Schwarzenegger Health Care Reform Redlines Lower Income Californians

Several health care reform proposals call for subsidizing insurance premiums for those earning too much to qualify for state programs, but not enough to afford typical premiums. Governor Arnold Schwarzenegger’s health care plan and CAHU’s Healthy Solutions plan are two examples of initiatives taking this approach.

There’s a significant difference between these two plans concerning how these subsidies can be used. Under the Governor’s proposal, those receiving subsidies can only use them to purchase coverage offered through a state-run purchasing pool called an “Exchange.” Under the CAHU reform plan, subsidies can be used in the open market. The distinction is significant.

By redlining subsidized Californians into a state purchasing pool the Governor’s plan limits their choice. The only real beneficiary is the agency running the pool: they’re guaranteed a clientele whether they “earn” it or not.

The CAHU proposal calls for subsidizing health insurance premiums for those earning 400% of the Federal Poverty Level or less. And it gives them the same freedom and choice as their neighbors not earning subsidies.

Imagine a legislator introducing a bill limiting Californians receiving food stamps to use them in a state run grocery store. The outcry from the left and right — and from the Governor’s office — would be loud and swift. What’s the difference here? Maybe the subsidies should be called “health stamps” to make things more clear.

Just because someone needs help paying their premiums doesn’t mean they should be denied the same rights, choices and access to innovation available to everyone else. The Administration’s current course of segregating subsidized individuals into a state run purchasing pool is neither fair nor needed. Redlining is redlining. The state should root out such behavior, not promoting it.  The time has come for the Governor’s team to rethink this part of their health care reform plan.