Senate Bill 562 by Sens. Ricardo Lara, D-Bell Gardens, and Toni Atkins, D-San Diego, calls for the state government to pay doctors and hospitals for health care, eliminating the need for insurance altogether, as well as federal programs such as Medicare and Medicaid.
However, the state would need a waiver from the Trump administration to be able to use the monies currently allocated for those programs in a single-payer system instead.
Benefits would be generous under the proposal, and there would be no more co-pays, premiums or deductibles, but Californians “would be hit with higher taxes,” the Los Angeles Times writes.
How much? “At this point, it’s hard to say.”
Estimates of the overall cost range roughly from $330 billion to $400 billion per year, and even if the federal government allows the state to use the dollars set aside for Medicare and Medicaid, there’s general consensus that Californians would have to pay additional taxes. Proposals have ranged from increasing payroll taxes or sales taxes, or instituting a new gross receipts tax on businesses, or a combination of all of the above. SB 562 does not contain any specific tax provisions.
“It's not free health care. That's something people really need to understand,” says Micah Weinberg, president of the Bay Area Council Economic Institute. The key question, he adds, is “do you pay the government or do you pay a private insurer?”
One reason for the high cost estimates is that the bill as currently written would follow a “fee-for-service” model, in which doctors and hospitals would be paid based on the number of procedures or patient visits they bill for.
“Such a model has been criticized for driving up costs since it gives an incentive for doctors to provide more — but not necessarily more effective — care,” the Los Angeles Times writes. “Over the last few decades, the health care industry has moved toward different payment models that are meant to encourage efficiency and better care coordination.”
Moreover, while health care professionals may benefit from such a system by being able to spend more time with their patients, they might also get paid less — and those who work at insurance companies or other administrative posts might lose their jobs altogether, says the Los Angeles Times.
The California Nurses Association supports SB 562, citing a recent University of Massachusetts Amherst study which determined the legislation would cut current spending on health care in California by 18 percent, and would reduce payroll expenses for both employees and employers.
“What this new study proves is that we can finally achieve the dream of guaranteeing health care for all Californians, without the punishment of crippling out-of-pocket costs, at far less than what was predicted by those who make enormous profits off the pain and suffering of everyday Californians,” the trade group’s executive director RoseAnn DeMoro said in a press release.
However, the California Association of Health Underwriters disputes those findings, contending that most of the savings in that university study come from shifting federal dollars — and there’s no guarantee that would happen.
Moreover, there would be “great disparity” in tax burdens if the bill were to be passed, the trade group says. California businesses will pay seven and a half times more ($106 billion) than those paying sales taxes ($14 billion) according to CNA-purchased economic analysis.
“This will lead to far more Californians being unemployed, less tax revenue into state coffers, and more pressure on an already broken unemployment trust fund, that is also 100 percent supported by employer taxes,” President Rick Coburn writes in a press release. “This proposal is one more cost pressure on California businesses and their ability to hire or expand.”
The trade group cites an April poll it commissioned, which found that a supermajority of California voters (66 percent) opposes establishing a universal health care system when they know the actual cost.
The trade group is urging lawmakers to improve upon the existing state Obamacare exchange, Covered California, “to create a system that expands coverage to all Californians in a market-based approach.”