The California Health Plan Collapse: Another Big Lesson in What Not to Do in Health Policy

Conn Carroll / January 31, 2008

The collapse of Governor Arnold Schwarzenegger’s California health plan was anti-climactic. For months, it was clear that the complex $14 billion proposal reached by Governor Arnold Schwarzenegger and liberals in the California state legislature was a political non-starter. In the process of hammering out the details with the help of liberal health policy analysts, the Governor managed to alienate entire classes of groups and institutions which should have been his natural allies: the business community, doctors and hospitals, Republicans in the state legislature and the conservative voters in the state, and voters of every partisan persuasion who did not think it was a good idea for taxpayers to subsidize health insurance for illegal aliens. Alienating that many constituencies over one issue is a unique achievement. So, it was a good lesson in the politics of health care reform, and what exactly not to do.

The obvious and more important- and broadly overlooked- fact about the now dead California Plan is that it was not even a reform, if that word has any meaning at all. It was largely an expansion of the status quo. What Schwarzenegger and his legislative allies proposed was, with minor exceptions, simply to accept the current structure and financing of the existing health care system- the mix of public and private, employer-based health insurance arrangements that exist today- expand it, and then slap mandates on both employers and individuals to force them to participate in today’s flawed system. (more…)