A civil war is brewing within California’s Democratic party. Progressives — led by Lt. Gov. Gavin Newsom, the frontrunner for governor, and the politically powerful California Nurses Association — plan to fight for a single-payer healthcare system this year. Their more moderate rivals — among them Assembly Speaker Anthony Rendon — are pushing back. Unfortunately, the progressives seem to be winning. Newsom has a 10-point lead over his nearest competitor for the Democratic nomination. If his faction emerges victorious, Californians had better prepare to lose their existing health plans — and pay billions of dollars in new taxes for the privilege. The California Nurses Association says it will push to revive Senate Bill 562, the Healthy California Act. Nurses recently rallied outside of the state capitol to urge Rendon to move the bill ahead. The bill would effectively take away the health coverage that Californians currently have — including Medicare and Medi-Cal — and replace it with a single government-run plan for all residents. The state government would decide which procedures and drugs to cover. The plan wouldn’t charge premiums, deductibles or co-pays — but it would still cost a fortune. According to an analysis by the state Senate’s Appropriations Committee, the bill would cost $400 billion a year. Of that, $200 billion would supposedly come from repurposing federal dollars earmarked for programs like Medicare and Medi-Cal. The remaining $200 billion would come from state funds. California’s government currently spends around $183 billion a year. So, SB 562 would more than double the state budget. The bill contains few specifics about how the state would raise the revenue needed to do so. The Senate Appropriations Committee analysis suggests a 15 percent payroll tax hike. The California Nurses Association claims that a 2.3 percent levy on business income in excess of $2 million, coupled with a 2.3 percent sales tax, would suffice. The bill’s eye-popping price tag is a major reason why Rendon chose to table the legislation last year — and why he’s reluctant to bring it up again. “Absolutely nothing has happened with the bill,” he said this month when asked whether his concerns had been addressed. He’s not the only Democrat who has concluded that single-payer is economic suicide. In 2016, Coloradoans rejected a similar single-payer plan by an 80-20 margin. With a price tag of $36 billion, the overhaul would have more than doubled Colorado’s budget. Not even deep-blue Vermont could stomach the tax hikes that come with government-run healthcare. In 2014, then-Gov. Peter Shumlin backed away from single-payer after concluding the reform’s 11.5 percent payroll tax on businesses and 9.5 percent income tax on individuals “might hurt our economy.” It’s a safe bet that Californians will sour on SB 562 as they learn more about it. Sixty-five percent of residents say they favor single-payer, according to the Public Policy Institute of California. But support drops by nearly one-third after Golden State residents discover the plan would raise taxes. Whether lawmakers take those objections to heart is another question entirely. If the California progressives emerge victorious in this fall’s elections, there may be no stopping them from implementing an economically ruinous single-payer plan. Sally C. Pipes is President, CEO and a fellow in health care policy at the Pacific Research Institute. Her next book, “The False Promise of Single-Payer Health Care,” will be published this spring.
The Senate Bill 562 or the “Healthy California Act”, California’s single-payer health care proposal, has generated controversy in the Democratic party. If the bill passes, Californians could lose their present health care plans and pay potentially billions of dollars in new taxes to cover the change. Progressive Democrats, backed by the California Nurses Association, are in favor of the bill, which would replace the present health coverage through Medicare and Medi-Cal with a single government-managed plan for all Californians. California’s government would decide the procedures and drugs that would be covered. Premiums, co-pays and deductibles would not be charged, but the cost of the new system would cost $400 billion annually, according to the Senate Appropriations Committee. $200 billion of that amount would come from the funding for Medicare and Medi-Cal and other similar programs; the remaining amount would come from state funding, which at present stands at only $183 billion annually. The Senate Appropriations Committee analysis has indicated that to cover the remaining amount, a 15 percent payroll tax hike would need to be enforced; the California Nurses Association has claimed that a 2.3 percent levy on business income of over $2 million, as well as a 2.3 percent sales tax, would be the best course of action. The legislation was tabled in 2017 because of the high cost of implementation. In addition to these two bills, there is also an effort underway in Congress to create a national healthcare system. At the moment, 65 percent of residents favor the single-payer method, but this number drops by nearly one-third when it is revealed that it would be paid for through taxation.