Disclaimer:  As I sit on My Front Porch writing this post I sit as a partner in a small business, as a father of two children and as the Chair of the Board of Directors of Community Hospital of Long Beach.  In these roles I am directly involved in health care and health insurance in different capacities.  The views expressed below are those of Dennis C. Smith, father and business owner and not those of me in my capacity at Community Hospital nor the views of Community Hospital, any of its staff or physicians.

 

It is no secret that health care in this state and country is faced with many challenges and is a concern for many Americans.  The actual care available is not an issue, thankfully, as it is in many countries around the world.  As a nation, and as a community in the Long Beach area, we are fortunate to have the very best health care and outstanding physicians, nurses, specialists and hospitals.  Seeing the opportunity to “fix” a problem Governor Schwarzenegger and the Assembly have come to an agreement to “reform” our state’s health care system, seizing the opportunity to make matters worse.

 

I will not regurgitate the many different aspects of the proposal, you may be aware of many of the provisions—if not, a simple Google search will provide you countless articles, or you can read all 210 pages here.  Let me save you some time, below I will break down some of the more critical points for you:

 

·         Estimated cost $14.5 billion The key word here is “estimated”.  Quick, name the last piece of legislation that came in at or below the estimate?  And that is the estimated cost for the current population of California at the current cost to provide health care.  What will the cost be next year when our population has grown by say 100,000 and health care costs have risen 4%? 

·         Fraud? Did you see the news last week about the State Workers Compensation Fund and the criminal investigations that are on-going?  Evidently there is no oversight or checks and balances on the board and millions of dollars of contracts are going to friends and family.  Tens of millions of dollars are being wasted or steered, no one knows how much at this point and we may never know.  On top of that the Federal government estimates that MediCare/MediCaid have a fraud rate of approximately 10% historically.  Ten percent of $14.5 Billion is only $1.45 Billion—in fraud.  While it may not be this high one can assume that a program of this size will have incredible amounts of fraud attached to it.

·         Everyone covered or else!   I love this one.  Everyone has to obtain insurance, if you don’t you will be fined.  Huh?  Note that the “everyone” includes “immigrants”.  That is what I read, “immigrants”, not “illegal immigrants”, “undocumented immigrants” “those from a foreign nation in California without proper documentation or authorization from the U.S. government”—nope, just “immigrants.”  Progression of the PC labeling of illegal immigrants has led from change of adjective (illegal to undocumented) to now dropping of the adjective all together.  Anyway, everyone is included in the proposal and everyone must have insurance.  So what about the kid out here going to college at Cal State Stanislaus from North Dakota?  His parents dropped him off of their insurance, he is healthy and risk/reward decision making concludes he is better off not getting health insurance and saving the money—now California says he must and if he does not he will be fined!  What about the twenty year old from Jalisco who has become an immigrant, without papers, takes a job with a home builder and does not buy insurance, he is going to get fined?  Who will track those without insurance? Who will process the fines? Who will track collections on the fines?  How ridiculous is the concept that you will collect insurance premiums or fine individuals who do not pay—even those who are immigrants and not on the government radar screen? 

·         New Bureaucracy How many new employees will be on the state payroll with this reform?  We have to have people to collect the premiums, people to disburse the payments to health care providers, people to validate the health care bills presented, people to discover those who are not paying for their coverage, people to issue fines, people to collect fines, people to manage those people, people to account for the funds (unless it is run like the Workers Comp system), people to do payroll and benefits for the new people being hired, and on and on.  There are already too many people employed by the State of California—when was the last department that has been closed? How many people have been laid off by the State in the last decade? I would be surprised to find out that the State does not still have telegraph operators on the payroll.  Once a government job is created it is pretty much there in perpetuity, this proposal would create thousands of additional government positions with no end in sight.

·         Current Bureaucracy The State is already involved in health care: Medi-Cal.  Without going into too much detail, let me just say my experience on the Board of Directors at Community Hospital has not endeared me to the ability of the government, State or County, to effectively manage any aspect of health care.  Payments are underpaid, approvals take months or years for simple acts such as converting a closet to a cabinet, the bureaucracy and those filling it get in the way of effective health care delivery.  So let’s expand the bureaucracy and add more layers to the health care system which will result in more delays in payments, construction, technology upgrades, and ultimately the quality of health care delivery.

·         Tobacco Tax Anyone want to join me in opening a series of tobacco shacks in Arizona, Nevada and Oregon along the California border, I bet business will be brisk.  We cannot stop hundreds of thousands of human beings entering California illegally—I mean immigrants avoiding traditional border control processes—how easy will it be to smuggle in hundreds of thousands of cartons of untaxed cigarettes?  On a positive note increasing the tax to $1.50 per pack will allow a street value increase on black market cigarettes to increase at least a $1.00 a pack.  That might be enough of a profit margin to entice meth and crack dealers to quit selling illegal drugs, I mean drugs, and start selling black market cigarettes instead.  Sure cigarettes are bad for people’s health but would you rather have a bunch of nicotine addicts roaming the streets or meth addicts?  The worst part about the tobacco tax is it shows the complete ignorance the Democrats (yes the Democrats, Republicans voted against this proposal—the entire proposal not just the cigarette tax) have about taxes and revenue.  They believe the “raise taxes raise revenue” mantra so much they have completely ignored the incredible increase in tax revenues enjoyed by the U.S. Treasury since the Bush tax cuts went into effect.  Raising taxes on a product, or an income, decreases the purchases of that product and thereby decreases the revenue received.  This tax will add to the law enforcement demands in the state chasing illegal/untaxed tobacco products and not raise that much more in revenue.

·         Hospitals Pay A Portion of Revenue Hospitals already pay a portion of their revenue to provide health care for those who are not insured.  Community Hospital of Long Beach annually provides millions of “free” health care to those in need or without insurance, add in St. Mary’s and Memorial who are considerably bigger and I estimate that somewhere in excess of $100 million is spent by the local hospitals for charity and uninsured health care clients.  Despite this Arnold and Fabian want the hospitals to also pay a revenue tax to cover the uninsured patients they have just paid provided health care for?  Oh, wait! They have a plan….

·         Matching Federal Funds Close your eyes, click your heels and say, “I wish I were getting money from Washington, I wish I were getting money from Washington…”  Isn’t everyone bitching about the Federal deficit now?  But we want to tap them to reimburse California hospitals hundreds, perhaps billions, of dollars for revenue taxes they have paid to the State of California to insure those without insurance—or green cards?  Has anyone spoken with anyone in Washington about this?  The primary crisis looming in the next two decades for this country is the Social Security Ponzi scheme—it is such a crisis that no politician wants to deal with it.  Guess what, when Social Security comes down MediCare is not far behind.  But California is going to add hundreds of millions of dollars of debt to the system?  I am a bit skeptical about the chances of this moving forward.

·         Employers Pay! No surprise here.  Even though our company provides insurance for employees we will no doubt be taxed to provide insurance for other employees—and many companies will probably be forced to lay off employees to pay for the insurance and insurance tax that will be levied.  If you listen closely you can hear the sound of businesses headed for the border states—putting more people out of work in California and uncovered by insurance.

·         Higher Insurance Costs for Those With Insurance The proposal says all insurance premiums are equal and no one can be denied due to a pre-existing condition.  That won’t cause insurance companies to raise their premiums for everyone will it?  Not to mention the State will mandate profit margins, which is to say they will probably eliminate them.  I do not want to argue that the health care insurers are the beacons of paragon and virtue, but they seem to provide better access to health care than the State—until this proposal goes through.  Remember when California mandated that insurance companies doing business in California offer earthquake insurance with every homeowners policy?  I do, I also remember that every major insurer quit writing policies in the state for a few months.  Eventually a joint agency was set up with the State and the insurance companies for earthquake insurance—my premiums went up and my coverage went down.  But that will not happen to health care.  Sure it will, if this proposal is enacted we will see insurers leaving the state, and those that stay will severely jack up their premiums.  My current premium for and HMO option with $10 co-pay through group insurance for my family is $900 per month, under this proposal my expectation would be a premium in the neighborhood of $2000 per month.

 

In a statement announcing the proposal Assembly Speaker Nunez said something to the effect that this proposal would improve health care in the State of California.  I could not disagree more.  It will cause employers and jobs to leave the state, it will force hospitals further into economic difficulty and result in more closures, it will add billions and billions of dollars to an already negative budget, it will attract even more illegal immigrants who know they will be insured, and it will severely impact the quality of health care delivery in our State as fewer and fewer of our best and brightest enter the health care professions.

 

Thankfully Senate Pro Tem Perata is very skeptical of the proposal as well and wants it studied further.  We can only hope that those doing the study have common sense and the ability to see past political ego and into the future if this proposal is enacted. 

 

While I am hopeful that this proposal dies in the Senate, I would like to commend Governor Schwarzenegger and Speaker Nunez for putting a proposal forward that will hopefully spark reasoned debate—not the typical emotional debates based strictly on partisan and special interest contributions—and provide a platform for future proposals.  In the end we, as individuals, must decide what we require from our health care delivery system and what compromises we are willing to make.  There is no golden shot or pill that will fix everyone—some in our population are born with illness others are not, some contract illnesses later in life through no fault or action of their own other than living others engage in lifestyle choices leading to illness, some are healthy and some are not, some are fit and some are not.  While encouraging and enabling a diverse society of people from different racial and ethnic backgrounds, sexual orientation, religious beliefs, ideologies and a myriad of other ways that make each of us unique, we need to recognize that diversity also exists in the health needs of our society and fundamental to our health care system is how to handle those with different needs, without bankrupting ourselves, our hospitals, our state.

 

Let’s talk about this issue and what proposals you think will work for Long Beach, for California and for the United States.

 

Your thoughts welcome, click here to email me or on “Leave A Comment” below for public response.