A new poll indicates that most Californians support changing the state’s immense, insurance-based medical care system to one in which the state provides universal coverage. However, there’s just one small detail: 65 percent support drops to 42 percent if a “single-payer” system requires new taxes, which, of course, it would.
There will be two sources of financing for Healthy California. The first is the same public health care revenue sources that are presently providing about 71 percent of all health care funding in the state. These include Medicare and MediCal, which together provide nearly 50 percent of all health care funding in California at present. It also includes tax subsidies for health care expenditures by individuals and households in the state, which provide about 9 percent of the state’s total health care funding. The Healthy California bill is explicit in stating that the State will work to obtain waivers in all of the present areas of public health funding, so that these present funding sources will continue to finance Healthy California. Assum ing the state is successful in obtaining these waivers, these funds will provide $225 billion in funding for the state’s single -payer program. That means that the remaining $106 billion to fund Healthy California will need to be provided by new revenue sources in the state.
The report proposes a two-fold tax structure: Sales taxes on everything except basic needs – grocery store purchases, housing, utilities – would go up 2.3 percent. Businesses that take in more than $2 million per year would pay an additional 2.3 percent in taxes on gross receipts.
It wouldn’t be the first time that a high price tag torpedoed a government takeover of health care. In 2014, Vermont’s attempt at single-payer ended abruptly when Gov. Peter Shumlin rejected the 11.5% payroll tax hike and 9.5% individual tax hike required to fund the program. Yet the financial costs of single-payer are practically negligible compared with the human costs.
Consider the Department of Veterans Affairs’ scandal-plagued single-payer health program. Last month, the agency’s inspector general found that more than 100 veterans died while waiting for care at a Los Angeles VA facility between October 2014 and August 2015.
California’s uninsured rate has declined dramatically in the past few years. Much of the increase in health coverage has been the result of the state’s decision to expand Medi-Cal, its Medicaid program, under the Affordable Care Act. While the federal government has funded a large share of program growth, state costs have also risen. This cost growth, combined with major policy shifts still conceivable at the federal level, has created additional uncertainty about the future of Medi-Cal financing. As state lawmakers and other stakeholders plan for the future of the program, it is important to understand how Medi-Cal is currently financed and how it fits into California’s overall budget.