to purchase costly private insurance policies. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.
It is ironic that Schwartzenegger's bill started out as a "politically feasible" alternative to the single payer bill SB 840 that was approved by both houses and then vetoed by the Governor. Once the bill came under scrutiny in the Senate, political support for his alternative evaporated.. Legislators, wisely, were unwilling to hand the private insurers' a blank check in the form of millions of new, mandatory customers.
State budget experts testified that the bill was fatally under-funded and could leave the state billions of dollars in the red. Having been down that road with the hastily enacted energy deregulation fiasco, proponents could only muster one yes vote out of eleven committee members.
The wisdom of the California Senate's rejection of the mandate model of reform should jumpstart the movement, in California and nationally, for universal, affordable coverage for all Americans through a single payer, Medicare for all system.
Quentin Young MD
National Coordinator
Physicians for a National Health Program (PNHP)