California's single-payer plan costs $400 billion - twice the state's entire budget

Posted May 24, 2017

The report said that assuming this cost was raised through a new payroll tax, with no cap on wages subject to the tax, the added payroll tax rate would be about 15 percent of earned income. At a hearing Monday, one Democratic legislator questioned whether the state can effectively manage a universal health care system.

Senate Bill 562, known as Healthy California proposal, would provide coverage for 39 million Californians, supplanting existing employer health insurance as well as Medicaid and Medicare.

Advocates of single-payer say any increase in taxes to pay for the program will be similar to what Californians already pay in premiums and deductibles.

But taxpayers would have to come up with another $200 billion to make up the balance.

"This bill would require unprecedented changes to a mature healthcare system", the legislative analysis states."Therefore, there is tremendous uncertainty in how such a system would be developed, how the transition to the new system would occur and how participants in the new system would behave". A state considers implementing a single-payer health care system, then learns it would have to use its entire annual budget, plus some, to fund the idea.

The list of states that have tried to go single-payer is still a small sample size, but a fairly wide ranging one.

Business groups and health insurers spoke out in opposition, saying it would lead to massive disruption and escalating costs.

The California Chamber of Commerce said the costs would likely be far higher than what was projected and the taxes imposed on employers would trigger major job losses.

On Monday, the Senate Appropriations Committee voted unanimously to place the bill in its suspended legislation file. The state has never gotten anything right in health care.”. "How can you possibly say this is going to be fiscally prudent for the state of California, not a burden for the state?"

State Sen. Steven Bradford (D-Gardena) also preached caution, questioning whether state agencies are up to the task.

Other states have taken a close look at single-payer and balked.

Single-payer advocates learned that lesson past year in Colorado at the ballot box, as the state turned blue for Hillary Clinton even as 79 percent of voters said "no" to single-payer health care.

SB 562 would establish a nine-member board to oversee health care in the state and create a trust fund to help pay for the program.

Kaiser Health News (KHN) is a national health policy news service.