California Can’t Afford Single-Payer Health Care Fantasy

A civil war is brewing within California’s Democratic party.

Progressives — led by Lt. Gov. Gavin Newsom, the frontrunner for governor, and the politically powerful California Nurses Association — plan to fight for a single-payer healthcare system this year. Their more moderate rivals — among them Assembly Speaker Anthony Rendon — are pushing back.

Unfortunately, the progressives seem to be winning. Newsom has a 10-point lead over his nearest competitor for the Democratic nomination. If his faction emerges victorious, Californians had better prepare to lose their existing health plans — and pay billions of dollars in new taxes for the privilege.

The California Nurses Association says it will push to revive Senate Bill 562, the Healthy California Act.  Nurses recently rallied outside of the state capitol to urge Rendon to move the bill ahead.

The bill would effectively take away the health coverage that Californians currently have — including Medicare and Medi-Cal — and replace it with a single government-run plan for all residents. The state government would decide which procedures and drugs to cover.

The plan wouldn’t charge premiums, deductibles or co-pays — but it would still cost a fortune. According to an analysis by the state Senate’s Appropriations Committee, the bill would cost $400 billion a year.

Of that, $200 billion would supposedly come from repurposing federal dollars earmarked for programs like Medicare and Medi-Cal.  The remaining $200 billion would come from state funds. California’s government currently spends around $183 billion a year.  So, SB 562 would more than double the state budget.

The bill contains few specifics about how the state would raise the revenue needed to do so. The Senate Appropriations Committee analysis suggests a 15 percent payroll tax hike.  The California Nurses Association claims that a 2.3 percent levy on business income in excess of $2 million, coupled with a 2.3 percent sales tax, would suffice.

The bill’s eye-popping price tag is a major reason why Rendon chose to table the legislation last year — and why he’s reluctant to bring it up again.

“Absolutely nothing has happened with the bill,” he said this month when asked whether his concerns had been addressed.

He’s not the only Democrat who has concluded that single-payer is economic suicide.

In 2016, Coloradoans rejected a similar single-payer plan by an 80-20 margin. With a price tag of $36 billion, the overhaul would have more than doubled Colorado’s budget.

Not even deep-blue Vermont could stomach the tax hikes that come with government-run healthcare. In 2014, then-Gov. Peter Shumlin backed away from single-payer after concluding the reform’s 11.5 percent payroll tax on businesses and 9.5 percent income tax on individuals “might hurt our economy.”

It’s a safe bet that Californians will sour on SB 562 as they learn more about it. Sixty-five percent of residents say they favor single-payer, according to the Public Policy Institute of California.  But support drops by nearly one-third after Golden State residents discover the plan would raise taxes.

Whether lawmakers take those objections to heart is another question entirely. If the California progressives emerge victorious in this fall’s elections, there may be no stopping them from implementing an economically ruinous single-payer plan.

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