A physician assistant of family medicine wears a stethoscope.
A physician assistant of family medicine wears a stethoscope. - 
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SCOTT JAGOW: This week, Governor Arnold Schwarzenegger unveiled a plan to provide every Californian with health insurance. Our economics correspondent Chris Farrell says a few states are trying to do this.

CHRIS FARRELL: The thread running through these plans is that you turn to the government, employers, health care providers and the uninsured themselves and everybody's going to contribute something to cover the uninsured. I mean that's the goal here. Whenever you think about a reform, what are you trying to do? All of these plans — the California plan, the Massachusetts plan — they're all designed to bring the uninsured into the health care financing system. And hopefully by doing that, actually bring down costs. I think it's a reasonable approach. Look, it's not great. It's not great, but I think it's a reasonable approach.

JAGOW: But why are the governors of these states coming up with these huge plans 'we're gonna cover everybody' instead of taking baby steps?

FARRELL: Well because I think what they've all learned is that the baby steps don't work. I think what the governors have learned over time is that they have to embrace more comprehensive reform, otherwise what happens is there's too much evasion. So you want to bring all the institutions, all the big players in: the government, the employers, the uninsured themselves, the health care providers. You have to bring everyone in, everyone has to make some sort of a sacrifice, everyone has to have some sort of an opportunity, and that's the way that it works. Otherwise there's just too much leakage.

JAGOW: Isn't Schwarzenegger though asking for trouble by throwing the blanket over illegal immigrants as well, having them covered?

FARRELL: I say, yeah he should be doing this. I mean they're working in the state, a lot of them are paying taxes, they have deposits at the banks, why shouldn't they be covered?

JAGOW: But I mean in terms of. . .

FARRELL: I understand politically it's very. Very charged, extremely charged. From an economic point of view, and that's all I'm making a judgment on, from an economic point of view, it makes a lot of sense.

JAGOW: And how are most of these plans being paid for?

FARRELL: CXombination of things. The Schwarzenegger plan will cost $12 billion. A lot of it is coming from expanding the state Medicaid program. You have taxes on doctors, you have taxes ion hospitals — they call 'em revenue enhancement, but you know, they're really a tax. And a mandate on employers which y'know essentially is another way of saying you're gonna tax employers. Basically what you're telling employers is 'give your workers health insurance or pay into this pool.' I call that a tax.

JAGOW: Alright Chris, thanks a lot.

FARRELL: Well thank you.

JAGOW: Our economics correspondent Chris Farrell.