It looks like California is going to go the route of Canada and much of Europe and enact a single payer health insurance system.
The Democratic-controlled Legislature is on the verge of sending Gov. Arnold Schwarzenegger a bill that would create a state-run universal health care system, testing him on an issue that voters rate as one of their top concerns in this election year.
Here are some of the provisions of the legislation,
- It would abolish any and all private health care plans.
- Provide comprehensive medical, dental, vision, hospitalization, and prescription drug coverage to every California resident.
- There is no accounting for costs in the legislation.
- The plan could be paid for with all the money now being spent on health care.
- Require seperate legislation to establish the financinc system.
The song and dance is that by cutting administrative costs the plan will allow all California residents to go to a doctor or hospital. What is not discussed is the change in quality/availability of health care for those who already have health insurance. After all, it looks like the plan is not to spend anymore than we are already spending. Thus, if this notion of cutting administrative costs is not realized, there wont be anymore health care resources, but there will be more people consuming those resources. Hence quality/availability will have to decline for those who already have access to health care.
If there is no decline in quality/availability of health care/resources and administrative costs are not reduced then health care spending will sky rocket. At least initially which will exacerbate the already precarious budget situation here in the state.
Basically, quite a bit seems to be hinging on this notion that administrative costs can be cut. The reason I find this dubious is that firms, even health insurance companies, are generally profit maximizers. As such, this implies that firms are also cost minimizers at the profit maximizing level of output. Hence, the idea that there is lots of fat to be cut strikes me as dubious. The only way for this to be the case is that the firms in question are at least partially shielded from competition. Even if this is the case, replacing these firms, with their weakened cost minimizing incentive, with an entity that has virtually no cost minimizing incentive at all strikes me as just plain naive.
Of course, who knows. Maybe soon we’ll all have health care like they do in England.
