ARNOLD JUMPS GUN ON HIS HEALTH PLAN.

Byline: SHIKHA DALMIA Local View

GOV. Arnold Schwarzenegger's plan to reform the Golden State's health care system and offer universal coverage resembles his early movies: It is audacious, ambitious -- and rather awful.

The plan's biggest flaw is that instead of putting affordable health coverage within the grasp of the working poor, it penalizes them.

Instead of rushing ahead, California ought to wait until July, when the preliminary results come out from an almost identical experiment in universal health coverage in Massachusetts.

The centerpiece of both the Schwarzenegger and Massachusetts plans is a mandate requiring everyone in the state to purchase health coverage. But California mandates auto insurance for similar reasons, and 25 percent of the state's drivers still don't carry it. To prevent people from likewise skipping health insurance, Schwarzenegger proposes a set of subsidies backed by draconian enforcement methods that could turn the uninsured into tax criminals.

Arnold's plan would expand Medicaid to cover more children. He would extend subsidies on a sliding scale of income for adults and allow every uninsured individual to use his or her pre-tax dollars to purchase coverage just as companies do. But according to Schwarzenegger's own estimates, about 1.1 million of the state's uninsured legal residents wouldn't qualify because they exceed the minimum income threshold of $41,500 for a family of three. These families would still be required to buy insurance. But it's not clear that they would be able to find affordable coverage.

While Schwarzenegger has not spelled out exactly how he would enforce his health care mandate, his proposal explicitly hints at employing a version of the Massachusetts plan, which would involve requiring all residents to include their health-insurance policy number on their state tax returns. People who fail to do so would lose their personal tax exemption. Continued failure would invite fines equal to half the cost of a standard policy.

Given that such policies average around $3,000 to $4,000 for individuals and $8,000 to $10,000 for families, this could well mean thousands of dollars in annual fines for poor families. But these fines might still be much cheaper than buying insurance. Many low-income families could opt to pay the fines or avoid filing taxes altogether rather than buy health coverage. In effect, a program meant to help low-income people would tax them or turn them into criminals. Moreover, these people would have fewer job options because, under the governor's plan, employers with 10 or more employees who don't offer coverage would have to pay a 4 percent payroll tax per worker, something that would cause many of them never to employ more than nine people.

Whether this approach can work might become clear after July 17, the deadline for Massachusetts residents to demonstrate they have health coverage. Californians would be wise to hit pause on Schwarzenegger's health care movie until we see what works -- and what doesn't -- in Massachusetts.