When California introduces measures like AB1400, it’s important to know what it’s aiming to accomplish. This was not The Affordable Care Act 2.0. This was a complete overhaul of the health care system. The measure sought to move California to “Single Payer” healthcare. Single Payer completely eliminates all options for health insurance as we know it—no employer insurance is allowed, no individual health plans, no alternative choices or options for anyone, period. What you get instead is a government plan that sets rules under which citizens can receive medical care—what’s covered and what’s not, what frequencies are allowed, what doctors and providers are permitted to do—and then citizens receive their medical attention according to those new rules.
The equation for California boils down to evaluating how many uninsureds we’re serving with a bill like this, and what’s the cost. These two factors lay at the crux of what the average voter needs to know in order to form an opinion on bills like this. UCLA’s Center for Health Policy Research shows 94% of Californians have health insurance and 6% are uninsured. Of the uninsured, 54% are eligible for subsidized health insurance but have waived coverage. Another 41% of California’s uninsured population is made up of undocumented immigrants, who, importantly, just saw access to Medi-Cal expanded to all Californians—regardless of immigration status.
Those are important notes regarding the uninsured population a Single Payer bill would seek to aid. For context on the costs, the one time a state sought to implement a Single Payer healthcare system, it was in Vermont, and it was scrapped before it ever came to fruition. They literally passed the bill, celebrated its passage, and then when it came time to work out the finances were “pretty shocked at the tax rates we were going to have to charge” (Vermont’s Gov. Shumlin).
How expensive? Well, for perspective the entire budget for the State of California is currently about $262 billion. That $262 billion runs the entire state’s budget—AB1400 called for another $400 billion on top of the current $262 billion. In order to raise that much money, not only were there a slew of new taxes proposed, but the legislation actually also called for Constitutional Amendments to permit the legislature to implement new taxes, as needed, without voter approval. This was because the price tag was so massive that, in addition to the new taxes needed to fund it, additional major funding came from money captured by reallocating federal funds California receives via a proposed system of waivers—waivers that would be subject to White House approval. While you might be able to count on some Administrations granting waivers, passing legislation which requires financial favors from whoever happens to be in the White House at any given time is not a reliable long-term strategy.
There are ideas that wrap around the existing system and provide deeper premium subsidies, that might merit deeper consideration.
While California promises to continue evaluating Single Payer as a healthcare strategy in the future, it is important to know what percentage of Californians are even uninsured under the current system, and, more importantly, to evaluate whether this massive and incredibly expensive undertaking is really the best way to redesign affordability in health care. Might there be more incremental and politically practical options that could move us along in the right direction with more realistic chances of implementation? This is not to say that Single Payer healthcare, in and of itself is an inferior system—more that, in the same ways biological evolution has a way of building upon and improving the existing entity, perhaps there is room for more legislatively palatable changes that might be aimed at more attainable improvements. There are ideas that wrap around the existing system and provide deeper premium subsidies, or even claims cost assistance (deductible/co-pay reduction) for example, that might merit deeper consideration.
All in all, a thoughtful approach to assisting Californians with the cost of healthcare is clearly on the horizon, but the question about total revolution versus building a better system brick by brick, is a big one—and while Single Payer legislation is attractive to some, there might be realities, once we really get into it, that make it just too big of a lift.
Tobias Kennedy is president of Montage Insurance Solutions and CEO of Simpolicy. Learn more at montageinsurance.com.