Is Statewide Single-Payer Feasible, or Is It Just California Dreamin’?
California’s leading progressives are currently debating — amicably, for the moment — when the right time will arrive to destroy the state’s healthcare system.
The frontrunner in the race for the governor’s mansion, current Lieutenant Governor Gavin Newsom, has long championed single-payer health care. But he recently softened his support. “[Single-payer] is not an act that would occur by the signature of the next governor,” he recently said. “There’s a lot of mythology about that.”
His most progressive allies — including the California Nurses Association, which has led the charge for single-payer — appear to be in more of a hurry. “To get there, state leaders must have political will,” said Stephanie Roberson, a legislative advocate for the Association.
This debate — over when to implement single-payer — misses the point. Any single-payer system would be a disaster for California taxpayers and patients, whether it’s established tomorrow or in ten years.
California’s most recent dalliance with single-payer originated last June, when the State Senate passed SB 562, the Healthy California Act. The bill would consolidate all public insurance programs — including Medicare and Medi-Cal — into a single state-run health plan. That plan would also gobble up uninsured Californians, those who buy insurance through Covered California, and the millions who currently have coverage through work.
Like most single-payer schemes, the proposed system would effectively outlaw private insurance. Public officials would determine which drugs, procedures, and services the one-size-fits-all system covers. Care would be free at the point of service. Californians would pay no premiums,
deductibles, or co-pays, and referrals to specialists would not be necessary.
Assembly Speaker Anthony Rendon ultimately rejected SB 562 as “woefully incomplete,” since it included no funding mechanism. But to pacify progressives, he formed a special commission, grandly titled the “Assembly Select Committee on Health Care Delivery Systems and Universal Coverage,” to further study single-payer.
The Committee heard more than 30 hours of testimony before releasing a report authored by an independent healthcare consultant and professors from the University of California, San Francisco, and the University of California, San Diego. That report essentially concluded that implementing single-payer would be impossible in the short term.
Among the reasons? It’d cost about $400 billion. That’s more than double California’s entire annual budget.
In theory, the state could cover about half that total by poaching federal funding from existing public insurance programs, such as Medicare and Medi-Cal. But as the report points out, that would require a federal waiver — one the Trump administration almost certainly wouldn’t grant.
Even if Democrats retake the White House in 2020 and grant California a waiver, the state would still
have to come up with $200 billion to fund the single-payer system. Senate leaders have floated a 15 percent payroll tax.
A study conducted by University of Massachusetts, Amherst, economist Robert Pollin on behalf of the California Nurses Association claims that the state would only need to raise an additional $106 billion in revenue.
And even if those wildly optimistic projections are correct, California would still have to raise taxes significantly. The nurses’ study suggests an additional 2.3 percent sales tax — on top of the existing 7.25 percent levy — and an equivalent tax on business revenue.
Such enormous tax increases would drive businesses out of California. As the tax base continually shrinks, lawmakers would be forced to raise tax rates higher and higher to offset the lost revenue.On the other side of the equation, single-payer advocates’ rosy revenue projections are predicated upon wresting significant savings out of the healthcare status quo. Practically, that means paying doctors and hospitals less — rates likely tied to Medicare or Medi-Cal, which are much lower than those paid by private insurers.
Many doctors would respond to such pay cuts by retiring early or moving to other states. Meanwhile, the best and brightest medical students would think twice about coming to California to practice. These twin outcomes would exacerbate the Golden State’s existing shortage of physicians, particularly in high-need areas.
Publicly funded health care for all sure sounds good. But the math behind single-payer doesn’t add up. And all the political will in the world can’t overcome that fact.