December 18, 2007

DOA?

So Don Perata says the health plan is "DOA" in his house. If you watch the video, the comment is off the cuff as he literally stands on a street corner riffing on the subject. I wouldn't take his pronouncement as his final word on the subject.

The substance of his objection, the idea that it seems crazy to be doing health care at the same time the state has a $14 billion shortfall, is legit, of course.

Some thoughts on that:

First, the voters wouldn't be voting on health care until November. Presumbably, by then, the governor and the Legislature will have devised and passed a plan to deal with the deficit. No guarantees that it will be a good plan, or that it will solve the problem forever. They have not done that yet and I will believe it when I see it. But as a political matter, the voters probably won't be weighing the one against the other. And there is a chance they will be weighing the health care plan in the wake of a settlement on the budget that at least has been sold as solving that problem. So I just don't think that's really much of an issue as a political concern. In other words, if you support the reform on its merits, you shouldn't be too concerned about what the voters will think of it in relation to the budget.

How about beyond the politics of it, to the budget itself? Well, Perata seems to be implying that the state will need to raise taxes to close the deficit so it shouldn't raise taxes to expand access to health care. That's a good argument too, if you support raising taxes. But how, exactly, is Perata going to get that tax increase? We pretty much know the Republicans in the Legislature are not going to pass it. That leaves the voters. And it's a pretty safe bet that the voters are not going to pass a general-purpose tax increase to help balance the budget, or probably even a narrowly drafted one to stave off cuts in health care programs. They might, maybe, pass a tax increase to expand access to health insurance and protect people who have it from losing it if they get sick and/or lose their job.

The LAO is looking at the general fund implications of the health care plan. On the surface, there appears to be little risk to the general fund and the chance that the program would actually benefit the general fund by reducing the cost of health care now funded by general taxes, shifting it to the special taxes created for the program. But there is at least one potential trap door. AB 1X1 says it won't take effect until the director of finance certifies that the money is there for it. And that money does not have to be the money called for in the planned ballot measure. So one could argue that if the ballot measure fails, there will be pressure to come up with money from the general fund to make it happen, and that could hurt other programs. But that seems like a stretch, and it's a decision that would still be in the hands of the Legislature. The program does not take effect until the money is there.

Finally, Perata says it makes no sense to promise universal health care in four years while cutting health care today. I'm not sure if that makes sense or not. But clearly he wants and is going to have to get some kind of assurances from Schwarzenegger on the short-term magnitude of cuts in health care programs. And that probably will be what comes out of all of this.

Posted by dweintraub on December 18, 2007 3:16 PM