The collapse of the liberal health care fantasy

Wall Street Journal Editorial:

Arnold Schwarzenegger's "universal" health-care plan died in the California legislature on Monday, in what can only be called a mercy killing. So let's conduct a political autopsy, because there are important lessons here for the national health-care debate.

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... The California legislature is probably the most liberal this side of Vermont, and even Democrats refused to become shock troops for this latest liberal experiment. Mr. Schwarzenegger and Democrats in the State Assembly did agree on a compromise plan in December. But on Monday, only a single member of the Senate Health Committee voted to report the bill to the full chamber -- and thus it joined a graveyard full of state "universal" health-care failures.

Like collapses in Illinois, Wisconsin and Pennsylvania, this one crumpled because of the costs, which are always much higher than anticipated. The truth teller was state Senate President Pro Tem Don Perata, who thought to ask about the price tag of a major new entitlement amid what's already a $14.5 billion budget shortfall.

An independent analysis confirmed the plan would be far more expensive than proponents admitted. Even under the most favorable assumptions, spending would outpace revenue by $354 million after two years, and likely $3.9 billion or more. "A situation that I thought was bad," Mr. Perata noted, "in fact was worse."

This reveals that liberal health-care politics is increasingly the art of the impossible: You can't make coverage "universal" while at the same time keeping costs in check -- at least without prohibitive tax increases. Lowering cost and increasing access, in other words, are separate and irreconcilable issues.

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The centerpiece of the Schwarzenegger plan was the "individual mandate," which is also the heart of HillaryCare 2.0. Such a law would compel everyone to acquire insurance, with subsidies for those who couldn't afford it. But the individual mandate incited a liberal revolt. Many Democrats and some unions argued the subsidies weren't generous enough to cover lower-income families, and it wasn't fair to penalize them for coverage they couldn't afford. One state Senator called the plan "a knife in the throat of the working poor." So the plan failed because it was too expensive -- and because for some Democrats it wasn't expensive enough.

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There is another unstated reason why this plan will be opposed. One-third of the uninsured are illegal immigrants. There has already been a voter rebellion against subsidizing illegal immigration and conferring benefits and privileges such as driver's licenses. Imagine the reaction of voters when they find that Hillary wants to give incentives for people to come to the US for subsidized medical treatment. This of course has not come up in the echo chamber of the Democrat debates, but cannot be avoided when they face real opposition. Even if the Republican candidate is McCain as is likely, his deficit hawk status would push him to that argument and it would also help him with the voters who he has alienated on the immigration issue.

What would also happen with the Democrats' plan is that in order to hold down costs health care would be rationed the way it is in Canada and the UK. This would mean long waits for treatments and testing in a passive aggressive form of triage.