Single-payer health care resurfaces

By CMTA Staff

Capitol Update, July 18, 2008

Senator Sheila Kuehl, in another attempt to implement a government-run, single-payer system in California, presented SB 840 in front of the Assembly Appropriations Committee on Wednesday, July 16th.  The bill was originally introduced in 2005 and vetoed by Governor Schwarzenegger.  It would have provided health insurance coverage, administrated by the State, to all California residents.

As currently drafted, SB 840 establishes a commission that will oversee the solvency of the Healthcare Fund and has the authority to implement measures that control cost or increase revenue.  The Legislative Analyst Office (LAO) indicates that the system would be funded with a combination of new tax revenues (deposited in the Healthcare Fund) as well as the redirection of current funding for health care services from federal, state, and local governments.  It concluded, however, that this single-payer proposal would result in a net shortfall of $42 billion in 2011-12 (the first full year of operations) and $46 billion in 2015 16.

SB 840 also requires the new health care system to be operational within two years after the commission determines that there are sufficient resources to implement the program.  The commission has authority for a loan from the General Fund to finance transitional costs (estimated to be $6 million in the first year). The LAO opined that "Any plan to reform the state’s health care system, by the nature of its complexity, will involve financial risk over the long term."

This proposal establishes a defective bureaucracy that will fail at the expense of the taxpayer.  It has been suggested that employers and individuals could be taxed between 4-16 percent.  The LAO estimated the following new taxes to generate about $113 billion to finance the system:
    •    Employers – 8 percent
    •    Employees – 4 percent
    •    Self Employed income – 11.5 percent
    •    Non-wage income – 11.5 percent
The uncertainty of the true cost to the system and the lack of cost controls may put the state in a larger financial quandary.

To see LAO’s full report, go to:  http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=1863

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