HEALTH CARE PLAN JUST NEW TAXES?

Byline: HARRISON SHEPPARD and MIKE ZAPLER Sacramento Bureau

SACRAMENTO -- Gov. Arnold Schwarzenegger has long promised to oppose any new taxes, but that very vow has become the target of new debate as he pushes a massive plan to provide health care for all Californians.

The governor's proposal unveiled last week would impose billions of dollars in new charges on doctors, hospitals and employers to help expand health coverage to the estimated 6.5 million residents who are uninsured.

But while Schwarzenegger has steadfastly refused to call the new costs ``taxes,'' some of the governor's own allies in the business and fiscal conservative communities say that's exactly what they are.

The tax vs. fee debate is more than just a question of semantics: It could decide the fate of Schwarzenegger's proposal.

Tax increases require a two-thirds vote in the Legislature, while fees need only a simple majority. And the head of the Howard Jarvis Taxpayers Association said he would consider filing a lawsuit if the costs are not treated as ``taxes'' in the Legislature.

``We would have to see the language, but if there is an attempt to push this as a fee not requiring a two-thirds vote of each house, then litigation is a distinct possibility,'' said Jarvis president Jon Coupal. ``We would look at it.''

Among other things, Schwarzenegger's health care proposal calls for requiring all Californians to purchase insurance, requiring insurers to provide insurance and expanding public assistance for those who cannot afford their own insurance.

To pay for it, he has proposed companies with 10 or more employees who do not provide health coverage be required to pay an ``in-lieu fee'' of 4 percent of their payroll.

Hospitals would contribute a ``coverage dividend'' of 4 percent of gross revenues, while doctors would pay 2 percent of gross revenues.

Schwarzenegger argues the payments are fees, not taxes, because they are tied to specific programs.

And he says they are aimed at getting rid of the ``hidden tax'' that insured Californians pay to subsidize the uninsured who obtain free care in emergency rooms, estimated at $1,200 a year per insured family.

He says the requirement to buy coverage and an increase in Medi-Cal rates will provide an additional $10 billion to $15 billion to doctors and hospitals, more than compensating them for the new charges.

``It's not really a tax because in the end they're all going to benefit and they're going to make more money because of it, because hospitals are not going to have all the uninsured people there,'' Schwarzenegger said.

Assembly Speaker Fabian Nunez, D-Los Angeles, said he also does not believe the extra costs amount to a tax.

``We really don't think it requires a two-thirds vote,'' Nunez said in an interview. ``But that doesn't mean the voices of the Republicans are going to be ignored. They have a place at the table. We're going to be inclusive of their concerns and their ideas.''

Sabrina Lockhart, a spokeswoman for the Governor's Office, added that the health care proposal does not fit the legal definition of a tax.

``According to California state law, a tax is imposed for revenue purposes, rather than for a specific benefit,'' Lockhart said. ``This is money from the health care system going right back into the health care system.''

But Schwarzenegger also is being chided by some allies for what they say is hypocrisy because he is advocating the charges after he relentlessly argued in the 2006 governor's race that challenger Phil Angelides wanted to raise taxes by $18 billion.

The largest share of that total -- $7 billion -- was an Angelides-backed mandate on medium and large businesses to provide health care for their workers.

Angelides and others complained that the mandate wasn't a tax but the governor's aides insisted it was.

``He excoriated Phil Angelides, rightly, for proposing the same tax increases he has put on the table,'' said state Sen. Tom McClintock, R- Thousand Oaks, who had Schwarzenegger's backing in the lieutenant governor race last year.

But Lockhart said one of the key differences between that plan and the governor's proposal is that the governor's plan spreads the costs among doctors, hospitals and employers.

Still, Schwarzenegger's friends in the business community are not happy with the plan. The California Chamber of Commerce, which has been one of Schwarzenegger's staunchest allies, described the charges as taxes.

Chamber President Allan Zaremberg said he is concerned that the cost of health care is expected to rise faster than employer payrolls, meaning the charges may have to be increased even further.

``We are concerned that the new costs mandated by this plan will far outstrip anticipated resources,'' Zaremberg said in a written statement.

Doctors also consider the charges a tax, and say the costs will be passed along to their patients.

``To no one's surprise, physicians in California will probably not like the physicians' tax,'' said Dr. Anmol Singh Mahal, president of the California Medical Association.

``A tax on physicians is really a tax on those who are sick because it is the sick who go see their doctor.''

Whether the costs will be determined to be taxes or fees also has political ramifications for selling the plan to the public, said Tim Hodson, director of the Center for California Studies at California State University, Sacramento.

``I think fees are generally regarded as more palatable because they're regarded as something you pay for a specific service,'' Hodson said.

``Now, if the health care fees are genuinely fees, then if people continue to refer to them as taxes, it's a convenient political rhetoric designed to create negative attitudes, rather than inform.''

harrison.sheppard(at)dailynews.com

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