Posted on January 31, 2008

California's health reform failed because mandates are fundamentally flawed as a model for reform


For Immediate Release:
January 31, 2008

Dr. Quentin Young 312.782.6006
Drs. David Himmelstein and Steffie Woolhandler 312.782.6006
Todd Main 312.782.6006

While Governor Schwarzenegger’s health reform plan crashed and burned this week on the legislative highway, it confirmed once again that using mandates to achieve universal coverage is a failed model for reform.

The take home lesson: America’s health insurance industry is the problem. Any reform based on a prominent role for the industry precludes success, because the private health insurance industry is simply too bureaucratic and expensive. The administrative overhead in the current private system approaches 30%.

As the members of the California Senate also learned, it is financially impossible to expand coverage to the uninsured without also controlling costs. This means taking on the politically challenging task of ousting the insurance industry profiteers.

The failure of the mandate model in the six states that have tried it (and currently in Massachusetts) can be directly attributed to the private insurance industry. Each of these state reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on political surrender: avoid challenging insurance firms’ stranglehold on health care while coercing the uninsured to purchase costly insufficient insurance policies. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

It is ironic that what started out as a “politically feasible” alternative to the single payer bill SB 840 that was approved by both houses and then vetoed by the Governor turned out to have little political support when it came under scrutiny in the Senate.

It failed the “politically feasible” test because its supporters surrendered to the insurance industry in advance on cost control and then gave them a blank check in the form of millions of new customers.

State budget experts testified that the bill was fatally underfunded and could leave the state billions of dollars in the red. Having been down that road with the hastily enacted energy deregulation fiasco, proponents could only muster one yes vote out of eleven committee members.

The wisdom of the California Senate’s rejection of the mandate model of reform jumpstarts the national movement for an entirely achievable single payer medicare for all system.

Quentin Young, MD
National Coordinator
Physicians for a National Health Program

PNHP has Health Policy Experts available for interviews to discuss Single Payer reform and the positions of the presidential candidates

Please call or e-mail to contact any of PNHP’s Health Policy Experts<

QUENTIN YOUNG, MD, Chicago, Dr. Young is a practicing internist in Hyde Park. He chaired the Department of Internal Medicine at Cook County Hospital for a decade. He is the former President of the American Public Health Association. Contact: 312.782.6006

OLVEEN CARRASQUILLO, MD, MPH, New York City is Assistant Professor of Medicine and Public Health at Columbia University’s College of Physicians and Surgeons. Dr. Carrasquillo is a member of the Advisory Committee of the National Hispanic Medical Association, and is a practicing internist with patients in the predominantly Latino community of Washington Heights.

CLAUDIA FEGAN, MD, Chicago, Associate Chief Medical Officer of the Ambulatory and Community Health Network, of the Cook County Bureau of Health Services. She is a co-author of “Universal Healthcare: What the United States Can Learn from Canada” (The New Press, 1999)

OLIVER FEIN, MD, New York, is Professor of Clinical Medicine and Clinical Public Health at Weill Medical College of Cornell University. He was Robert Wood Johnson Health Policy Fellow during 1993-1994, when he worked as a legislative assistant for Senate Democratic Majority Leader, George Mitchell.

JERRY FRANKEL, MD, Dallas, is a urologist who is recently retired from private practice in McKinney, Texas. He is a leader in the development of less-invasive surgical techniques in his field. He ran for Congress in 1996 against House Republican Dick Armey. Dr. Frankel has published numerous articles and letters on single-payer national health care and appeared on the local affiliates of ABC, NBC, PBS, and NPR.

DAVID HIMMELSTEIN, MD, Boston, is an Associate Professor of Medicine at Harvard. He is a co-founder of PNHP and his research focuses on problems in access to care, administrative waste, and the advantages of a national health program.

DON McCANNE, MD, California, (Senior Health Policy Fellow) Dr. McCanne is a retired family physician in San Clemente, California. For three decades, Dr. McCanne has allotted one-half of his practice hours to indigent patients.

DEB RICHTER, MD, Vermont, practices family medicine in Montpelier, Vermont, and is a frequent spokesperson in the print, TV, and radio media.

GORDON SCHIFF, MD, Massachusetts, Dr. Schiff is an internist at the Brigham and Women’s Hospital in Boston. He is an expert in patient safety and Medical Informatics and teaches at the Harvard School of Public Health.

WALTER TSOU, MD, MPH, Philadelphia, Dr. Tsou is an internist and former Health Commissioner of Philadelphia. He currently serves on the Executive Board of the American Public Health Association.

STEFFIE WOOLHANDLER, MD, MPH, Boston, Dr. Steffie Woolhandler is an Associate Professor of Medicine at Harvard and co-director of the Harvard Medical School General Internal Medicine Fellowship program. She worked in 1990-91 as a Robert Wood Johnson Foundation health policy fellow at the Institute of Medicine and the U.S. Congress. Dr. Woolhandler is a frequent speaker and has written extensively on health policy.