Health Care for All? A Taxing Burden

Legislative Democrats rolled out the red carpet for Michael Moore last week as the controversial filmmaker came to Sacramento promoting his new movie "Sicko" and discussing the virtues of more government involvement in our health care system. If his movie is any indication Moore really believes the best things in health care are free. He lauds Castro’s Cuba (ignoring human rights violations) and France’s numerous benefits including paid maternity leave and laundry service.

Frankly I quickly got a little "sicko" to my stomach upon seeing the pomp and circumstance being afforded to Moore’s bankrupt ideology.

Currently there are three major socialized medicine legislative proposals being promoted by the tax-and-spenders in the Legislature and a competing legislative package by Assembly Republicans. The latter — certainly not Michael Moore approved — relies on proven free market solutions and would allow taxpayers to keep more of their hard-earned money.

When it comes to health care — and government involvement therein — there is an abundance of disinformation. Even the "facts" being used by those promoting more government healthcare mandates paid for by taxpayers are in serious question. Proponents of maximum government intervention are quoting a study by the New America Foundation which concludes that without healthcare reform insured Californians are paying a "hidden tax" of 10 percent on their premiums to pay for the uninsured. However a just-released study by the Hoover Institution says these figures are inflated that "Even if the insured did bear all costs it would be 2.8 percent of the insurance premium." Others have suggested that those who justify more government intrusion into the healthcare industry are exaggerating the number of Californians who need health insurance and that most of those who do are not legal residents of the state.

At HJTA we believe insurance costs can be reduced by taking straightforward steps including: implementing health savings accounts increasing competition by allowing individuals to purchase insurance from outside California and removing some of the 49 mandated procedures that that health insurance companies must cover. This would enhance access to insurance for those who actually need it without burdening other citizens who are already overtaxed.

On the other side proposals backed by legislative leaders and Governor Schwarzenegger will result in a tax increase of anywhere between five to seven billion dollars annually — maybe even higher. By itself this would serve to double our current structural budget deficit.

The Governor’s plan would force employers with ten or more employees who do not offer health insurance to pay a four percent payroll tax and would impose "fees" which are actually taxes on healthcare providers. It would also require all residents to obtain a health insurance policy with a minimum $5000 deductible paid for by themselves or their employer. Lastly all legal and illegal children would be covered as long as their annual family income was below 300% of the federal poverty line ($61950 for a family of four).

Assembly and Senate Democrats have proposed plans similar to the Governor’s under AB 8 and SB 48 respectively. A difference is that they propose a 7.5% payroll tax on those employers who do not offer health insurance.

There is a broad consensus that all three of these plans violate either state and federal law. First despite rhetoric to the contrary all are tax increases each should be subject to Proposition 13’s requirement of a two-thirds vote of the Legislature. On the Federal side of the legal issue these bills violate the Employee Retirement Income Security Act (ERISA) a 1974 federal law which bans states from telling companies which offer health benefits how to run their benefits programs. The inclusion of a payroll tax in all three bills would cause them to run afoul of ERISA which has been upheld in many states including most recently Maryland this year.

For reasons founded on both policy and the law taxpayers will continue to advocate for the free market reforms that will bring health care costs lower without shifting the burden to taxpayers. We cannot stand idly by while taxes are raised and employees lose their jobs because employers either can’t afford to keep them or they are forced to leave the state.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest taxpayer organization — which is dedicated to the protection of Proposition 13 and promoting taxpayers’ rights.