Last year, California Gov. Arnold Schwarzenegger vetoed a bill which would have created single-payer health care in that state. But the universal coverage proposal (PDF) he’s offered in its place may be almost as bad.

In a nutshell, the program would require everyone in California to buy a specific health insurance package defined by the state, providing subsidies for families making up to $60,000 per year to pay for the coverage. The plan is projected to cost $12 billion a year, with half of that cost covered by federal funds, according to the proposal.

The biggest reason why Californians don’t buy health insurance today is that it is too expensive. California already has a blizzard of insurance regulations covering everything from dental anesthesia to in vitro fertilization. These raise the costs of insurance, particularly for the young and healthy, who often choose to go without insurance rather than paying excessive premiums. If Mr. Schwarzenegger only wanted to address the neediest cases, he wouldn’t need to spend $12 billion; he could repeal existing regulations that stood in the way of inexpensive insurance.

But rather than attempting to reduce counterproductive regulations, Governor Schwarzenegger proposes new ones, including a requirement that insurers cover all applicants regardless of whether they are in perfect health or on their death bed. These new regulations will drive insurance costs up even more, requiring either more government subsidies or imposing a greater financial burden on businesses and individuals. Vicious circles, anyone?

Then, of course, there are the economic costs. The nonpartisan Taxpayers Foundation reports that California’s state and local tax burden is the 15th highest in the nation, and its business climate ranks 45th out of the 50 states. Californians already pay $4,451 per capita in state and local taxes. As the Chronicle reported in December, tens of thousands of Californians are fleeing the state every year to escape the tax burden.

To raise $12 billion in additional revenues, Schwarzenegger would have to enact a variety of new taxes, including taxes on health care providers and businesses. In addition, his plan would require every business with 10 or more employees to provide its workers with health insurance or pay a four percent payroll tax. Such a requirement simply increases the cost of hiring workers, so employers will inevitably hire fewer of them. (Imagine a nine-employee company trying to decide whether to hire a tenth). — San Francisco Chronicle

But the program gets worse. For instance, it imposes price controls on insurance providers, which ultimately will lead to shortages and rationing. And when that happens, people are going to start dying.

And as Cato’s Michael Cannon says, the numbers don’t add up. It appears that federal taxpayers may be on the hook for the vast majority of the money required for this new destructive scheme.

Schwarzenegger actually proposes to use an old Medicaid trick that would put non-Californians on the hook for much more than half the cost. First, he would boost state payments to providers, which triggers federal matching funds. But then he would tax the providers so much that he would recover the state’s initial outlay plus most of the federal matching funds, which he would then use to finance the rest of the plan. At the end of the day, California would spend zero extra dollars on provider payments, yet the ruse would net an additional $1.3 billion from taxpayers in other states.

After one cuts through the budget gimmicks, one finds that Californians would contribute only $1.3 billion to the plan, while taxpayers in other states would contribute $4.5 billion — or over three times as much. — Cato@Liberty

Last year Schwarzenegger vetoed a single-payer health care plan, saying that “I don’t believe that government should be getting in there and should start running a health care system . . . I think that what we should do is be a facilitator, to make the health care costs come down.”

Obviously he’s abandoned the ideas of reducing health care costs and increasing accessibility. After all, what good is universal coverage if you have to wait six months to see a doctor?