January 9, 2007 12:48PM

The California Health Plan

A few things I find interesting the proposed California health plan.

1. Although it mandates health insurance, it envisions high‐​deductible health insurance policies as satisfying the mandate. Apparently, the thinking is in terms of a deductible of $5000 for an individual, as opposed to Massachusetts, where they think that “high‐​deductible” is about $1000.

2. It does not create an equivalent of the Massachusetts “connector.” The more one looks at it (see this description, for example), the “connector” is micro‐​managing individual and small‐​group health insurance in Massachusetts, leaving the private sector essentially no room to maneuver. The “connector” really ought to be re‐​named for what it is, a central planner.

3. Funding the plan with a tax on health care providers is interesting. In my new Cato Unbound essay, I write about today’s overly generous health insurance coverage:

For health care providers, insulation is a bonanza. Because consumers are not spending their own money, they accept doctors’ recommendations for services without questioning them and without concern for cost. Faced with an insured patient, a health care provider is like a restaurant catering to convention‐​goers with unlimited expense accounts. The customer will gladly take the most high‐​end recommendation and not worry about the price.

The Governator’s plan is to pay for a subsidy to health care consumers by putting a tax on health care producers. Thus, the push for health insurance becomes something other than a pure windfall for providers.

4. The plan explicitly envisions health insurance for illegal immigrants. If you think of that as a humanitarian issue, you may like it. But if you think about it in terms of the incentive it provides to illegally immigrate, it sounds problematic. Also, I am curious as to how the state is supposed to administer a program for illegal immigrants with one hand and enforce immigration laws with the other.

Of course, not all details have emerged, and the legislature has yet to put its imprint on any plan. So it may be premature to comment at any length.