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California Single Payer Redux

Here in California, I want to focus on Senate Bill 562, the most recent single payer bill, which is moving through the legislature as we speak. Effectively, this legislation would abolish private health insurance all together inside CA, and allow only one state run plan, for all people residing here. All federal funding from Medicare and Medi-Cal would be diverted to a state fund. All premiums paid by individuals would also be included, and employers would have a new payroll tax.

Like your current health plan? You cannot keep it, period. I am thinking of how my Medicare clients will react to that….There is even a statement in the bill about funding to retrain all third-party people who deal in health insurance. That means people like me, as well as tens of thousands of other employees in insurance. Solar panel sales, anyone? Uhh, this one is hard for me to support simply on professional employment grounds.

Yesterday afternoon, the estimated cost of providing single payer coverage came in. Prior to that, it was a conceptual statement at best, and simply a pollical shot across the bow to Washington, at worst.

The new cost estimate put the cost of a program like SB 562 at about $400 billion per year. Federal funds from current programs would get us about $200 billion. Current employer and employee/individual premiums/taxes would net another $100 to $150 billion. That means we would need to come up with between $50 and $100 billion in new money to break even in year one.

We have 39 million people in California. However, only 55% of residents pay taxes. If we only have 22 million tax payers to foot the bill, the higher estimate would cost each taxpayer over $4500 a year. That is new expense, because the premiums they used to pay are already accounted for. We are not a nation, despite our heft. States cannot print money, and must operate within a budget. The program costs more than DOUBLE the current state budget. Without any budget amounts written in the actual language, the bill could be passed by simple majority. Affording this single payer program will ultimately require new taxation of residents. That changes the ground rules to a much higher legislative standard, and means a 2/3 majority in both houses is required to pass it. If it somehow does get voted through, Gov. Brown is likely to veto it, based on the cost.

Even if SB562 goes to suspense this year in Sacramento, single payer has been a revolving door in Sacramento for many years, and each time it comes back to the surface, it is more familiar, and easier to consider as an alternative to the current dysfunctional market. We will elect a new Governor in 2018, and that person will be a Democrat. Gavin Newsome, the leading horse, has indicated he strongly supports this concept.

If anyone has questions about what they are hearing on these topics, or want some sources to confirm things, please let me know. I want all of us to be informed by thoughtful conversation, which leads to making good decisions.