Mandating insurance tricky in California

To bring about universal coverage in California, Gov. Arnold Schwarzenegger says people must start thinking about health insurance the way they do auto insurance ― as a responsibility everyone must shoulder.

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In January, Schwarzenegger proposed a plan requiring all Californians to have health coverage, promising to spread the cost among individuals, businesses, hospitals, insurers and the government.

The idea does well in polls, and Democrats Hillary Rodham Clinton and John Edwards are pushing it in their presidential campaigns.

But a look at how mandatory insurance has fared elsewhere, from Switzerland to Massachusetts, shows it will not be easy to put into practice in California.

The reason is mainly the cost.

Health care is a lot cheaper in countries that have succeeded at imposing mandates. The average Dutch resident paid half what a typical American spent in 2005, while the average in Switzerland was 70 percent.

"If premiums were half the cost in California, it would be a lot easier to get everyone covered," said Larry Levitt, vice president of the Kaiser Family Foundation, a nonpartisan health think-tank based in Menlo Park.

Massachusetts passed a mandatory insurance law last year, but high costs are forcing the state to let more than 10 percent of the uninsured off the hook because they can't afford the premiums.

Experts say medical inflation means the gap between what most people can pay and what health care truly costs is getting wider every year.

That's why California unions have been so suspicious of compulsory insurance and have pushed Democrats to demand higher subsidies for the nearly 5 million residents who have no insurance on any given day.

Half those people live on less than twice the federal poverty level, about $20,000 for a single person and $41,000 for a family of four ― nowhere near enough to afford the cost of comprehensive health coverage.

Employers spend on average $4,500 a year to insure a single person and $12,100 for a family of four.

"If you really are going to make insurance affordable for all of the Californians who are uninsured, given these demographics, it's an expensive proposition," said Marian Mulkey, an analyst with the California Health Care Foundation.

Schwarzenegger's plan has been pegged at $14 billion a year, and some experts say the real cost will be even higher.

His universal coverage plan is seen as the most ambitious reform attempt since the Clinton plan of the early 1990s. But Democrats are nervous about making it mandatory and Republicans reject the whole idea of expanding government's role in health care.

Even if legislators agree to a deal with Schwarzenegger, voters would have to approve new funding for the plan.

Europeans are more inclined to tax themselves to fund public programs. A third of the Swiss receive government subsidies for health coverage, as do two-thirds of the Dutch.

Requiring everyone to get a policy spreads the risk across a larger group.

European countries take this very seriously. Swiss authorities make sure everyone has insurance, assigning policies to the uninsured, along with penalties ― debt collectors chase people until they pay.

"There's a cultural tradition of people feeling that they must have insurance, and you're letting your friends and your neighbors down if you don't," said Robert Blendon, a Harvard professor of health policy. "The idea that you would go to the doctor or hospital and tell them you don't have insurance, it's unacceptable."

Even before the Swiss made insurance mandatory a decade ago, 97 percent of the population had a policy. It's now 99 percent.

In the United States, just 85 percent had insurance in the latest census, and just 81 percent of Californians. In Massachusetts, it was 90 percent.

Most of California's uninsured are low-wage workers whose employers don't offer insurance. They also include people between jobs, young risk takers and people who have been rejected by insurers because of their troubled health histories.

Schwarzenegger is proposing to cover most of them through a mix of public subsidies and private mandates. He would force employers to chip in a minimum amount toward employee health coverage, but not the full cost.

The poorest workers would get care through public programs, while those earning a little more ― up to about $25,500 for a single person and $51,500 for a family of four ― could buy insurance at a discount through a state-run pool.

Some at higher income levels ― up to $41,000 for a single person and $82,500 for a family of four ― would qualify for limited tax credits to ensure they didn't have to pay more than 5 percent of their incomes toward premiums.

Schwarzenegger also would require insurers to sell policies to everyone without regard to health status, with prices based on a person's age rather than medical history. Health economists say that could drive insurance rates even higher as sick people consume more care than they're paying for in premiums.