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No Chair When the Music Stops

California Governor Arnold Schwarzenegger expressed doubt and concern on Monday about the Senate health-care reform bill. National media haven’t given this nearly the coverage they awarded his expressions of support for the overall ObamaCare effort in July and October. But under the mainstream media’s radar, the Governator was going soft on the Democrats’ health-care reform as early as last week, and the reason for his shifting posture is the cost to California.

Schwarzenegger’s prior attempt at health-care reform in California makes a superb cautionary tale. The 2006 proposal, advanced by Democrats in Sacramento and substantially endorsed by the governor, was eerily similar to the U.S. Senate bill to be voted on this week. It incorporated an individual mandate to purchase health insurance; increased employer costs through either insurance premiums for workers or a tax penalty; vague and open-ended bureaucratic measures to control costs; expanded enrollment in Medicaid/Medi-Cal; and subsidies to those with incomes up to 400 percent of the federal poverty level who would be required by law to buy insurance.

There was no question this plan would cost more. Even friendly analysts concluded that it would add between $6.8 and $9.4 billion in state costs, while causing private health expenses to rise by 9.9 percent per year and employer costs to rise by 8.8 percent per year. California, the analysts pointed out, has 12 times as many “uninsured workers under 65” as Massachusetts; the Bay State’s solutions would be overwhelmed by sheer numbers in the Golden State.

Yet, until the housing-market collapse stopped California’s decade-long spending spree in its tracks, state Democrats were pushing their health-care reform proposal vigorously — with the support of the Republican governor. A CATO Institute analysis pinpointed why: the state Democrats’ plan relied heavily on federal matching funds. A bit of comically transparent budgetary sleight-of-hand would have enabled California to shift most of its additional costs to the other 49 states.

The bill in the U.S. Senate this month, however, will impose on California all the inevitable costs of mandating universal “insurance coverage” in California, and then some. California doesn’t have the advantage of recalcitrant Democratic senators whose votes need to be bought with Medicaid-funding relief, as Ben Nelson’s (NE) and Mary Landrieu’s (LA) were. California’s senators, Barbara Boxer and Dianne Feinstein, are some of the “safest” party-line voters in Congress. The result is a case of unpleasant consequences that must be humorous to those who don’t live in the Golden State.

The game of “musical health care costs” is only just starting across America. Senators Nelson and Landrieu think they have already grabbed their states’ seats for when the music stops. But the impact on the states — especially an unequal impact — may well be the spike on which the Democrats’ plan is ultimately impaled. Federalism, uniquely strong in America, has not yet had its say on this topic.



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