Single-payer could cost California more than twice the state budget

May 23, 2017

Ricardo Lara

A plan to create a single-payer healthcare system that is currently under consideration in the California Legislature would cost $400 billion annually to implement, according to a legislative analysis released by the Senate Appropriations Committee on Monday. By comparison, California’s proposed budget for the upcoming fiscal year is approximately $180 billion.

In order to cover healthcare and administrative costs, California could redirect $200 billion of existing federal, state and local funds toward the single-payer system. However, the state would need to raise another $200 billion from tax hikes, according to the analysis.

SB 562, a bill introduced by state senators Ricardo Lara (D-Bell Gardens) and Toni Atkins (D-San Diego), calls for creating a Medicare-style health system for all California residents, including illegal immigrants. If adopted, California would become the first state in the country to institute a single-payer system.

Under the proposal, private insurers would be replaced with a state agency that would function as an insurance company, paying doctors and hospitals when people seek treatment. Residents who currently receive insurance through employers would received coverage through the state.

The legislative analysis states the single-payer proposal would likely reduce spending by employers and employees statewide, which currently ranges from $100 billion to $150 billion a year. However, the analysis says there is tremendous uncertainty about how the single-payer healthcare system would function.

“This bill would require unprecedented changes to a mature healthcare system,” the legislative analysis states.“Therefore, there is tremendous uncertainty in how such a system would be developed, how the transition to the new system would occur and how participants in the new system would behave.”

At the California Democratic Party convention over the weekend, the issue of single-payer healthcare received considerable attention. Progressives, including hundreds of nurses, railed for a single-payer system, while some party officials expressed doubt over whether the state would be able to fund the plan.

Last month, SB 562 passed the Senate Health Committee on a 5-2 vote. State Sen. Bill Monning, who represents San Luis Obispo County, cast one of the votes in favor of the single-payer bill.

On Monday, the Senate Appropriations Committee voted unanimously to place the bill in its suspended legislation file.


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copperhead

Oh, so it will bankrupt the stat? Then by all means, do it.


When California taxes surpass federal taxes, that’s it I mam leaving! That’s my Obama redline in the sand.


Incredulous1

This is a huge cost, but the real culprits are the ridiculously exorbitant prices that doctors and hospitals charge for their services. The reason for those fees are several. 1) is the comparatively ridiculously exorbitant prices that universities charge for training future doctors. 2) The ridiculously high prices that insurance companies charge to cover the occasional malpractice lawsuit (“occasional” in comparison to the fact that while one doctor or hospital may be sued for harming somebody, ALL doctors, even competent ones, have to pay the high rates). 3) Simple greed. Doctors charge well above any fees they are paying for insurance and university fees. 4) The American public has been naturalized to paying these crazy fees for so long that we think they are right. As it stands now, people (by this I mean Rush Limbaughites) most who can barely afford to pay to spend one day on the hospital if they had to, raging in the streets about any plans to make health care more affordable to them. Crazy.


Meanwhile, in more sane corners of the world, single payer is the only logical choice.


https://en.wikipedia.org/wiki/List_of_countries_with_universal_health_care


These are countries that actually have thought the issue through, rather than doing things in the reflexive, knee-jerk fashion we do here in the U.S. They realize that paying a dime here or there to help someone in need, will more than make up for the dollars that will have to be paid later when that person becomes truly sick, and the cumulative cost of millions of employees taking sick days off of work because the couldn’t pay for going to the doctor when their malady was in its infancy.


“There’s global evidence of how well (single payer) can work,” said Daniel Zingale of the California Endowment, a nonprofit health care foundation and a former adviser to Schwarzenegger. “But in a practical sense, there are big hurdles to overcome that are unique to the American health care delivery system. To do that is to take some of the profits out of things like drug manufacturing, medical devices and (health maintenance organizations). That’s a big political lift in a state and nation where the health care delivery system has been all about profits.”


http://www.sfgate.com/business/article/Single-payer-health-care-would-cost-more-than-11164959.php


But hey, this is a mean society. We’d rather kick someone when they’re down out of spite even when we know it’ll hurt us in the end than do the right thing in the first place.


Oh well.


Incredulous1

An true story. We once had to take my daughter, when she was two years old, to a hospital (Nevada County Hospital in northern California) in the middle of the night when she had a fever and we were worried. Not only did the people in the emergency room keep us waiting about 2 HOURS, even though we were the ONLY ones there, while they yukked it up behind the counter, occasionally glancing our way, but when they FINALLY got around to seeing us the doctor saw us for only about 5 minutes. His treatment was one Ibuprofen tablet.


Later we got the bill: $400. Yeah.


Moderator

Incredulous1 when you post more than 1 link in a comment it must be approved. It is a form of flood/spam control.


Incredulous1

Hmm. Ok, thanks for the explanation.


pokey5735

If the state would stop providing everything for illegals that have no business being here in the first place, maybe there would be more funds for health care for American citizens. Stop electing Democrats and maybe this state will recover.


RonHolt

I was wondering what the cost and income source for this proposal was going to be. Even though I am cautious about the accuracy of such projections, they sound fairly realistic . . . except for one huge factor. Putting an additional 15% tax onto wages (as I have read elsewhere) to cover the costs would either result in wages declining or in driving employers out of business (at least in this state).


I don’t know what the current average rate is for employer-funded health insurance but I doubt that it is 15% of wages and many small employers don’t offer coverage at all. (Someone is welcome to correct me with verifiable facts on this.) If the cost of government-based single-payer insurance is significantly higher than private insurance, it will put California at a competitive disadvantage in the national economy.


We had a lousy situation when health insurance was purely private (a situation which the GOP House wants to reinstate) and slightly better situation under the Obamacare with its mix of private and public funded healthcare. However, to keep businesses from being undercut you can not economically succeed with an expensive system in one state when they can find significant savings elsewhere.


If there is one lesson that should have come from the past election, it is that as bad as things are/have been, they can get worse. Think before you act Sacramento and don’t limit your thinking to what will get you the most votes in the next election — or to what you want in an ideal world since this one is far from ideal.


Ricky2

Well Ron, can’t tell you how the figures go for most employers, but mine pays more than 20% of my wages for our (2 person) health insurance. So, 15% might be a good deal for employers and employees both.


All the nay-sayers to the “cost” of single payer overlook the obvious — those with insurance are already paying a huge amount, and if that money instead went towards single payer, the “cost” might be pretty much of a wash. Eventually, single payer would reduce costs from what they’d otherwise rise to because a single payer would have huge bargaining power with hospitals and other ripoff artists with whom we as individuals have little leverage over prices. This has been the experience with our existing single payer system, Medicare. Costs are lower, customer service is very good.


RonHolt

You may be right about that. I am covered by a program that is less than that but the coverage is just for one person. However, that still doesn’t address the situation for the large number of small private employers who don’t offer any coverage at all. They are still going to face BIG problems working a 15% wage tax into their budget.


The Identarian

Brought to you by the same people who brought you the “Stupid Train”. On its face it does not work. What is it about this state that allows such idiotic ideas?


Pelican1

Watching California self destruct is like reading a Dick and Jane book (for those of you old enough to remember)

See the bureaucracy grow…grow, grow, grow. See government spend, spend, spend. See Californian’s pay, pay, pay..


Rambunctious

The democrats in the legislature along with Governor Brown can see the wall in front of us but they refuse to take their foot off of the gas peddle. To complain and shout at them does no good. We will hit the wall so hold on tight and belt up or bail out the door while you still can.


1965buick

NO


Boldguy

I guess the only choices are going to be, move to a different state or sell my business and go on the dole!!!

Free food, cell phone, health care, housing and money, doesn’t get any better than that:)

No wonder Trump got elected with his anti immigration stand, I don’t want to share my free stuff with a bunch of people that didn’t earn it either!!!


kettle

A: move to a different state.


Kansas, Wisconsin, Iowa all have the tax rates you want and they are reducing all of those pesky “services” you don’t like.


Trump is cutting your services and raising your taxes just like you want.


Rambunctious

The president doesn’t cut services or raise taxes, the house does that. A little Trump derangement maybe?


kettle

Derangement Hardly, Trumpkins proposed the budget and the house votes.


Perhaps you have not seen the 2018 dumpster fire federal budget? No it wont pass but it is a horror show that shows the low moral and ethical standards of the orange one and his family/friends.


Rambunctious

It’s a tax payer based budget something the nation has needed for a long time. Take a look at the national debt. Kettlekins…


RonHolt

I agree that we need to reduce the national debt but I think YOU need to look a lot harder at where and how it can be done. I would start with the Dept. of Defense which is the largest “discretionary” part of the budget by far. (Social Security and Medicare have their own dedicated funding sources.) A relatively small cut in the Defense budget (10%?) could make up for almost all the other proposed cuts combined.


As to tax cuts, it is time to take the “trickle down” theory of economics and bury it. There is no evidence I have seen that it ever has worked at all and there is evidence that it doesn’t work well if it does work at all. When the rich get tax cuts, they are much less likely to reinvest it (at least in this country) to grow the economy. Tax cuts to the middle class are far more likely to be spent and thus stimulate business. At the very least, if you are going to cut taxes for the rich, eliminate all the deductions that enable them (especially corporations) to dodge what taxes they do owe and also do something to keep them from dodging taxes by moving their “official” headquarters to countries like the Bahamas with low tax rates.


UnReasoned

Hmm… Maybe it will get better on its own if we complain about it some more?