California health insurance system study says state model is unsustainable

Maryalene LaPonsie | June 30, 2010

By: Maryalene LaPonsie

There is no shortage of opinions to be found about federal health care reform. For some, it offers new hope that all families will have access to health insurance coverage. However, for others, the new legislation is one more step toward the total dismantling of quality medical coverage in the United States.

The Committee for Economic Development (CED) apparently falls into the latter category. Their new report, Health Care in California and National Health Reform, argues that the federal reform is nothing more than "empty promises" that will bankrupt an already faltering system.

California medical insurance

According to the CED, it decided to focus its research on California for a number of reasons. Among the qualities that attracted the organization to the state are its:

  • Large population base
  • Diversity of employers
  • Diversity of medical insurance providers and plans
  • Difficulty in maintaining low cost health insurance options
  • Past legislative attempts to reform the state health insurance system
The California medical health insurance system is large enough to accurately represent the difficulties facing families nationwide, but small enough to provide a manageable study sample.

The CED study looked at such factors as transparency in California's health insurance system, competition between managed care providers and incentives for quality, affordable health insurance. The conclusion? California's medical health insurance system is unsustainable, so long as it is based upon employer-provided health plans. But does government-run health insurance fare any better?

California lessons for national health insurance

In light of the findings regarding the California medical insurance system, the CED goes on to argue that national health reform is destined to fail as well. Because the California health insurance system is based on most families finding health insurance coverage through their employers, the study authors state that national reform will do no better than the current California system when it comes to providing low cost health insurance options.

Instead, the CED favors a system it calls "market-based universal health insurance." Essentially, every family would be given a credit to buy their own insurance. With employers out of the picture and families having a specific amount to spend, the CED believes that health plans may have a reason to cut costs, reduce premiums and offer more affordable health insurance policies.

The CED pegs itself as a non-profit, non-partisan group directed by leading business executives. First formed in 1942, the organization has a long history of public policy initiatives. However, being a business group, it is understandable that the CED opposes any system of employer-provided health insurance. After all, there is no doubt that businesses would love to be able to cut costly employee health benefits from their bottom line.

With the meat of the health reform bill not scheduled for implementation until 2014, there will be plenty of time to continue the debate health insurance for American families. Only when the reform is fully rolled out will we know whether Washington got it right. For the sake of all Americans, we hope the CED won't be saying "told ya so."

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