California heads for single-payer havoc with CalCare


California Democrats have renewed their quest to take over the state’s health insurance system.

The state Assembly’s Health Committee approved legislation that would effectively outlaw private health insurance and force all Californians onto a government-run plan called CalCare. The plan calls for a tax increase of at least $163 billion, according to some estimates, and subject everyone to long, potentially deadly waits for care.

California Democrats have been dreaming of single payer for years. While campaigning for governor in 2017, Gavin Newsom told voters they had his “firm and absolute commitment” that he would “lead the effort” on universal health care in California.

With the promise of an incoming governor sympathetic to the cause, several state senators in 2017 introduced Senate Bill 562, which would have established single payer statewide. It passed the state Senate. But Assembly Speaker Anthony Rendon killed the bill, calling it “woefully incomplete.”

Incomplete indeed. Even though single-payer would cost California $400 billion each year, more than triple the state’s total general fund annual budget, the 2017 legislation proposed no funding mechanism.

Last year, state Assemblyman Ash Kalra, D-San Jose, and other Democratic lawmakers introduced AB 1400, a near-exact copy of the 2017 legislation, down to the lack of a funding source.

This month, they finally revealed a plan for funding their single-payer ambitions. It would essentially double the state’s tax burden.

The proposal includes a 2.3% tax on a business’s gross revenue over $2 million. That bill is due regardless of whether the business is profitable.

It includes additional graduated payroll taxes for employees of businesses with over 50 workers, and higher income taxes for Californians making more than $149,509.

Those taxes would extract over $160 billion each year — more than California raised in total tax revenue in any year prior to 2020. Altogether, California’s top marginal tax rate would climb to over 18% — nearly four times the national median.

For people in the highest income brackets, well over half of each marginal dollar they make will go into the state’s coffers.

If taxes of that magnitude sound unprecedented and irrational, that’s because they are. California already has one of the highest costs of living in the country. Increasing taxes yet again could drive even more residents and businesses out of the state.

Luckily, pushing CalCare through the legislature won’t be easy. Assemblyman Kalra has introduced Assembly Constitutional Amendment 11 to adopt the tax increases and change the constitution to allow the legislature to hike taxes to fund single-payer by a simple majority, rather than the two-thirds majority required under current law. That takes the approval of two-thirds of both legislative chambers and a majority of voters.

California voters may not be too keen on government-run health care, either. A new survey conducted by the California Agents and Health Insurance Professionals found that nearly two-thirds of California voters oppose single payer.

It’s no wonder why. Look at how single-payer systems abroad treat their patients.

In England, one in 10 residents — nearly 6 million people — are stuck on government wait lists for hospital care. Delays are so severe that more than 20% of patients are paying out of pocket for private health care.

In my native Canada, the median wait between referral by a general practitioner and receipt of treatment from a specialist is 25.6 weeks, the longest wait since records have been kept. People are dying while they wait. A Deloitte report found that delayed and missed care may have caused 4,000 deaths unrelated to COVID-19 between August and December 2020.

But state lawmakers don’t seem likely to heed these horrors. After labor unions, in particular the California Nurses Association, mobilized to help Gov. Gavin Newsom survive his recall election last fall, they’re looking for repayment in the form of single-payer health care.

The Biden administration would have to give California waivers to use federal Medicare and Medicaid money to fund their single-payer system. Health and Human Services Secretary Xavier Becerra, the former state attorney general, is the one who would approve the waivers – and he’s a longtime supporter of single-payer.

That would be a dream come true for the state’s single-payer advocates. But for ordinary patients, CalCare would be a nightmare.

Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All.” Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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