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An exclusive column penned for the FlashReport by Frank Schubert, President of Schubert-Flint Public Affairs.

December 4, 2007

[Publisher's Note:  As part of an ongoing effort to bring original, thoughtful commentary to you here at the FlashReport, I am pleased to present this column from Frank Schubert, a well-regarded veteran political and public affairs consultant -- Flash]

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Governor Schwarzenegger and legislative leaders have declared this the year for healthcare reform.  They’re working hard to put something on the 2008 ballot for voter approval. But as we turn the calendar to December, these elected leaders have yet to reach an agreement on what “reform” should look like. Furthermore, striking a legislative deal would be the easy part. It will be much harder to get voters to ratify any agreement.

Various versions of healthcare reform have been on the California ballot eight times in the past fifteen years, and been rejected every time. Defeated proposals include sweeping employer mandated insurance requirements (defeated twice), universal single-payer health coverage, and several health measures with more moderate objectives.

California voters are not alone in turning thumbs down to healthcare proposals. Voters in neighboring Oregon and Washington have rejected five different coverage schemes during the same period of time. Just last month, 60% of Oregon voters said “no” to funding children’s health coverage through an increase in that state’s tobacco tax (California rejected a similar proposal last year).

The political problems facing a prospective legislative deal are numerous, and substantial:
  • The politics of healthcare are complex, and not necessarily in alignment with the goals of Governor Schwarzenegger and legislative leaders. Sacramento politicians are focused on provide coverage to the uninsured, but 90% of California voters already have health coverage. To voters, healthcare reform means making their coverage more affordable, and protecting what they already have. They may agree, philosophically, that helping the uninsured is worthwhile, but they are not prepared to make sacrifices in their own coverage or pay more in order to enact reform. Therein lies the rub -- someone has to pay, and since the uninsured generally cannot pay themselves, then it falls to those with insurance to pick up a lot of the tab.
  • The politicians know that there is great voter reluctance to paying more to cover the uninsured, so they go to tremendous lengths to claim that someone else will pay. The usual victims in this blame game are employers who don’t now provide coverage, and smokers. Big surprise – both groups are targeted to pay in this new scheme as well. Trouble is, that isn’t going to fly either. If forced to pay for health insurance for workers and dependents when they cannot afford to, employers will do what they can to shift costs. Prices will rise, worker salaries and other benefits will be cut, and lots of folks will end up without a job. And making smokers pay? Aside from the ruinous economic policy of basing a massive, rapidly growing entitlement program on a declining revenue source, voters recognize that it is patently unfair to ask a small minority of people – the 10% of adults who smoke – to pay for a broad-based program like providing health coverage to the uninsured.
  • The pending proposal says that all individuals will be required to purchase insurance coverage if they don’t have it. But that’s extremely difficult to enforce. Roughly a third of California drivers don’t have auto insurance, even though it’s required by law.
  • The individual mandate is coupled with a requirement guaranteeing that insurers sell every Californian a policy regardless of health status. That’s a great political sound bite, but it is a horribly expensive insurance requirement. Why would someone pay the cost of an individual health insurance policy month after month when you can go get a policy the same day you become ill? Such a provision will very substantially increase insurance rates for everyone as insurers pass along the costs to the rest of us.
  • Requiring employers to spend up to 6 ˝ percent of their payroll on healthcare, or pay that amount to a state fund that will purchase coverage, will substantially disrupt the existing insurance market. Many employers that pay more than 6 ˝ percent now may decide that it’s cheaper for them to have their employees covered by the new state plan. That means untold tens of thousands of people will lose their existing coverage and be dumped into the state plan.
  • California faces a state budget deficit of $10 billion annually. How can we afford to embark on a massive new entitlement program costing billions when we don’t have enough money to pay for existing programs?
  • Finally, and significantly, the reform proposal takes on interest groups that have a documented history of standing up for themselves, and their customers. Employers, insurers, tobacco companies and the pharmaceutical industry are all potential victims of this reform effort. Collectively, you can be sure they will devote the resources necessary to ensure that voters know about all the numerous problems inherent in this reform measure.
It’s one thing for politicians to hold press conferences declaring that this is the year for healthcare reform. It is an entirely different matter to make that declaration true. The Governor and Legislature would be far better off refocusing their energy into more manageable directions, such as providing health coverage for uninsured children and enacting market-based reforms that will reduce healthcare costs. They seem hell-bent on putting a sweeping reform plan together, vowing to ask voters for their approval. But they won’t like the answer that voters will give them.

Frank Schubert is president of Schubert Flint Public Affairs, a full-service public affairs firm based in Sacramento and Orange County. He has managed or played key strategic roles in twelve statewide ballot initiative campaigns dealing with healthcare reform in California, Oregon and Washington, winning all of those campaigns.