California Insider

Sen. Sheila Kuehl is back with her plan for a government-run, single-payer health care plan. I oppose this idea on principle, because I do not want the people who run the DMV and ruined California's electricity industry to be managing my health care. I want to decide what health care I want and need, I'll take the risk that I can find a way to pay for it, and I'm willing to help those who can't afford it get what they need.

But setting aside my ideological position, what about the practicalities of single-payer? One of the premises is that government-run health care would be cheaper than private insurance because administrative costs would be reduced, marketing eliminated, etc. But I see at least one big problem with this theory.

Kuehl is proposing health care for all, "free" at the point of service, no deductibles, no co-payments. Does anyone honestly believe that given that framework, the demand for health care would not increase, and increase dramatically? It's a myth that the "demand" for health care is driven only by the onset of specific illnesses and injury, and is unaffected by the price of health care. One need only look at the workers compensation system for injured workers, who get their care for free, to see what effect that has on usage. And if doctors are paid by the visit, would they not have an incentive to overtreat and overtest? If we are to guard against such abuse, would we then not need to erect an entire new bureaucracy to fight it? The possibilities are endless.

Another huge problem Kuehl has never acknowledged: early retirement. Right now, I would bet that millions of Americans aged 55 and up who could otherwise afford to retire are still working mainly because they get their health care through their employer and couldn't afford to buy it on their own. Kuehl wants to give those people "free" health care, paid for by payroll taxes. But the 55-plus set who retire early (and use a lot of health care) won't be paying any payroll taxes. So her plan is basically an invitation to every well-off older Californian, and every well-off older American, to retire early here and get their health care for free, at the expense of younger middle-income and even poor workers who would be paying higher taxes to give them that privilege. That's just what we need: another transfer of wealth from the young to the old. At the very least, for Kuehl's plan to avoid total collapse, she would have to tap into the wealth of those retirees, not just the wages of the working class.

I don't want to give the good senator any more ideas on how to pretty up this pig, so I'll stop there.

I've just started California Rising, Ethan Rarick's biography of Pat Brown. I'll give a full report later, but knowing what I know about Rarick's considerable skills as a journalist and a writer, I am betting that it will be a great read.

The Legislative Analyst has published a great report on revenue volatility in California, with options for reducing it, from shifting the source of taxes, to the relative burden on various income groups and types of income, to larger reserves. You can find the report here.