December 22, 2006

Commentary:

“Time for a Change on Health Coverage”

By Governor Arnold Schwarzenegger

One of the most serious problems facing California and our nation is the large number of people without medical insurance.  In California, 6.5 million people —more than any other state— have no medical insurance for all or part of the year. Nationally the number is a staggering 47 million.

But this is not just a problem for the uninsured. It is devastating to our economy and to working families, who pay a hidden tax to cover the costs. It’s why I have made fixing our broken healthcare system my number one priority for 2007.

We know the sad facts about being uninsured, which are made even worse as health care costs rise faster than inflation. The uninsured are forced to gp to emergency rooms for treatment because they have nowhere else to go. They are more likely to wind up in the hospital for avoidable conditions. And when they are diagnosed with an illness, the disease is often more advanced. This is bad for them and bad for the rest of us because we all end up paying one way or another. 

The national Institute of Medicine estimates that the United States spends nearly $100 billion a year to provide health services to the uninsured - costs  passed on to the rest of the population. For a family with insurance through an employer, the amount they paid in 2006 increased  9 percent - to $2,824 - more than twice the rate of inflation, according to the California HealthCare Foundation.  Employers’ share increased to $9,036.

For employees working in small companies, the numbers are worse. Twenty five percent of those employees saw their premiums increase more than 15 percent.

One study said California premiums have gone up $3.5 billion to cover health care for the uninsured, and insured workers are being asked to pay more in other areas, too. Deductibles are up, leaving people with more out-of-pocket expenses, and co-pays have also been increasing. This year, for instance, the California Health Care Foundation says 69 percent of insured employees with PPO coverage have a deductible of less than $500, down from 85 percent in 2000. And the percentage of employees with policies capping out-of-pocket expenses at $1,500 dropped from 44 percent in 2000 to 21 percent this year.

This is what I mean by a hidden tax. The Legislature didn’t approve higher fees. There was no debate, no hearings. And voters certainly didn’t go to the polls and say, yes, we want to pay more - but virtually all of them are.

Medical expenses, even for those with insurance, already are a leading cause of personal bankruptcy in this country. More than 400,000 people a year now declare bankruptcy for reasons tied directly to unpaid health care bills. People who get seriously ill often lose their jobs, lose their insurance and then get destroyed financially. It is an all-too-familiar story and everyone knows who picks up those costs, too - you and me.

Unless we reverse these trends, people will continue to reach deeper into their pockets, get less and worry more. The system is so fragile even people with adequate insurance - the “worried well” - wonder how long that will be the case.

We have the greatest quality of life and standard of living in the world, but if wages are eaten up by rising healthcare costs, people are shortchanged. If families live in mortal fear of being plunged into financial ruin because someone gets ill, peace of mind is a pipedream.

These are chronic problems, unattended too long. But with the same bi-partisan cooperation we enjoyed on issues such as rebuilding California and protecting our environment, I know Democrats and Republicans can find common-sense solutions.

This state capitol is prepared for a very significant debate about how to fix our broken healthcare system. In July, I held a summit to start exploring new ideas and my Administration has been working to develop those ideas ever since. Senate President Pro Tem Don Perata has announced a plan this week. Every idea is being debated: market based solutions, employer mandates, individual mandates, new regulations, removing old regulations...the people of this state deserve a debate on every issue.

I will introduce a series of proposals in the coming weeks. We will attack the problem from a variety of fronts and put everything on the table. We can do better. We must and we will.

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