California’s Single Payer Dream Turns Out to Be a Fiscal Nightmare

States shopping for single payer health care systems are like young guys shopping for wedding rings – everything looks glittery until they turn over the price tag. There’s just no way around it. A government takeover of the entire health care market is an inherently expensive proposition. But whereas other, more sensible states pulled back from the brink of fiscal disaster, California may nevertheless be plunging headline into an economy-destroying decision.

This week, Golden State lawmakers got their first glimpse at the price tag for their single-payer proposal, which totaled an incredible $400 billion annually. That’s more than twice the state’s current budget of $182 billion. To be fair, the report noted that around $200 billion of existing federal, state and local funds could be repurposed to go toward the single-payer model (though I’m sure employers would have something to say about that), but that still leaves more than $200 billion to be raised from new taxes.

Part of the reason for the tremendous expense is that it’s the most audaciously liberal single-payer proposal that could be imagined. As Vox’s Dylan Scott explains, the “state would pay for almost all of its residents’ medical expenses – inpatient, outpatient, emergency services, dental, vision, mental health, and nursing home care – under the plan, and Californians would not have any premiums, copays or deductibles.”

Not having any out-of-pocket costs is cold comfort given that Californians will be paying for it through higher taxes or lower wages. And in return for the generous benefit package the state is giving up every lever they have to keep costs down.

“Under the bill, enrollee access to services would be largely unconstrained by utilization management tools commonly used by health care payers, including Medi-Cal,” according to the committee report. “The ability for enrollees to see any willing provider, to receive any service deemed medically appropriate by a licensed provider, and the lack of cost sharing, in combination, would make it difficult for the program to make use of utilization management tools … . Therefore, it is very likely that there would be increased utilization of health care services under this bill.”

Seeing an exorbitant price tag, replete with a report explaining how you’re proposing to fundamentally break the insurance market, has typically been enough for other states to back away from the ledge.

Two years ago Vermont (home of Bernie Sanders) dropped the idea after final estimates indicated that the plan would have required the state to raise an additional $2.5 billion in revenue. That would have required doubling the $2.7 billion in revenue the state collected annually to fund everything else in government, a notion that even Democrat governor Peter Shumlin noted would be “detrimental to Vermonters.”

“You’d think that, if there was any state where this could fly politically, it should have been Vermont,” political science professor Matthew Dickinson told Vox. “But in this case, the price was so big that even a state as solidly blue as Vermont wasn’t able to swallow it.”

Given that precedent it was little surprise that Colorado voters roundly rejected a single-payer proposal (80 percent of voters cast ballots against the idea) after estimates suggested it would require a 10 percent hike in payroll taxes to pay for it. And New Yorkers may be coming to a similar conclusion after estimates suggested that the state would need to double (and maybe even quadruple) their current tax revenue levels in order to pay for the scheme.

And yet, as we should know by know, California is different, far outside the traditional realms of blue and red.  The Sacramento Bee reports:

A California Senate committee tasked with reviewing bills that spend state money passed a $400 billion universal health care proposal Thursday with no funding plan.

Sen. Ricardo Lara, D-Bell Gardens, introduced SB 562, a sweeping overhaul of the state’s health insurance market. He’s also the chair of Senate Appropriations. The committee passed the bill with a 5-2 vote during a fast-paced suspense file hearing, clearing the way for it to be taken up on the Senate floor next week. …

Lara has yet to reveal a detailed plan about how the state would come up with the money to provide health care to the nearly 40 million people living in California. Opponents argued that the funding issue should have been addressed before the committee voted on the measure.

Apparently, when it comes to Democrats from California, you not only have to pass a bill to find out what’s in it, you also have to pass a bill to see how taxpayers would pay for it. Perhaps, before throwing hundreds of billions at another entitlement, Golden State Democrats should figure out how to shore up their collapsing pension system, pay down their $1.6 billion budget deficit, and finish their $100 billion high-speed rail boondoggle.

Photo Credit: www.SeniorLiving.Org