Why the health plan failed

Conventional wisdom on why Gov. Arnold Schwarzenegger’s universal-health-insurance plan failed in the Senate Health Committee is that it got caught in partisan cross-fire between liberal purists on one side and conservative anti-tax zealots on the other. There’s some truth to that, but there’s another, more fundamental reason: It wouldn’t have worked.

Rushed into existence, it was a jury-rigged contraption that had to be split in two—a legislative bill and a statewide initiative—to get fully approved. But its fatal flaw was that it relied on a mandate that everyone had to buy health insurance, and that’s simply not feasible as long as private corporations provide that insurance.

Indeed, reform based on the private insurance industry is bound to fail, because that industry is too bureaucratic and expensive and prefers to insure healthy people only. It also skims 30 percent off the top, so it can’t possibly provide universal insurance at a rate everyone can afford.

In states that have tried mandated universal health insurance using private insurers, including Massachusetts, it has failed. As health-care costs rose, legislators were forced to back off from enforcing the mandates. Nor could they finance new coverage for the poor. Massachusetts’ subsidized coverage is nearly $150 million over budget.

The governor’s bill started out as a centrist alternative to SB 840, Sen. Sheila Kuehl’s Medicare-for-all bill, but when state budget experts testified that it was fatally underfunded and would break the bank, it died a merciful death. It’s time to take another look at SB 840.