Single-Payer Health Care in California: Legislative Analyst Weighs In

Single-Payer Health Care in California: Legislative Analyst Weighs In

The last decisive action we saw on SB-840, a bill to impose government-monopoly health care in California, was a gubernatorial veto in September 2006. Nevertheless, its sponsor, state senator Sheila Kuehl pitched the same bill into the Legislature again in 2007.

Senator Kuehl’s analytical support for SB-840 is a positively glowing report that her supporters commissioned from the Lewin Group in January 2005 (for a previous version of the legislation, SB-921). Three years have gone by, so the non-partisan Legislative Analyst’s Office (LAO) did another analysis at the request of Republican state senator Dick Ackerman.

Although completed three weeks ago, it took a little while for the LAO’s report to see the light of day. Indeed, it’s publication itself is somewhat mysterious. Yesterday, the Sacramento Bee’s Dan Weintraub penned a column about it (although nobody outside the legislature had heard of it yet). The title, “Single payer health concept one thing, math another,” pretty much gives the gist of the thing: more expensive than anticipated.

An apparently startled senator Kuehl gamely replied, that she would “interrupt” her usual analysis of the budget to discuss the “confidential analysis” about which Mr. Weintraub had written in the newspaper. Remarkably, her title claims that the “LAO confirms single payer reduces health care spending, contains annual growth.”

And, yesterday afternoon, up popped the analysis on the LAO’s website! Certainly, the LAO concludes that costs for health services will grow at a slower rate under government monopoly. However, citing “other experts,” the LAO also notes that “there may not be enough physicians or hospital capacity to provide those services” (pp. 23-24). (Strangely, the LAO also comes to the odd conclusion that demand for health care will increase, not just because it’s free, but because people might move here to take advantage of it! How many Americans have you heard of who go to Canada for “free” health care?)

Unfortunately, the LAO does not cite my 2006 study, which estimated how much health care capacity California would lose, through physician emigration and lost capital investment, under government-monopoly health care. Had she done so, she would have been able to give more precise shape to the negative impacts that she hints will result from government monopoly.

Nevermind: the most important news from the LAO’s report is that the single-payer camp grossly underestimated how much taxes it would need to fully fund the government take-over. Indeed, all four new and increased taxes proposed in SB-840, plus existing federal health transfers and currently funded state programs (Medi-Cal, etc.), would only pay for three quarters of 2010-2011 single-payer budget, and four fifths in 2015-2016 (p. 8).

Senator Kuehl’s solution, confided to the LAO, is that SB-840’s originally proposed taxes should be increased by about one third: from 12% to 16% on the new payroll taxes, and from 11.5% to 15.5% on the new investment income taxes (p.12).

Wow! With a tax hike like that, no wonder senator Kuehl wanted to keep the LAO’s report “confidential”!

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.