Politically Fearful Newsom Punts on Single-Payer

Politically Fearful Newsom Punts on Single-Payer

Nearly two-and-a-half years ago, Gov. Gavin Newsom, D-Calif., created a commission to come up with a plan for implementing single-payer health care in the Golden State.

The Healthy California for All Commission finally released its report last week.

The governor has scarcely acknowledged its existence. In a statement, the governor’s spokesman said, “We have been following the progress of the commission’s work, and look forward to reviewing and discussing the final report with the Legislature and stakeholders.”

Not exactly a ringing endorsement.

Newsom knows that implementing single-payer would be costly and would dramatically reduce access to care. But admitting as much would cost him politically.

Newsom campaigned on launching a government takeover of the health insurance system.

That promise helped him attract the support of the politically influential California Nurses Association and other progressive activists.

By creating a commission to study the issue in 2019, Newsom bought time.

Progressives in the Golden State have long struggled to come up with a viable way to pay for single payer. Rather than propose tough choices about how to come up with hundreds of billions of dollars, Gov. Newsom punted to his commission.

The commission also gave Newsom cover when the California State Assembly considered AB 1400, a bill that would’ve set California on the path toward single payer, in 2021.

He refused to get behind the bill on the grounds that his commission was still studying the issue. AB 1400’s sponsors were unable to line up enough support for passage, so they never brought it up for a vote before the Assembly’s Jan. 31, 2022, deadline.

But now his Newsom’s commission has spoken.

It’s calling for a “unified financing” system.

One of the options it presents would abolish private insurance and give the state responsibility for paying for coverage for everyone.

That puts Newsom in a tough spot.

Failing to act on his campaign promise would go against progressive orthodoxy.

It would also anger progressives, who were crucial to his success in a recall election last fall. But there’s good reason why Newsom is dragging his feet.

Installing single payer is completely implausible.

According to the state Legislative Analyst’s Office, AB 1400 would cost between $494 billion and $552 billion. The state’s entire annual budget, for comparison, is $286 billion.

To cover that tab, legislators floated an unprecedented $163 billion tax hike on individuals and businesses. To put that number in perspective, California collected just shy of $172 billion in state taxes in 2020  in total.

A tax increase that enormous would almost certainly cause even more businesses and workers to leave the state  and severely damage the economy in the process.

It’s also far from clear that the transition to a single-payer system is even possible under current law, as even Newsom’s commission admits in the study.

The state would need waivers from the federal government to repurpose federal Medicare and Medicaid funds toward a new single-payer system.

Former California attorney general  and longtime single-payer advocate  Xavier Becerra would be the federal official who would consider those waiver requests, in his capacity as U.S. Secretary of Health and Human Services (HHS) in the Biden administration.

There’s no telling whether he’d do so.

The experiences of other countries with single-payer systems should also give Newsom and company pause.

In Canada, patients typically wait more than 25 weeks for specialist care, according to research from the Fraser Institute, a Vancouver think tank.

In Britain’s government-run National Health Service, at least 30,000 cancer patients are now waiting for treatment. The number of people waiting more than a year for hospital care has reached 300,000  a nearly 200% increase from before the pandemic.

What Gov. Newsom will do with the findings of his commission remains unclear.

If he prioritizes the interests of California’s patients, businesses, and taxpayers, then the commission’s long-awaited report will do nothing more than sit on a bookshelf collecting dust.

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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.