California's resounding 'no.' - rejection of Proposition 186

Business Economics, April, 1995 by Rita Ricardo-Campbell

In 1994, Califomia's Proposition 186, like the Clinton Administration's "Health Security Act" of 1993, made many promises. Proposition 186 would have initiated a single-payer, government-run health care system for all residents of California that would be financed from higher taxes. Neither the federal Clinton proposal nor the California failed legislation provided full financing for what they promised. The public saw highlighted higher taxes that the public does not want to pay instead of promised benefits. Proposition 186 was rejected on November 8, 1994, by a state-wide vote of 5.5 millions against, with only about 2 million persons voting for the over-promised, underfunded, state-run, single-payer health care proposal.

SUPPORTERS OF 186

Generally, the initial supporters were the uninsured, the elderly, the California Teachers Association, United Auto Workers, California Council of Churches, California Nurses Association, Consumers Union and the League of Women Voters. The latter group had in 1991 sponsored "joint consensus meetings" throughout the country on national health care policy.

I spoke at such a meeting three years earlier, November 16, 1991, in Los Altos, California, on "America's Health Care - Whose Problem?" along with the chair of a grass roots organization, People for Accessible Health Care for Santa Clara County. Similar meetings were held throughout the state. The League of Women Voters effort addressed the issues surrounding costs by trying to define a "minimum basic level" of health care and also asked "what criteria should be used in allocating or 'rationing' health care services for individuals in need?"

Although a "minimum basic level" of medical care seems to be a simple concept, it is impossible to define. As technology improves, the basic level increases. Medical needs vary from person to person and for the same person vary over time. And discussion of how to allocate or ration unlimited medical care would not re-elect politicians. Thus very few politicians talk about the concept that the demand for health care will always outrun the supply, and, if price does not limit wants, then some method of allocation must be used. Almost any preset, easily assessed boundary, such as age, would be politically explosive.

Such basic topics were not involved, to the best of my knowledge, during the 1994 debates on the Californian legislation, even though the debates were very few in number and little publicized. It was as if the public were either worn out or satiated by the extensive public debate on the Clinton's somewhat different health bill that promoted managed care among prepaid groups of health care providers. California was nationally in the forefront of that movement, but California also has a high cost per capita for health care among the states. The preceding federal debate in the main avoided such fundamental questions as what kinds of medical care the government should provide and what kinds would individuals be willing to pay for out-of-pocket. And the work "ration" was barely mentioned.

OPPOSITION TO 186

There was very little political support for Proposition 186. Both the incumbent governor Pete Wilson (Republican) and his Democrat opponent Kathleen Brown opposed Proposition 186. Additionally opposed were the California Taxpayers Association, National Federation of Independent Business, California Chamber of Commerce, California State Employees Association, California Association of Hospitals and Health Systems, California Manufacturers Association and several life insurance companies.

The California Medical Association (CMA) did not support Proposition 186, although in 1992 it had supported a more limited health care initiative that would have extended bare-bones medical insurance coverage to all full-time workers, paid three-fourths by the employer and the remainder by employees. Although this proposal also failed to pass, it is of current interest to note that it proposed to contain costs through a CMA program to collect and distribute pricing information for each medical procedure. Dissemination of information to consumers to make the markets more competitive is often overlooked as a viable method to contain costs of medical care services. Competitive markets take time to work, but they do work.

COSTS VS BENEFITS OF 186

A major argument for 186 was that, by eliminating private health insurers who were assumed to waste money, millions of dollars in administrative costs could be saved. But no one argued that this would pay for the whole bill. New tax revenues would be needed. Opponents argued that taxes would go up to pay for an expensive new government bureaucracy in addition to providing medical care for some who were not able to have health insurance and on their own could not afford to pay for their own medical care. There is a high cost per capita program of MediCal, California's Medicaid that pays for the poor.

Proposition 186 would have imposed four new taxes:

1. $1 per pack on cigarettes (and equivalent on other tobacco products),