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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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« December 8, 2006 | | December 13, 2006 »
December 12, 2006

Sen. Perata's health care plan

Here is a link to the summary and supporting documents for Sen. Perata's health care proposal, unveiled a few hours ago. Perata is proposing a plan he says would cover about two-thirds of the uninsured, namely all those working legally in California. He specifically omits coverage of illegal immigrants. The plan includes an individual mandate enforced through the tax code and subsidies financed by payroll taxes on employers who don't provide insurance. The amount of the tax has yet to be determined. Individuals would be able to buy coverage through a statewide pool and would not be denied because of pre-existing conditions. Small employers could also buy coverage for their workers through the pool.

Posted by dweintraub at 2:15 PM

Kaiser official proposes California health plan

The chairman and CEO of the Kaiser Foundation Health Plan has proposed a health plan for California that would broaden access to care through an individual mandate and subsidies financed by a health-care sales tax and a payroll tax on employers who do not cover their workers. You can read the proposal here, at Health Affairs.

Posted by dweintraub at 10:16 AM

Mike Murphy on Bush

Sometimes-Schwarzenegger adviser Mike Murphy has surfaced with an op-ed in the LA Times suggesting a radical idea to save Bush on Iraq: a bipartisan war council.

Posted by dweintraub at 6:41 AM

On a carbon tax

Harvard economist and former Bush adviser Greg Mankiw has been beating the drum for a more efficient tax system, that is, one that raises taxes on things we don't like (such as pollution) and lowers them on things we do like (investment, savings, work). Mankiw refers to the more favored taxes as "Pigovian taxes," after an economist who developed the theory that underlies them.

Mankiw's preference for such levies leads him to advocate a carbon tax, which he says he prefers to the "cap and trade" systems that allow firms to earn and sell credits to the right to pollute. Mankiw argues that the cap and trade idea, while preferable to straight, top-down regulation, allows firms to profit from their earlier pollution by being granted credits to continue polluting at that level.

This is going to be an increasingly hot topic for discussion in the country over the next few years, and with California's AB 32 about to move into the implementation phase, that discussion might start here.

This is what Mankiw has to say about it:

I am less fond of cap-and-trade programs than Pigovian taxes because they, in essence, give the revenue from a Pigovian tax lump-sum to a regulated entity. Why should an electric utility, for example, be given a valuable resource simply because it has for years polluted the environment? That does not strike me as equitable. A new firm entering the market should not have to pay for something that an incumbent gets for free. And the fact that the incumbent has for years been taking a valuable resource from the rest of society is no reason to think it deserves a free ride in the future. On equity grounds, one could just as easily argue that the incumbents should compensate society for their past misdeeds.

Cap-and-trade systems are also relatively inefficient, for two reasons. First, they encourage utilities to pollute more before the cap-and-trade system is put into effect in order to "earn" pollution rights. Second, they waste the opportunity to use the Pigovian tax revenue to reduce distortionary taxes on labor and capital. Of course, cap-and-trade systems are better than heavy-handed regulatory systems. But they are not as desirable, in my view, as Pigovian taxes coupled with reductions in other taxes. One exception: If the pollution rights are auctioned off rather than handed out, then cap-and-trade systems are almost identical to Pigovian taxes, including all the desirable efficiency properties.

Posted by dweintraub at 6:11 AM



At Crossroads, a panel of experts and the public debate the future of health care in California. We'd like you to join the conversation.

Daniel Weintraub


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