Sunday, September 09, 2007

No Health Care Reform in California This Year

Dan Walters of the Sacramento Bee writes that efforts at major health care reform in California appear to be dead for this year. While it is possible that the governor will call the legislature into a special session to address the issue, my sources are telling me that it is more likely that the issue will be negotiated behind closed doors in hopes of arriving at a solution that can be passed in early 2008.

Although both the Democratic legislature and the increasingly marginally Republican governor both supported reform, those groups divided over the means of financing it. Democrats wanted to put the entire fiscal onus on employers, while Governor Schwarzenegger wanted to fund it through a fee to be paid by doctors and hospitals. Republicans in the legislature opposed both plans, and they were right to do so. Note that the governor chose to call his funding mechanism a "fee" rather than a "tax." Tax increases require a supermajority in the state legislature, and it will not be possible to muster one. However, the linguistic gamesmanship would almost certainly be the subject of a judicial challenge should it pass.

In addition, Californians would be wise to remember an axiom from their Republican governor from 40 years ago. Businesses are not taxpayers: they are tax collectors. Imposing a tax on businesses, whether those businesses are health care providers or employers, only results in higher costs being passed on to consumers to pay the tax.

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