Schwarzenegger's Health-Care Lift

In a conversation with BusinessWeek, the California governor discusses his vision for health-care reform in his state

California Governor Arnold Schwarzenegger is working with business and labor, Republicans and Democrats, to come up with a health-care reform plan that would provide health insurance to all Californians and slow the dramatic increases in insurance premiums (see BusinessWeek.com, Debate Room, "Universal Health Care: No Sick Joke"). He discussed his initiative with BusinessWeek senior writer Richard S. Dunham.

What impact have rising health-care costs had on the economy?

For businesses that are competing on an international level and need to be watching every penny, health care is a pretty major expense. It's very important that we fix [the system] as quickly as possible.

You have said that consumers and businesses are bearing an extra burden because the cost of caring for 45 million uninsured Americans is picked up by others.

Common sense tells us that someone has to pay for those who are uninsured. There's a lot of people who suffer because of it. We want to make sure that everyone is insured and hospitals get paid. Hospitals are stuck with $60 million a year in unpaid bills. There's a lot of people paying a hidden tax because of it. It needs to be fixed.

Is government help needed?

Everyone tries to see if the private sector can solve the problem through supply and demand. If it doesn't work, obviously there is government to step in.

Government has a role. But only to give guidance. We don't want to run the health-care system. It would fail [if government operated the system]. We need labor leaders, business leaders, insurance companies. The better ideas we get, the better decisions we can make. We should get together and be part of the solution rather than have government make those solutions alone.

What are the models for your reform efforts in California?

In Massachusetts, [former] Governor [Mitt] Romney was very courageous. Business and labor leaders got together. We need to fine-tune it. It's just one state, but it shows whatever system we have [now] is not working.

What are the keys to successful reform?

As soon as you get millions of [uninsured] people covered, insurance rates will go down. You will bring the hidden tax down. Businesses will benefit. Uninsured people will benefit. Eventually, everyone will benefit from this kind of reform. We need to deliver, big time.

You have worked with Safeway (SWY) Chief Executive Steve Burd on wellness and preventive-care sections of your plan.

This is a very, very important area. I want people to live healthy and eat well. I want to promote fitness and health. A huge percentage of kids are obese. All that costs huge amounts of money down the line. I very rarely get a cold.

What kind of a message will it send to Congress if California enacts its own health-care legislation this year?

Because we are such a big state, the [national] leaders watch us and the national press writes about it.

What do you think of the role of business leaders such as Steve Burd in trying to find national solutions to health-care problems?

That is really terrific. They are pushing the federal government to act. They are saying, "Guys, you've got to wake up. We are suffering because of it." There is a need in the country and I think Washington will see that.

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