California Democrats Wrestle with Proposal to Replace Private Health Insurance with “Single-Payer” System

A sweeping proposal to replace private medical insurance in California with a single, government-run health care system has suddenly taken on sharp political edges for Democrats, threatening party unity even as it promises to mobilize voters on the left.

Supporters say “single-payer” proposals like Senate Bill 562, which the state Senate could vote on this week, are becoming a hard-and-fast litmus test for Democrats in California, and perhaps nationally — despite the long odds of one state going it alone with a top-to-bottom health care overhaul.

“From here on out, single-payer — and in particular 562 — is going to be for Democrats what abortion is for Republicans,” said Don Nielsen, a lobbyist for the powerful California Nurses Association, the bill’s lead sponsor.

Pent-up frustration over the Democrats’ inability or unwillingness to create such a system — nationally or statewide — exploded last weekend at the California Democratic Convention. Throngs of supporters of Vermont Sen. Bernie Sanders and other activists organized by the nurses’ union disrupted speeches and threatened to “primary” incumbent Democrats who don’t get on board.

The uprising delivered a clear message for California’s Democratic politicians: SB 562 is not just a conversation starter hastily drafted under the specter of an Affordable Care Act repeal; it must be passed and signed into law. Now.

Then, two days later, came the numbers: California would have to collect roughly $200 billion in private funding to run the $400 billion program, most likely through a payroll tax that Californians would pay instead of premiums, co-pays and deductibles, according to a long-awaited Senate committee report. The $200 billion is more than the state’s entire $124 billion general fund budget, which pays for everything from K-12 education to social services.

The reality check was challenged by the proposal’s champions, who note that health care spending is already high. They argue that a universal health care system in California would save money by eliminating the profits, advertising and overhead of the private health insurance market in the same way as another single-payer system, Medicare. But the sheer scale of the numbers underscored the magnitude and complexity of the proposed overhaul.

SB 562, by Sens. Ricardo Lara, D-Bell Gardens, who is running for state insurance commissioner, and Toni Atkins, D-San Diego, would create a single, statewide insurance plan for everyone — including undocumented residents, seniors on Medicare and people who now get their health coverage through work — without co-pays or deductibles. But the measure does not lay out a plan for paying for it.

If Senate leaders call for a vote on the bill this week by Friday’s deadline, Democrats have a choice: Do they support a proposal with which they may agree in concept, but which would have profound — yet still unspecified — implications for the state? Or do they vote against it and risk being painted as a “corporate Democrat” in a primary challenge?

Some compare the pressure coming from the party’s progressive faction to one on the other side of the aisle.

“The left wing of the Democratic Party has become the doppelganger of the tea party movement,” said Jack Pitney, a professor of politics at Claremont McKenna College. “It provides a lot of ideological energy, but the energy is also combustible.”

The single-payer issue presents an opportunity and a challenge for the Democratic Party as it tries to regain control of Congress in 2018, said Thad Kousser, a political science professor at UC San Diego.

“It could definitely help you mobilize people in a midterm who otherwise don’t show up,” he said, “but if the backers of this use it to mobilize people in a primary to knock out centrist Democrats who have the best shot in the general, then it hurts the party.”

While the switch to a single-payer system would almost certainly require a hefty payroll tax, the bill itself contains no tax provisions. And a change made Thursday — making the universal health care plan contingent on the funding to pay for it — means that it’s possible the bill could be signed into law without ever changing a thing. That’s because Democrats would have to later pass the taxes with a two-thirds vote — a huge hurdle.

Gov. Jerry Brown — who terms out next year and has fashioned himself as a fiscal moderate — has been openly skeptical, publicly questioning how California would pay for its own system, especially given the uncertainty over health care coming out of Washington. Few expect he would sign the bill into law if it reaches his desk.

But supporters say they are making their case to the governor and that they have vowed to keep single-payer at the top of the agenda and to make it a key issue in next year’s elections.

A fuller analysis of the costs, savings and financing options for the proposal — conducted by the University of Massachusetts, Amherst, and commissioned by National Nurses United — will be released early this week, said Michael Lighty, policy director for the California Nurses Association and National Nurses United.

The governor is asking tough questions, Lighty said, “and we are in the position to answer them in a rigorous way.”

Los Angeles County Supervisor Sheila Kuehl, a former state lawmaker whose multiple single-payer proposals passed the Legislature — only to be vetoed by then-Gov. Arnold Schwarzenegger — said she sat down with Brown last month after a meeting they both attended to explain how the new law would work.

“He said to me, ‘Hey, I think you could tell me about single-payer,’” Kuehl recalled.

Her primer: “The government already pays billions of dollars, and so do employers, and so do workers. And that all adds up to paying for single-payer,” she said. “But I don’t know if he’s sold on it.”

Lt. Gov. Gavin Newsom — arguably the front-runner in the race to succeed Brown and who is now working on his own universal health care plan — could be far more receptive, if elected. When the candidate stopped by a nurses’ rally Saturday night at the Sacramento Convention Center, Executive Director RoseAnn DeMoro put him on the spot, asking where he stood on SB 562.

“I guess I could say ‘I’m with you’? Does that work?” Newsom quipped before taking the stage to cheers.

The party’s anti-establishment faction did not show the same love for Assembly Speaker Anthony Rendon, interrupting his speech at the convention with chants — prompting an intervention from outgoing state party Chairman John Burton. Rendon had earlier expressed caution about the proposal in an interview, saying he supported single-payer “philosophically” but questioned the timing and the funding of the Senate bill.

Kousser, the UC San Diego political scientist, said it’s striking that even liberal lawmakers are being targeted by the left.

“California politics,” he said, “is starting to feel like Berkeley politics — a competition for purity rather than progressive pragmatism.”

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