Universal health care plans have now collapsed in Illinois, Wisconsin, Pennsylvania and California due to high costs. But it will work when Hillary's president

Terminated

January 30, 2008; Page A16

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.

It's especially useful to compare today's muted obituaries to the page-one melodrama that surrounded the Governor when he announced his plan a year ago. Endless media mash notes were bestowed on the "post-partisan" Republican trying to get something done.


The idea was that Mr. Schwarzenegger would set a national precedent, leading to a groundswell for reform in Washington. Not to mention that the Schwarzenegger plan was a near-copy of the one Mitt Romney pioneered in Massachusetts, and the one Hillary Clinton now favors. A leading author of the California plan was Laurie Rubiner, who directed health policy at the New America Foundation before becoming Senator Clinton's legislative director in 2005.

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So much for that. 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.

Of course Washington might be able to disregard these practicalities, because the states are prohibited from running deficits while the feds aren't. But the California experience also reveals some of the ideological differences among Democrats, which would also divide in the Beltway.

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.

Opposition also arose because the plan didn't do enough to punish the left's health-care villains. While it greatly expanded regulation of insurers -- requiring them to accept all applicants, and prohibiting premium differences based on health status -- it didn't cap how much they could charge consumers, or regulate their profits. Democrats also complained that the taxes the plan imposed on business, as high as 6.5% of payroll, weren't high enough. Business disagreed.

All of which is to say that while the plan was opposed by nearly all Republicans, it died at the hands of Democrats. Mr. Schwarzenegger was a collaborator in that he went out of his way to assail and thus alienate fellow Republicans for opposing tax increases to pay for the plan. But if Mrs. Clinton or Barack Obama want to push a major health-care reform through Congress, they will have to find a way to appease their own left-wing while not alienating business and taxpayers.

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What the California collapse should discredit in particular is the individual mandate as a policy tool for Republican reformers. This was Mr. Romney's enthusiasm for a time, helped along by the Heritage Foundation. But in order to be enforceable, such a mandate inevitably becomes a government mandate, and a very expensive one at that.

Voters are rightly concerned about health care, but they also don't want to pay higher taxes to finance coverage for everyone. Mr. Schwarzenegger's spectacular failure shows that there's an opening for Republicans to make the case for health-care reform based on choice and tax-equity, not mandates and tax hikes.

See all of today's editorials and op-eds, plus video commentary, on The Editorial Page.

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