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California lawmakers advance single-payer health care

A key state Assembly committee approved a plan funded by new business and personal income taxes that would extend medical coverage to all Californians. The proposal could face a full floor vote by the end of the month.

SACRAMENTO, Calif. (CN) — California Democratic lawmakers on Tuesday jumpstarted a historic overhaul of the state’s health care system, advancing framework for a first-in-the-nation government-run structure that would extend care to all residents through a series of major tax hikes.    

By a 11–3 party-line vote, Democrats on the state Assembly Health Committee approved the ambitious health care reform. However, despite the overwhelming result, the bill’s fate remains uncertain as both Democrats and Republicans warned they were planning to reject it if it reaches the Assembly floor later this month.  

Assemblyman Jim Wood, chair of the Assembly Health Committee, said previous attempts to improve the private health care industry have fallen short and that it’s time for the state to abandon the longstanding profit-driven model.

“Fixing individual segments of the system and hoping it improves the whole no longer seems to be an effective approach,” said Wood, D-Eureka. “Something has to give, and just maybe single-payer health care can be the catalyst for that change.”  

While recent proposals stalled mostly due to a lack of funding, this time supporters are hoping voters will approve billions in new taxes on businesses and the state’s richest earners to implement a single-payer health care system. Backers claim the system-often referred to as universal health care will not only guarantee coverage for all but eliminate the possibility of crippling out-of-pocket costs common in the nation’s most populous state.

Coined the “Guaranteed Health Care for All Act,” Assembly Bill 1400 will create a single-payer program to be administered and overseen by a new state agency known as CalCare. A corresponding nine-member board made up of doctors, nurses, mental health professionals would be appointed by the governor and lawmakers. The bill further mandates at least one board member have private health care industry work experience, one come from a nonprofit agency and one be a labor group representative.  

A host of labor unions have joined the California Nurses Association in support of AB 1400, as well as cities like San Jose, Sacramento, and Long Beach. They say the system will trim existing administrative costs, coalesce the state’s buying power and reduce labor union strikes that often stem from disputes over health care benefits.  

“Profit motives and financial incentives would no longer determine care, rather decisions under CalCare would be based on patient need,” said Carmen Comsti, policy specialist for the nurses association.  

The bill by Democratic Assemblyman Ash Kalra outlines the transition to a publicly financed, single-payer system while an accompanying measure would act as the primary funding mechanism. The former requires majority approval in both the Assembly and Senate and must be signed off by the governor.  

Though Tuesday’s vote signals early support for universal health care among some Assembly Democrats, selling the corresponding tax raise to the rest of the Legislature — and taxpayers — remains thorny at best.

To implement AB 1400, Kalra wants to raise excise and payroll taxes for state businesses, as well as increase personal income taxes for workers making over $149,509 per year. The constitutional amendment requires two-thirds support in both chambers plus majority approval from voters to become law.

Democrats hold a supermajority in both houses but approving new taxes could prove to be tricky: the California Taxpayers Association predicts Kalra’s legislation would increase tax collections by $163 billion per year. In recent years, the moderate faction of the party has been reticent to raise taxes and it could be even more wary in an election year.

During the nearly seven-hour committee hearing, multiple Democrats said they were uncomfortable approving the policy bill before taking up the funding mechanism.

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Some, including Assemblywoman Cecilia Aguiar-Curry, called out Kalra for failing to respond to questions about a bill he introduced nearly 11 months ago. In a terse exchange, Aguiar-Curry said she was worried about sending the wrong message to the constituents in her mostly rural district that universal health was on the horizon.  

“I’m not willing to take a flier and cast my lot with platitudes, giving someone else direction to figure it all out,” said Aguiar-Curry, D–Winters. “I will not vote for a bill that does not depend upon a funding mechanism for enactment; that would be a lie to our constituents.”

Republican committee members also bashed the plan and rallied around the massive estimate from the taxpayers association.  

The GOP and other critics are painting Kalra’s plan as a “government health care takeover” that will kick Californians off their existing health plans. They argue the majority party won’t be able to manage the transition, noting the state’s ongoing struggle to complete a high-speed rail project or its failure to get unemployment benefits out in a timely manner during the pandemic.

“With all due respect, the state doesn’t have a real great track record recently of providing a better service, or, well anything right now,” said Assemblyman Heath Flora, R-Modesto.

Health care providers and business groups also pushed back, warning that a single-payer system would cause poor patient care and a mass exodus of doctors.   

The California Medical Association argues the plan gives excess power to a board of nine unelected people and “would transform the practice of medicine in unknowable ways, without any input from those who practice medicine.” Kaiser Permanente, the state’s largest provider, says AB 1400 will threaten jobs and “undermine its unique integrated health care delivery system.”

Preston Young, lobbyist with the California Chamber of Commerce, told the committee doctors and other providers would be hesitant to sign on with CalCare and likely seek employment out-of-state. He also called the companion funding piece, which would require voter approval, the “biggest tax increase in state history.”  

“This is completely antithetical to affordable health care,” Young testified.

Other potential hurdles include getting the federal government to sign off on the single-payer system and defending it in court.

As noted in the health committee’s legislative analysis, the state will have to petition the Biden administration for waivers to use Medicare funds for the pending CalCare system. There are also questions as to whether the plan could comply with the federal Employee Retirement Income Security Act (ERISA) and the Fifth Amendment’s Takings Clause.

The committee staff is also wary of how the state will afford the switch to a single-payer program. It highlighted previous studies by the University of California indicating the state will need to raise $233 billion to make the switch in year one.  

“[Kalra’s constitutional amendment] is projected to raise $163 billion,” the analysis states. “This estimate is significantly less than the actual need... thus, the committee may wish to ask the author how he plans to fund the remaining balance, including funding for expected year to year increases in expenditures and the reserves needed to cover fluctuations in revenue.”

Tuesday’s vote comes as Governor Gavin Newsom is simultaneously pushing his own progressive health care reform.

Earlier this week Newsom unveiled his 2022–2023 budget priorities, including a plan to extend subsidized health coverage to all residents regardless of immigration status. California currently offers Medi-Cal coverage to undocumented people over the age of 50 and below the age of 26.

Asked about Kalra’s proposals, Newsom, who promised to pursue a single-payer system on the campaign trail in 2018, claimed he had yet to read the bills.

A similar single-payer proposal cleared the state Senate in 2017 but faltered in the lower chamber. Citing “potentially fatal flaws”, Assembly Speaker Anthony Rendon shelved the bill and its $400 billion price tag.

Kalra’s AB 1400 will be referred to the appropriations committee and must clear the Assembly by majority vote before the end of the month. He gave the committee a rough estimate of five years for the full adoption of a single-payer system.

“This is not a government takeover of health care; you’ll still have the same access to the same doctors, nurses and clinics you have access to now,” said Kalra.  

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