The California State Assembly earlier this month heard testimony from proponents of The Healthy California Act, a bill that would establish a state-run, single-payer healthcare system.
The Nurses and their progressive allies can yell as loudly as they want. But the Healthy California Act remains completely infeasible. The bill would bankrupt California and harm patients across the state.
The Healthy California Act originated in the state Senate as SB 562. The upper chamber approved it last June; Speaker Rendon has been sitting on it ever since.
The bill would upend health care in California. Everyone would have to give up their current health coverage — including those with private employer-sponsored plans, those who buy policies on the individual market, and those covered by Medicare and California’s version of Medicaid, Medi-Cal.
The Act would enroll everyone in a new state-run plan — one without deductibles, copays, provider networks, or specialist referrals.
Providing everyone in California with “free” health care would cost a lot of money. Last year, the state Senate’s Appropriations Committee estimated the cost of SB 562 at $400 billion — twice California’s entire budget. To offset these enormous costs, the Committee predicted that the state would have to impose a new payroll tax of about 15%.
The Nurses claim that study is hogwash — and that Rendon is ignoring an analysis of the bill by Robert Pollin, an economist at the University of Massachusetts Amherst, that they commissioned. That study concluded that the bill would provide universal coverage at a cost of $331 billion a year.
That’s wishful thinking. Pollin assumes that the state will be able to make massive cuts in reimbursements for hospitals and doctors — roughly 22% off what private insurers currently pay. He also posits that the state will be able to slash drug spending 30% by implementing the same price controls the Veterans Health Administration uses.
The VA does indeed pay about 40% less for drugs than do Medicare’s privately administered prescription drug plans. But the agency can only do so by refusing to cover some of the latest medicines. Of the 200 most prescribed drugs, the VA’s formulary covers 16% fewer than does Medicare’s average drug plan. And the VA doesn’t cover any of the most prescribed drugs in three classes.
What good are savings of 30% if Californians don’t have access to the medicines they need?
Pollin’s proposed cuts in payments to doctors and hospitals will similarly reduce access to care. For evidence, look no further than the state’s trial run administering a healthcare system — Medi-Cal.
The program covers nearly 14 million Golden State residents — one-third of the state population. Medi-Cal pays physicians about half what they get through Medicare. And Medicare generally pays less than private insurance. California has the third-lowest Medicaid reimbursement rates in the country.
Doctors have responded by refusing to see Medi-Cal patients. In 2013, 69% of doctors accepted Medi-Cal patients. Two years later, that number had fallen to 63% — even though the number of people on Medi-Cal increased, thanks in part to Obamacare’s expansion of the program.
Some Medi-Cal beneficiaries must travel more than 50 miles to find a doctor, according to Mark Dressner, a former president of the California Academy of Family Physicians. “If I have patients that need a rheumatology consultation, it can take two years for them to get an appointment,” he said.
It’s not that the doctors are greedy. Most can’t cover the costs associated with running their practices on Medi-Cal’s meager reimbursements. One doctor in Winters, Calif., reported that the program paid her $20 for a basic office visit — one-third the rate of private insurance.
If the state takes over the entire healthcare system, doctors are unlikely to just accept Medi-Cal-style payments. They’ll leave the state — or the practice of medicine altogether. This will also make it significantly harder for California to attract and retain the best and brightest new medical graduates and specialists.
California can’t afford an exodus of doctors. By 2030, the state will need an estimated 8,000 additional primary care physicians to meet the needs of its population.
Single-payer would endanger Californians’ physical and financial health. The California Nurses Association’s support of such a system is at odds with its stated commitment to advocating for patients.