Dan Walters: Health plan resembles energy plan

Critics of the health insurance plan promoted by Gov. Arnold Schwarzenegger and Democratic legislative leaders, including this column, have often likened it to the disastrous electricity deregulation scheme enacted in 1996.

"The assumptions sound like electricity to me," Sen. Sheila Kuehl, D-Santa Monica, said shortly after Schwarzenegger floated the first version of his plan nearly a year ago.

Kuehl, an advocate of state-managed "single-payer" health coverage, half-seriously suggested that the Legislature hire a "pirate" to game the health care plan the way energy sellers exploited flaws in the energy plan.

An odd phenomenon has occurred in recent weeks, however, as a semi-final version of the health plan was adopted by the Assembly and sent to an uncertain fate in the Senate and as Schwarzenegger and his allies filed an initiative to provide its financing plan.

Veterans of the months-long energy process, which was dubbed "Steve Peace's death march" for the former legislator who drove it, have, in a series of e-mails and other communications, disdained the comparison and denied that it was an insider game. But advocates of the governor's health plan deny that it, too, is something that was cooked up in the backrooms of the Capitol.

Kim Belshé, the governor's health and human services secretary and lead staffer on health care, contended in a letter to The Bee that "there have been hundreds of meetings with stakeholders, numerous public events and even a statewide town hall meeting in August that brought together 4,000 Californians to share ideas for reforming health care."

Belshé concluded that there's "a big difference between our push for health reform and the 1996 energy deregulation bill" because financing for the plan would require voter approval, making it "the ultimate public process."

These are distinctions without a difference. Not only were the processes similar – largely private negotiations with "stakeholders," as they are called – but the products bear a strong resemblance as well in that they are patchworks of concessions to various interests without a full explanation of the potential pitfalls.

Take, for instance, the health plan's imposition of a special tax on hospitals with a guarantee that they would recoup all of the money and then some through higher federal health payments. It's a hide-the-pea gimmick reminiscent of the energy plan's provision for a token decrease in consumers' power rates, financed with bonds that those same consumers would be repaying.

The energy plan assumed that wholesale power costs would remain low forever, so the state could safely commit its utilities to buying juice on the spot market, rather than relying on long-term contracts. The health plan assumes that if cigarette taxes are raised by $1.75 per pack, it will be a dependable source of revenue, even though common sense and past experience tells us that tripling cigarette taxes will reduce smoking and/or increase the traffic in untaxed black market smokes.

We have yet to see anything from either the administration or the legislative cheerleaders, such as Assembly Speaker Fabian Núñez, that delves into those or other questionable assumptions and downside risks, such as the high probability that the proposed health spending mandate on employers violates federal law. All we get are repeated assurances that it's all upside benefit – very much like we were told in 1996 that passage of the energy plan would reduce everyone's power costs.

The one big difference this time is that the Senate is not likely to rush to judgment like the Assembly. A number of senators voted for that 1996 energy bill and have lived to regret it. With Kuehl promising extensive hearings, the health scheme may get the critical analysis it deserves.

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• Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.