Healthcare the Schwarzenegger way

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In 1918 a constitutional amendment to provide all Californians with health insurance was deemed a "Prussian plot" to bring Germany's socialized medicine to the US. Voters defeated it. Now a governor with Teutonic roots is pushing the idea again, but with better prospects.

Gov. Arnold Schwarzenegger's ambitious plan to overhaul California's healthcare industry and provide insurance for essentially all 36 million residents is sure to stir debate far beyond the state borders. The plan, together with a similar one already signed into law in Massachusetts, could spur other, equally innovative moves and inject the issue higher in the 2008 presidential election campaigns.

Most healthcare reforms falter when one or more key players – insurers, doctors, hospitals, employers, taxpayers – are asked to shoulder a bigger burden and cry foul. Mr. Schwarzenegger's plan aims to spread both the burden and incentives as evenly as possible, creating a delicate balance where every faction still has something to gain.

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Last fall, the governor vetoed a plan for a "single-payer" healthcare system, in which the government would enroll residents directly in a state-administered plan. By mandating employer participation – similar to minimum-wage laws – his plan keeps the system private but imposes regulation and costs on all but the smallest businesses.

His plan seeks to close the gaps in the current system of private insurers and largely employer-provided healthcare plans. Doctors would have to pay in 2 percent of their revenues and hospitals 4 percent, but they would receive better pay for treating the poor, who'd receive state- sponsored insurance.

Insurance companies would gain by selling millions of new healthcare policies, but would also not be able to deny coverage and would have limits set on their administrative costs. Citizens previously without insurance would have to buy coverage, with the cost depending on their income. That could mean relief for those already paying for insurance, whose premiums have been boosted significantly to pay for care for the uninsured.

The plan extends coverage to impoverished children in the state who are illegal aliens. While this may seem to be compassionate, it mixes another volatile issue that deserves separate attention – immigration reform – into an already complex and delicate plan.

The plan is likely to be stretched and shrunk in various ways as the players and their advocates in the legislature tussle over it. Accommodation for those who employ reasonable alternatives to conventional medical treatment, such as spiritual healing, should be built into any bill to reach the governor's desk.

California may show the nation that it is possible to provide health insurance to all citizens. But that doesn't address the equally urgent need to control healthcare costs. The US spends $6,697 per person each year on healthcare: That's twice what other industrialized countries pay. And new government statistics out this week show healthcare spending is still growing at 6.9 percent per year, outstripping inflation and becoming ever more burdensome.

Until runaway costs can be contained, no one can claim to have fixed the broken healthcare system.

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