Posted on January 16, 2007

Comparison between Schwarzenegger Health Plan and Single Payer for California


Distributed by the California Universal Health Care Organizing Project
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The best way to analyze the Governor’s plan is to compare it to SB 840.

Today we celebrate the birthday of Dr. Martin Luther King, Jr. Health care was one of Dr. King’s greatest concerns. All Californians desperately want to solve the health care crisis. Various solutions are being debated in Sacramento. This educational leaflet compares the proposed solution of Governor Schwarzenegger to SB 840 the California Health Insurance Reliability Act, which he vetoed last August. In August 2006, the California Legislature passed SB 840 in both the Assembly and the Senate. This sent a message across America that Californians want a great health insurance system minus the bureaucratic nightmare of the insurance industry.


SB 840 would save Californians 12 billion dollars in 2007, Arnold’s plan would cost an extra 12 billion dollars.

SB 840 savings would occur by removing the middle man insurance industry from health care and bargaining vigorously with the drug companies. The 12 billion dollar figure is from the Lewin analysis of Kuehl’s legislation. That report can be found at

Arnold’s plan will use state funds to subsidize the insurance industry. We do not want welfare for the insurance industry which has always tried to avoid the sick and insure only the healthy. The insurance industry should be removed from healthcare.


Arnold maintains the current bureaucratic nightmare of over 6000 health insurance plans and 69 government programs.

SB 840 is a bureaucracy buster as it reduces the bureaucracy from 6000 to 1. Most politicians want to cut bureaucracy. But not Arnold. SB 840 is the biggest bureaucracy buster in history.


SB 840 is extremely comprehensive and includes full coverage for mental health, dental, vision, and prescription drugs.

Arnold’s program does not require employers to offer any minimum benefit.

Deductibles and Copays.

Arnold’s minimum required coverage has $7500 out of pocket costs for individuals and $10,000 out of pocket costs for families.

SB 840 has no out of pocket costs or deductibles. We think it is bad health policy to set up barriers to care.

Racial, gender, and class inequalities

SB 840 delivers great health care to everyone.

Arnold’s plan maintains the current system in which different classes of people receive different classes of care.


Arnold’s plan does nothing to remove the contentiousness at the bargaining table. All labor negotiations today revolve around health care. Arnold’s plan leaves individuals on their own to bargain with insurance companies.

SB 840 removes health care from the bargaining table. SB 840 uses the collective bargaining of 37 million Californians to bargain for lower drug prices.


SB 840 levels the playing for all business. Costs are known.

Arnold’s plan maintains an uneven playing field. And Arnold’s plan sets a new low bar for what business should pay. Businesses that currently provide health care spend slightly over 10% of payroll on health care. Wal-Mart spends 7%. Arnold calls for a minimum of a 4% payroll fee on some employers. This is a plan that Wal-Mart would love and should be called the Wal-Mart plan. Arnold’s projected income from the 4% fee amounts to one billion dollars in a state that is projected to spend $200 billion on health care in 2007.

Who pays?

Studies on SB 840 project an employer payroll tax of 8.1% of payroll after the first $7000 per employee and a employee payroll tax of 3.8% after the first $7000 of income. These figures reflect the current relationship between employers and employees.

Arnold’s plan lowers the bar on employers to 4% with no capped rate for employees.

Arnold’s plan is in line with the three decades long shift of wealth from working families to the rich.

Choice of health care provider.

Arnold’s plan allows insurance companies to limit choice.

SB 840 allows full choice of provider.

Cost controls

SB 840 uses an annual budget to pay for health care.

Arnold’s plan allows insurance companies to raise rates. Insurance companies have no incentive to control costs in California. They actually have an incentive to have Californians spend more money on health care. Arnold proposes limiting the insurance industry’s overhead and profits to 15 cents of every premium dollar. Ask yourself, would insurance companies want 15% of 200 billion dollars or $300 billion dollars? The more money that Arnold directs to the insurance industry, the better for them.

On the hidden tax

Arnold talks of a hidden tax on current insurance premiums to cover the uninsured. Don’t hold your breath for a rebate check from your insurance company.

SB 840 takes on the real hidden tax on health care which is the existence of the middle man insurance industry. Medicare has about a 3% percent administrative costs versus the proposed 15% administrative and profit cost of private insurance. I will take the government efficiencies any day over the insurance industry’s, especially when the insurance costs 5 times as much.

Insurance Industry and Individual Mandates

SB 840 uses government to remove this bureaucratic, wasteful middleman.

Arnold’s plan uses government to enforce citizen funded subsidies (individual mandates) for the insurance industry. You could label Arnold’s plan “Leave no insurance company behind”.

SB 840 is health care for Californians. Schwarzenegger’s plan is welfare for his needy friends in the insurance industry.

If you like how Wal-Mart’s CEO Lee Scott treats his workforce, you will love how Arnold treats the health care of Californians.

SB 840 was co-authored by 45 of the 73 Democratic legislators. It was endorsed by over 500 organizations, including the California State Federation of Labor, AFL-CIO and the California State Council of the Service Employees International Union.

Legislators who co-authored State Senator Kuehl’s bill last year are Senators Alarcon, Alquist, Cedillo, Chesbro, Escutia, Figueroa, Florez, Lowenthal, Migden, Murray, Ortiz, Perata, Romero & Soto and Assembly Members Bass, Berg, Bermudez, Chan, Chavez, Chu, Coto, Dymally, Evans, Goldberg, Hancock, J Horton, Jones, Klehs, Koretz, Laird, Leno, Levine, Lieber, Lieu, Montanez, Mullin, Nava, Oropeza, Pavley, Ridley-Thomas, Salinas, Torrico, Vargas, & Yee.

The central question to ask Arnold Schwarzenegger is why would he veto a bill that removes racial, gender, and class inequalities and instead support a plan that gives preferential treatment to the parasitic middle man insurance companies?

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane” MLK