Gov.'s about-face on healthcare ‘fees’ is more than a matter of semantics

One of the pleasures of writing a Sacramento column is that politicians read it and occasionally change their minds. I’m thinking that must be what happened to Gov. Arnold Schwarzenegger on taxes.

First, he apparently has bought into my oft-written contention that taxes, as Oliver Wendell Holmes put it, “are what we pay for a civilized society.” In order to enhance the quality of life in an increasingly congested state, taxes sometimes have to be raised.

Schwarzenegger, who previously preached the no-tax gospel, seems to have converted. Why else would he have proposed to sock doctors and hospitals with a new tax to help pay for universal healthcare in California? The docs would pay the state 2% of their receipts and the hospitals 4%, raising an estimated $3.5 billion.

OK, the governor insists on calling it a “fee” rather than a tax. More on that later.


Second, it’s gratifying to see the governor finally agrees with me that one proposed mandate would not be a tax. If the state requires employers to spend money for their workers’ healthcare, this isn’t a tax.

In my view, that’s a cost of doing business, in the same category as requiring a minimum wage.

The governor is proposing that businesses with at least 10 employees offer health insurance or send Sacramento an amount equal to 4% of the payroll. That estimated $1 billion would be dumped into a state pool and used to help buy the workers’ coverage.

Schwarzenegger calls this 4% hit a “fee.” Whatever, it’s no longer a “tax” in his mind, a significant shift from the past.

But his conversion conveniently comes too late for his 2006 reelection opponent, Democrat Phil Angelides.

Last year, when Angelides suggested a similar “play or pay” concept -- requiring employers to either provide the coverage or pay the state to do it -- Schwarzenegger smeared him as a liberal taxer. An absurdly high $7-billion price tag was placed on Angelides’ idea -- now essentially Schwarzenegger’s -- and that became the biggest piece of the Democrat’s "$18-billion tax increase.”

Angelides’ taxes “would drive California’s economy backward,” the governor repeatedly charged.

The $7-billion and $18-billion figures were distortions shamelessly crafted by Schwarzenegger’s hired-gun political gurus. They quickly left the state after his reelection, scattering to various presidential campaigns.


But they left behind mounds of balderdash for Schwarzenegger to gingerly step through -- on top of his own demagogic campaign rhetoric.

One of my favorites was delivered, fist-pumping, to a delighted Republican state convention. Angelides’ “message to us is more taxes,” Schwarzenegger shouted. “Well, here’s our message to him: We say no to more taxes. No to more government spending. No to more government control.”

Let’s see: He now wants to raise taxes. Spending has risen at least 26% on his watch. And you could have fooled me if requiring everyone to have healthcare coverage isn’t government control.

There’s another favorite from my archives: a 2004 Schwarzenegger “voter guide” mailed to households by the Republican Party. On that November’s ballot was a measure, Proposition 72, to repeal a healthcare act sponsored by state Senate leader John Burton (D-San Francisco). He wanted to require employers with at least 50 workers to provide health insurance or pay a fee to the state. “Play or pay.”


In the GOP mailer, Schwarzenegger called that employer fee a “job killing health care tax.”

There’s a lot of mumbling, sheepish grins and eye-shifting when you ask Schwarzenegger aides to explain the difference between Democratic “play or pay” employer mandates and this governor’s.

In my view, none is “a tax.”

But it escapes me why smacking doctors and hospitals isn’t either an income tax on their earnings or a sales tax on their services. Anyway, if universal healthcare is as important as the governor maintains -- and it is -- the state should make everybody pay by increasing sales and/or income taxes.


A one-cent sales tax hike would net roughly $3 billion after paying schools their Proposition 98 cut. I’d raise income taxes across the board, not just seize money from the very rich again. In California, a family of four must earn roughly $45,000 before it owes any state income tax. A few bucks for affordable healthcare would be worth it.

The Schwarzenegger camp has been trying out all sorts of convoluted explanations about why the doc and hospital “fees” aren’t taxes. It contends that providers would be getting higher Medi-Cal rates and more patient business under the governor’s plan, so it’s not really a net tax. Also, the “fee” would be “recycled” back into healthcare and not used for general government spending, so it doesn’t fit the legal definition of a tax.

But it fits Webster’s, which is what Republican legislators and, I suspect, most voters go by.

Sen. Tom McClintock (R-Thousand Oaks) says his dictionary “defines a tax as ‘an involuntary contribution for the support of government.’ There’s nothing voluntary about what the governor proposes. I don’t see anything about a, ‘No, thank you, I’d rather not.’ ”


McClintock, the GOP candidate for lieutenant governor last year, says Schwarzenegger has left him “very disillusioned and disappointed. The reason I supported him -- and a lot of other voters did -- was because of his ironclad, clear promise that he would not raise taxes.

“It’s the last time I’ll ever trust anything he says.”

Of course, at stake in this semantics squabble is passage of some universal healthcare plan. A tax increase requires a two-thirds vote. A fee can be approved by a simple majority without Republican support.

But also at stake is Schwarzenegger’s credibility. Has he reneged on a “read my lips” no-tax pledge to voters?


He certainly has.

But maybe he doesn’t know it. Maybe I’m all wrong and he hasn’t changed his mind despite my punditry. Maybe he has just changed his vocabulary.


George Skelton writes Monday and Thursday. Reach him at