Gov. Arnold Schwarzenegger signed two bills Thursday that he touts as reforms to "provide affordable and quality health care insurance." In reality, Senate Bill 900 and Assembly Bill 1602 create a new bureaucracy outside the normal controls of even the governor and state Legislature to dictate which insurance companies may sell to California consumers and small businesses, what prices they must charge and what coverage they must provide.


A health care exchange that truly helped consumers by providing a clearinghouse of all insurers would permit buyers to compare and evaluate programs and prices, then choose what they desire. Such an unfettered market would be welcome. But this government-run exchange will operate under the sweeping federal makeover of the health care industry. This exchange will further restrict and regulate what can be sold, rather than allow the market to respond to supply and demand.


Consequently, Californians will be ill-served. Health care will become more expensive, not more affordable and less accessible, not more. Moreover, it seems clear that these measures are intended to pave the way for ultimate, single-provider health care coverage, and for that provider to be the government.


That system would replace consumer choice of doctors and treatments with choices made by the provider, driving up costs, resulting in rationing and delays. Massive new government bureaucracies, such as the one created by this legislation, inevitably increase administrative costs, waste and fraud, while destroying jobs in the private sector.


Sally Pipes, president of the Pacific Research Institute, a free-market think tank in San Francisco, has told us that the state-run exchange essentially will act as the administrative arm of the federal government, which will dictate how to operate under the federal health plan's thousands of pages of new regulations, even further removing health care choices from local consumers.


California is the first state to set up insurance exchanges, which aren't required until 2014. Rushing to create them compounds the problem. Should President Barack Obama's health care legislation be repealed, as Republicans vow to do if they gain control of Congress in the November election, California still will be stuck with state government-run exchanges and all their inherent problems.


We agree with Gov. Schwarzenegger that "choice and competition have the power to improve health care quality and reduce health care costs." We couldn't disagree more that government-run bureaucracy is the way to achieve those worthy ends.