Commentary

Health Care Solutions Already Here

Two of the biggest concerns of those who support a federal health care overhaul are expanding availability of health care for those in need and making sure that individuals with preexisting conditions have access to affordable insurance. It may come as a surprise to learn that California has programs in place to do just that. The crux of the problem in California is not a lack of programs, but a lack of funding.

Why support a costly federal mandate that may include directives and programs ill-suited to California, when there are existing programs in place? The proposed federal program would not be free; Gov. Schwarzenegger has said it would cost California an additional $1 billion per year. Given that cost, rather than signing on for expensive federally mandated policies that may or may not meet the needs of California, California legislators should be pressed to re-order spending priorities to fund existing programs.

California already has a program for middle-class individuals with pre-existing conditions. However, California’s Major Risk Medical Insurance Program is seriously underfunded. California’s high-risk-pool policies have the lowest cap on payments of any state – $75,000 a year. It is estimated that a half million Californians are uninsurable in private markets, making them eligible for an MRMIP subsidized policy. Yet, the program costs so much and offers such limited benefits that fewer than 10,000 Californians are enrolled.

The crux of the problem in California is not a lack of programs, but a lack of funding.”

California already has a program to serve residents of medically underserved communities. Over 600 primary health care delivery sites serve over 1.6 million patients, with grants from the federal Health Center Program. Ranked as one of the 10 most-effective federal programs by the Office of Management and Budget, the Health Center Program offers a program in place with the potential to improve access to health care. However, the centers rely heavily on state funding to provide care.

California already has a program to insure individuals who are poor and disabled. Like MRMIP, Medi-Cal is seriously underfunded. Medi-Cal spending per enrollee in fiscal year 2006 was $2,740 compared with the U.S. average of $4,575. Reimbursement rates are so low that many private physicians refuse to serve Medi-Cal patients. Stories abound about the lack of access to both primary and specialty care for Californians insured through Medi-Cal, and it is only getting worse.

Adequate funding requires a realignment of state spending priorities. However, the state Legislature seems incapable of taking steps that would reduce spending in other areas, such as privatizing some prison facilities or contracting with other states to provide prison services.

Similarly, the Legislature is unwilling to take a firm position on cutting state funding for higher education. Despite recent fee increases, student fees remain relatively cheap.

Reducing funding for higher education and prisons would free funds to help the needy and those with preexisting conditions buy health care. It’s a matter of setting priorities.

Other adjustments won’t have as big a fiscal impact but, for example, licensing hairdressers, contractors and other professionals may be something California can do without – many states manage without state licensing. Politicians have to say no to strong political constituencies when their interests do not align with those of the state at large.

California has programs in place to help individuals with preexisting conditions and those who are too poor to buy insurance. A new round of programmatic changes at the federal level which would impose federal mandates on California and won’t solve the underlying problem – a lack of sound priorities in state funding.

Shirley Svorny is professor of economics, California State University, Northridge, and an adjunct scholar at the Cato Institute.