Editorial: Time to play 'Let's make a deal' on health care

Assembly Speaker Fabian Núñez struck the right tone Wednesday in convening a hearing on Gov. Arnold Schwarzenegger's health care proposal, which remains on life support in these waning days of this special session.

"I would ask you to keep in mind that there is a fair amount to praise in the governor's plan," Núñez said to his colleagues. "In fact, I would say that some of the governor's more progressive proposals haven't even been made by Democratic governors around the country."

Given those words, you'd think that state leaders could strike a deal any day now, and they could – with the right atmospherics. Stick Schwarzenegger, Núñez and Senate Leader Don Perata in a room – one in which they could no longer hear or see labor protesters comparing the governor's plan to the grim reaper. Left undistracted, the governor could be free of anti-tax zealots who refuse to recognize that our current health care system – with 6.7 million people uninsured – imposes huge costs on businesses and taxpayers.

The speaker acknowledges that the governor "has made some movement" in revising his proposal. Now it's time for Núñez to make some concessions. Ever since it was introduced, the speaker's proposal – Assembly Bill 8 – has required employers to shoulder the bulk of the burden in financing an expansion of health insurance. The speaker needs to move off his mandate that employers pay a minimum of 7.5 percent of payroll to pay for health care, and move that figure closer to 5 percent.

For his part, the governor should drop his proposal to lease the state lottery to help pay for health reform. This is a nonstarter for many lawmakers, all the more so since the Legislative Analyst's Office on Wednesday questioned the governor's projected revenues from a lottery lease.

The governor should also be clearer about what kind of minimum health benefits that middle-income Californians – those without insurance and not eligible for subsidies – could expect under a system that mandates that everyone carry health insurance.

Once the governor and lawmakers have settled such issues, they still will be left with a minor detail – $2 billion or so needed to close the deal.

Democrats need to offer some alternatives to the lottery. Our preference would be a broad-based increase in the income tax. Others, including former Bee editorial writer Mark Paul, have suggested a change in the tax code so that wealthy CEOs and others would have to treat their health benefits as income, subject to taxation. Ending such exclusions could generate billions each year.

There are other options. One is to raise taxes on tobacco, which could generate $900 million yearly. While cigarette taxes are not a sustainable source of revenue (and wouldn't be, if people wisely stopped smoking) the end result would be a healthier population.

And how to raise the rest of the $2 billion? Why not a small increase in the car tax? Automobiles generate health care costs with accidents and air pollution, so a hike – or more accurately, a restoration of past registration fees – has a certain logic to it.

The bottom line: There's no free lunch for health care reform. If Californians want it, then state leaders must figure out a way to pay for it.