SACRAMENTO, Calif. (CN) – Introduced as a hedge against President Donald Trump’s promise to gut former President Barack Obama’s landmark health care law, a California bill establishing universal state-run health care was approved by a state Senate committee Wednesday.
After more than two hours of debate, the Senate Health Committee cleared the Golden State’s latest attempt at adopting universal health care despite key concerns as to how the system will be paid for.
State Sen. Ricardo Lara, D-Bell Gardens, told the Senate Health Committee that Senate Bill 562 is the best way to extend health care coverage to almost 3 million uninsured residents and that the state must act with urgency.
“With President Trump’s promise to abandon the Affordable Care Act and leave millions without access to care, California is once again called to lead,” Lara said.
The transformative legislation would create a single-payer health care system, provide health insurance to all California residents regardless of immigration status and allow state regulators to negotiate drug costs with the pharmaceutical industry. If it passes – in the face of opposition from powerful business and health insurance groups – the proposal as drafted would take effect January 2018.
Lara’s presentation was delayed 30 minutes as committee members trickled into the crowded Senate room. Hundreds of enthusiastic supporters dressed in red shirts jammed the Capitol hallways and held a pre-hearing rally in downtown Sacramento.
While the single-payer bill passed its first legislative test, stiff challenges remain. Backers have still not identified a way to pay for a system devoid of employer-based and Medicare/Medi-Cal expenditures.
Lara says he is funding a research program by the University of Massachusetts-Amherst regarding the plan’s ultimate cost, but it won’t be completed until May. The bill advances to the Senate fiscal committee, which Lara chairs.
Critics say the plan is a “job-killer” and have questioned the timing of transforming the state’s health care system with Congress also plotting large-scale health care reforms.
“It’s an inherently flawed system lacking competition and important cost-containment mechanisms which will result in lower quality and higher cost health care for all Californians,” testified Karen Sarkissian of the California Chamber of Commerce. “It should be called Medi-Cal for all.”
Currently, 56 percent of Californians obtain health care through their employer, while 39 percent are enrolled in some form of Medi-Cal or Medicare. The cost of California’s health care is staggering: in 2016, health care expenditures totaled more than $367 billion.
Lara and supporters, including the California Nurses Association, will need to figure out how to comply with California’s Proposition 98 if they want to raise taxes to pay for universal health care. Proposition 98 requires 40 percent of revenues from new taxes to go to education.
Supporters will also have to attain a federal waiver in order to receive federal health care support. Lara said if the waiver is denied, he has identified other ways around the denial – including a potential lawsuit.
No state currently has a single-payer system, but California lawmakers have been kicking around the idea for decades. Voters rejected a universal health care initiative in 1994 and five separate bills have been proposed since 2003, including a 2007 effort vetoed by Arnold Schwarzenegger.
Under SB 562, every resident would be eligible to receive all covered benefits without deductibles or co-payments. Users would be able to choose from any provider signed up for the government-run system.
The program would be managed by a 9-member board appointed by the Legislature and governor, as well as a 22-member public advisory committee. The board would be tasked with securing providers, negotiating reimbursement prices and establishing standards for “safe, therapeutic care for all residents of the state.”
The health insurance sector has predictably lined up against the bill, including Anthem Blue Cross, Kaiser Permanente and Blue Shield of California. Gov. Brown also expressed skepticism last month about how the single-payer system would be funded and implemented.
Speaking in opposition to the bill, Kaiser’s lobbyist said the health care giant would be “dismantled” under SB 562.
“This bill unfortunately is divisive, counterproductive and actually could cause harm,” said Teresa Stark, Kaiser’s government relations director.
Several of the groups that have lined up against SB 562 have made political contributions to current members of the Senate Health Committee, including chair Ed Hernandez, D-Montebello, Toni Atkins, D-San Diego, and Richard Roth, D-Riverside. Each member voted in favor of the bill Wednesday.