As California Debates Single-Payer Health Care, Consider How Much Your Taxes Would Increase

At a recent town hall, California’s Sen. Dianne Feinstein was unfairly criticized for expressing concern about proposed state legislation to create a “single-payer” health care system for California. Her concerns are well founded. The practical reality is that setting up a single-payer system, especially for just one state, is unworkable.

Under a single-payer system, health care would be financed through taxing people to support a government-run program rather than through having them or their employers pay for private health insurance coverage. Doing that would require a massive tax increase on California families along with huge pay cuts for nurses, doctors and other health care professionals. And, it would spell the end of the employer-sponsored insurance that half the state relies on and values.

Debating the single-payer proposal also divides the state’s health care community at the very moment that it needs to be united in moving toward universal coverage under our existing system. Abandoning the Affordable Care Act, as Senate Bill 562 does, telegraphs to Congress that California was never committed to this law, which makes preserving our shared progress that much more difficult.

California’s current system relies in large part on employer-sponsored insurance, which is still the source of health care coverage for tens of millions of people. That coverage would disappear under SB 562. Instead of receiving coverage financed by their employers, working Californians would see a tax increase of well over $10,000 per year for many middle-income families.

For some Californians, this will be less than they are paying out of pocket for health insurance. For many it would be more. All, however, could see health spending in the state budget swell toward the state’s total health spending of $250 billion per year, crowding out essential investments that are also critical to the health of Californians, such as funding for education and transportation. Spending less would mean cutting the pay of nurses, doctors and other health care professionals by at least 50 percent.

The average salary of a registered nurse in California is $135,000. In equivalent dollars, Canadian nurses under their single-payer system make $65,000 per year. Though some private insurance companies do make profits, more than 90 cents on the dollar goes directly toward health care services and necessary administrative costs. Eliminating private health insurance companies would also undermine California’s innovative and effective integrated delivery systems that are a source of coverage and care.

Californians rightly criticized Congress for racing forward with health reform proposals before evaluating or “scoring” the actual impacts of these proposals. The current single-payer health care bill has not received an evaluation from our Legislative Analyst’s Office. In fact, it does not yet include a mechanism to pay for the program that could even receive a score, though the bill’s sponsors promise one in the coming month.

When the actual score came out for the first version of the American Health Care Act a month ago, it signaled its death knell since it showed that there would be 24 million fewer people insured as a result of the proposal. The last time a fully articulated single-payer bill was scored in California, it showed that even after the massive payroll tax increases proposed, the funding for the law was still $40 billion short, also effectively ending debate on that bill.

California needs to be leading the nation right now on sensible, responsible public policy. The Legislature is doing that right now on issues like transportation and climate change. This is not the time to abandon our critical leadership on moving toward universal, affordable coverage building on the Affordable Care Act.

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