Arnold’s Health Care Plan—‘A Plan Wal-Mart Can Love’

by Mike Hall, Jan 9, 2007

Despite the hype from media reports describing California Gov. Arnold Schwarzenegger’s new health care proposal as the equivalent of universal health care coverage, the Terminator’s plan in reality “shifts the responsibility for health care costs onto already overburdened workers and their families,” says Art Pulaski. Pulaski is executive secretary-treasurer of the California Labor Federation.

Schwarzenegger offered a broad outline of a plan he says would cover uninsured Californians and require all residents to purchase health insurance. There is likely to be a long legislative fight over the proposal, which The New York Times says “mirrors the plan in Massachusetts” that requires working families to buy health insurance but requires little of employers. (Click here to read more about the Massachusetts plan that was passed last year.)

Says Pulaski of the California plan:

While the Governor’s health care proposal includes some positive elements, it is the wrong prescription for California’s health care crisis. This proposal will be a boon to insurance companies, but a bust for most workers. This plan requires all Californians to buy health insurance with no guarantee that it will be affordable or that coverage will be adequate. We are concerned that the plan creates an incentive for employers who currently provide health care to drop coverage and instead pay only a minimal tax.

Employers with 10 or more employees who do not provide health insurance for their workers will be required to pay into a state health care fund. But like the Massachusetts’ plan, employers’ payments into the state fund are so low many employers who now provide coverage would be encouraged to drop coverage and pay into the fund.

In addition:

• Like the Massachusetts program, the plan is short on guarantees of affordable coverage even while it promises to reach universal coverage through an individual mandate. Without a guarantee of access for all to affordable coverage, such a mandate would be unworkable and unfair.
• Individuals above 250 percent of the poverty line ($24,500) will have to buy coverage without any help. Yet the plans that will be available can have deductibles as high as $5,000 and out-of-pocket limits of $7,500 for individuals (or $10,000 for a family). People at 300 percent of poverty would have to pay 21 percent of their income in premiums and deductibles for the minimal package before insurance starts to pick up some cost of care. By the time these individuals reach the $7,500 expenses cap, they will have spent 30 percent of their income on medical care.
• Schwarzenegger’s proposal relies on high deductible plans that will keep individuals from getting the care they need, despite his promise of reducing the cost of uncompensated care and promoting preventive care. 

Says Pulaski:

This is a plan that Wal-Mart can love and Wal-Mart workers will hate. The proposed employer contribution is so low that even Wal-Mart, a corporation known for its minimal employee healthcare coverage, already exceeds the requirements.

The governor says his proposal eliminates the “hidden tax” of the uninsured, but what he’s proposed is a new tax on middle class families.

It is unclear how the proposal would effect San Francisco’s Health Care Security Ordinance signed into law in July that brings quality, affordable health to some 80,000 uninsured city residents. The San Francisco Labor Council and the area’s union and community activists helped build the overwhelming public and political support for the law, one of the most comprehensive health care measures enacted by local or state governments.

With the cost of health care soaring and more than 45 million people in the country without health insurance, the debate on how to provide quality and affordable health care for working families will only intensify in state legislatures and Congress this year.

For example, last year in Wisconsin, a coalition of labor, government and community organizations came together to develop the Wisconsin Health Care Partnership Plan. The plan requires employers to pay a fair share of health care costs for their employees, who would share health care costs through co-payments and deductibles. Click here for the latest on the plan from the Wisconsin State AFL-CIO.

We will keep you posted on positive health care proposals and alert you about plans that would hurt workers and their families.

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