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Cost is key concern, though measure could advance with reforms in 2018
By Miriam Raftery
June 26, 2017 (Sacramento) – Assembly Speaker Anthony Rendon has pulled the plug on the Healthy California Act, or Senate Bill 562, which would have provided free universal healthcare to all Californians.
Rendon, who has claimed to support single-payer healthcare, said the bill was fatally flawed including “serious issues, such as financing, delivery of care, cost controls, or the realities of needed action by the Trump administration and voters to make SB 562 a genuine piece of legislation. In light of this, I have decided SB 562 will remain in the Assembly Rules Committee until further notice.”
That means it won’t come up for a vote by the full Assembly this year, though Rendon left open the possibility for the State Senate to revise and revive the measure next year, in the second part of the two-year session. He wants to see the Senate fill in holes to address financing, delivery of care, and cost control.
Critics slammed Rendon’s decision, which came just two days after The U.S. Senate unveiled its healthcare reform proposal to repeal the Affordable Care Act (Obamacare) and impose deep cuts in Medicare and Medicaid funding. A similar version in the House of Representatives would result in 23 million Americans losing healthcare, according to the nonpartisan Congressional Budget Office, making the situation dire in the view of those advocating for SB 562, which would have begun protecting Californians’’ healthcare in January 2018 if it had passed.
Vermont Senator and former presidential candidate Bernie Sanders voiced disappointment that Rendon refused to allow the bill to come to the Assembly floor for a vote, adding, “At a time when the United States is the only major country on earth not to guarantee health care for all, and when tens of millions of Americans are uninsured or underinsured because of outrageously high costs, California has the opportunity to lead this nation in a very different health care direction. If the great state of California has the courage to take on the greed of the insurance companies and the drug companies, the rest of the country will follow.”
The bill would have replaced health insurance companies with government-run healthcare. If it had passed, the measure would have provided all Californians with not only free medical care, but also free dental, vision care, mental health services, chiropractic care and more.
A recent poll found that 70% of Californians support universal healthcare.
Chuck Idelson, spokesman for the California Nurses Association which sponsored the Healthy California Act, noted that the insurance industry has poured massive amounts of money into efforts to defeat the bill. He questioned Speaker Rendon’s motives. “Whose interest is he acting on if not the insurance industry and those who oppose having guaranteed healthcare?” Idelson asked.
The key sticking point, and it’s a major one, is that the bill was passed by both the Assembly and Senate without detailing how it would pay the measure’s hefty $400 billion price tag. Republicans opposed the measure, noting the cost was higher than the entire state budget. That’s true, but it’s also an over-simplification of the situation.
So, could California afford universal healthcare without risking bankrupting the state, as Republicans have claimed passage of the bill could do?
Robert Pollin wrote in a Los Angeles Times editorial that a study he conducted at the University of Massachusetts, commissioned by the California Nurses Association found that “enacting a single-payer system would yield considerable cost savings (for California) overall by lowering administrative costs, controlling the price of pharmaceuticals and fees for physicians and hospitals, reducing unnecessary treatments and expanding preventive care. We found that Healthy California could ultimately result in a savings of about 18%, bringing healthcare spending to about $331 billion, or 8% less than the current $370 billion.”
Much of that is money that the state and federal government are already paying (though it’s unclear how much of the federal share may be slashed.) That leaves $106 billion as the known gap that would have to be covered.
One idea to do that would be two new taxes – though for most individuals, small and medium sized businesses, the costs would likely be less for the taxes than they are currently paying for health insurance and healthcare.
One tax would be a 2.3% tax on larger businesses, with exemptions on the first $2 million in revenue. Small businesses – 80% of all California companies –would pay nothing and mid-sized businesses would pay less than 1%. However, even for larger businesses, the tax would be less than they currently pay if they are providing healthcare benefits for workers.
The second tax proposed is a 2.3% sales tax increase, though housing, utilities, groceries and certain other necessities would be exempted and there would be help for low-income families. Most middle-income families spend between 2.6% and 9.1% of their income on healthcare, so even with the new tax, they would likely wind up saving money under the proposed plan, according to Pollin.
But even some supporters of universal healthcare have been squeamish about backing a measure where the primary analysis showing a cost savings was funded by the bill’s sponsors. Perhaps a more independent analysis funded by the Legislature itself would be a good place for the State Senate.
There are still big ifs even under the rosiest scenario. The biggest wild card is what the federal government will do and how deeply any repeal-and-replace Obamacare measure would affect California, if approved in reconciliation form by both houses of Congress and signed by President Donald Trump.
The proposed U.S. Senate plan, as drafted, hits seniors hardest, who could pay five times more in premiums than younger people, takes away guaranteed protections for pre-existing conditions, phases out Medicaid expansion and deeply cuts Medicare, forcing states to make tough choices on either scaling back the number of people covered or dropping reimbursement for doctors even lower. Others whose coverage will shrink or potentially disappear under the Senate Republicans’ plan include pregnant women, half of whom give birth under Medicare, and the disabled who rely on Medicare coverage.
But for now, with Assembly Speaker Rendon pulling the plug on the Healthy California Act, our state’s residents may be left at the mercy – or lack of mercy—of the federal government.
Advocates of universal healthcare aren’t giving up, however. Some have vowed to fund primary opponents to run against Democrats who oppose the Healthy California Act – with Rendon at the top of their list of targets. There is also talk of ballot initiative that would take the decision about universal healthcare directly to the people.
Senator Toni Atkins of San Diego, who coauthored the bill along with fellow Democrat Richard Lara, voiced disappointment but said, “This issue is not going away, and millions of Californians are counting on their elected leaders to protect the health of their families and communities.”
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