Senate committee estimates cost of single-payer at $400 billion; Nevada County reacts to report
The statewide single-payer health care system proposed by California’s Senate Bill 562 would cost the state an estimated $400 billion annually, the Senate Appropriations Committee announced Monday.
The state’s annual budget is currently $180 billion.
The Appropriations Committee’s cost analysis “confirms that the cost of single-payer health care is prohibitive,” said Bob Hren, chair of the Nevada County Republican Party, in an email.
“The cost would more than double the state budget,” said Hren, “thus requiring massively higher taxes for all residents and businesses.”
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Rich Ulery, former chair of the Nevada County Republican Party, said SB-562 would create a plan that provides broader benefits than any existing system in the U.S.
“And they think they can do it for less cost?” he asked. Ulery called the bill an “unaffordable boondoggle.”
But Mindy Oberne, chair of Nevada County’s chapter of Health Care for All California, said skeptics of the bill are jumping to conclusions too quickly. She calls the Appropriations Committee’s report “nothing more than speculative.”
Oberne and other supporters of the bill are awaiting a study that is currently underway at the University of Massachusetts Amherst, which was commissioned by Senator Ricardo Lara, a co-author of the bill. The researchers at Amherst, according to Oberne, will produce a “fiscal study,” rather than “speculative analysis.”
The appropriations committee report, she said, didn’t take into account the cost savings on pharmaceutical drugs and medical equipment that would be possible under a single-payer system. It also didn’t account for the savings that would result from more people having access to preventative care, a cost she said is very difficult to estimate, and it failed to tally the total cost of our current system for comparison, which includes deductibles and copays.
“If you really understand single-payer,” said Oberne, “it doesn’t make sense that it would cost more than what we have right now.”
She said the elimination of for-profit health insurance companies would result in massive savings to patients. Insurance companies, she said, not only have high administrative costs, but they also spend millions on lobbying in Washington, and they have to show a return on investment to their shareholders. Doctors, too, would save on the costs associated with completing the complicated paperwork required to bill various insurance companies, according to Oberne.
The Healthy California Act
Proponents of SB-562, otherwise known as the Healthy California Act, say it would establish an improved “Medicare for all” system in California, delivering full health coverage for all residents of the state, with no deductibles or co-pays.
The system would be financed by the state, but health care itself would be managed by providers, according to the Healthy California Campaign.
The “devastating” cost of deductibles and co-pays that patients are required to pay under the current health care system prompt many to ration care, said the Healthy California Campaign in a release. A single-payer system, it said, would “ensure real patient choice.”
But Hren calls the proposed single-payer health care system a “job killer.” Because individuals and businesses are “portable,” he said, meaning they can “choose to move to a state offering a better working/tax climate,” he fears that the increase in taxes SB-562 would bring could drive both employers and employees out of the state.
It would also bring “lower quality and rationed government health care services to all, similar to what is provided to the veterans,” said Hren.
Appropriations Committee Findings
The Senate Appropriations Committee’s report states that the fiscal estimates included in the report are “subject to enormous uncertainty.”
Half of the estimated cost of a single-payer system could be offset by existing federal, state and local health care funding, but the remaining $200 billion would need to be collected through tax revenues, according to the report. The additional payroll tax rate would be about 15 percent of earned income, it states.
“It is important to note that the overall cost of those new tax revenues would be offset to a large degree by reduced spending on health care coverage by employers and employees,” the report states. Existing spending, it estimates, is between $100 and $150 billion annually, so the total new spending required under the bill would be between $50 and $100 billion annually.
Numerous media outlets across the state have reported on the Senate Appropriations Committee’s cost analysis, which Oberne said wrongly portrays the bill in a negative light. The experience, however, shows her that “our bill can be a lead news story.”
“Please do not be alarmed by the media criticism of single payer,” she said. “What counts is how much we step up our organizing to educate the public, increase endorsements and win over wavering legislators to the bill.”
A full senate hearing on SB-562 is expected to take place early next month.
To contact Staff Writer Matthew Pera, email email@example.com or call 530-477-4231.
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