The bill that could potentially bring a single-payer, government-run healthcare system to California passed through the State Senate last week, despite a recently released study that found the plan could cost hundreds of billions of dollars.
Senate Bill 562, or the Healthy California Act, would establish a publicly-run health care plan that covers everyone living in California, including those without legal immigration status, and would drastically reduce the role of insurance companies in the state by paying for all medical expenses. The Senate voted 23-14 to pass SB on June 1, even though a financing plan for the bill has yet to be created.
A fiscal report developed by the Senate Appropriations Committee staff concluded that the estimated cost to provide healthcare to all of California’s residents is $400 billion — $200 billion of which can be repurposed from existing federal, state and local funds, and an additional $200 billion that would need to be raised from new taxes. The study proposes the option of a new 15 percent payroll tax to supply the revenue, although SB 562 does include any specific tax proposals.
Senator Tom Berryhill (R – Twain Harte) gave a passionate speech on the Senate floor prior to the vote June 1, expressing his opposition to the bill and cautioning his colleagues that, first, he did not believe the state could afford a measure of SB 562’s magnitude, and second, he did not trust the government to run a healthcare system.
“I appreciate what my colleagues want to accomplish with this measure, and I am open to working with anyone on how we can protect and expand coverage, particularly to those who need it most. But doing so on the backs of the middle class is not the way to do it,” said Berryhill.
He added later, “Anyway, in the end, when it comes to paying for all of this, whatever government bureaucrats come up with will only squeeze the middle class even more, because lower-income individuals rightfully won’t bear the cost directly, and the wealthy can always afford it.”
Though Senator Anthony Cannella (R – Ripon) did not speak on the floor, he submitted a “no” vote for SB 562 and detailed his opposition to the bill in a statement to The Journal.
“Improving access to quality, affordable healthcare is a top priority to me, and I’ve been actively involved in improving our system,” said Cannella. “However, this legislation is a tall order, and the state of California nor its residents can afford the price tag.”
While SB 562 is expected to be costly, another recent study conducted by Umass Amherst economist Robert Pollin demonstrated the cost savings that could come from a single-payer system. The Healthy California Act would cut current spending on healthcare by 18 percent, and reduce what middle-income California families now pay out of pocket for healthcare expenses by up to nine percent.
Pollin’s study estimates that with both these savings and the transfer of revenue currently spent on Medicare, Medicaid and other taxpayer subsidies, only an additional $106 billion will be needed to fund the bill, which he suggests raising through two modest taxes: a 2.3 percent tax on gross business revenue receipts, and a new 2.3 percent sales tax which would exclude all spending on housing, utilities, services and food at home to lessen the impact for low and moderate-income Californians. Residents with the lowest income would receive a tax credit.
As the Healthy California Act moves toward the State Assembly for a vote, the Senate is working on developing a financial plan for the bill. Assemblyman Heath Flora (R-Ripon) said he does not support the legislation.
“The Senate Committee on Health estimated the cost of the program at $400 billion which is more than triple the state’s entire $124 billion proposed budget with no funding mechanism identified,” said Flora. “We need to find a way to increase access to healthcare in California, but SB 562 isn’t the way to do it.”