California legislature reintroduces statewide universal health care bill

California Assembly members reintroduced a bill Jan. 6 that would create a universal health care system within the state of California.

Assembly Bill 1400, or the California Guaranteed Health Care for All Act, intends to replace private insurance and cover health care for all Californians. Previously, in 2017, California lawmakers introduced a plan to create universal health care, but it was shelved for its incompleteness and issues of financing.

If this bill were passed, it would make California the first state to have single-payer universal health care. A single-payer system means all funding for the CalCare program would come from the government, with Medicare, Medicaid and private insurance no longer playing a role.

According to the bill, taxes will be increased for certain groups – mainly employers and those with incomes of more than $150,000 per year. Secondly, the legislature intends to obtain waivers and approvals relating to Medi-Cal, Medicare and any other federal programs pertaining to the provisions of health care. These waivers and agreements will allow existing federal health care payments to be paid toward CalCare instead.

Gerald Kominski, professor emeritus of health policy and management and member of the consulting team for the Healthy California for All Commission, said the single-payer system replaces an implicit tax with an explicit tax on employers who provide health care plans.

While the price they are paying will not change by much, their mindsets will, as the money they are used to choosing to put towards their employees’ health insurance will now become a requirement, Kominski added.

Currently, employers who provide their employees with private health insurance get a tax deduction on the money they spend toward this insurance. If California passes AB 1400, these same employers would no longer be allowed to provide private insurance for their employees and instead would be required to pay a tax toward the funding of this new single-payer system.

According to the UC Labor Center, there will be an increase in tax for companies earning more than $2 million, a payroll tax for businesses with 50 or more employees, and a personal income tax for those making more than $149,509 per year. The UC Berkeley Labor Center estimates that creating a single-payer system could cost the state $222 billion a year without additional cost savings from streamlined services.

Ron Andersen, professor emeritus of health policy and management, said that while there would be a raise in taxes, individuals already pay significant amounts for their own coverage, even if they have Medicare.

One of the potential drawbacks to this bill is the elimination of private health insurance, as many Californians are happy with the health care they are currently receiving, Kominski said. Past efforts to expand nationwide government insurance programs have also drew criticism from individuals who were satisfied with their coverage and were opposed to the possible tax increases, Andersen said.

But Nadereh Pourat, director of the Health Economics and Evaluation Research Program at the UCLA Center for Health Policy Research, said if CalCare is implemented well, it could be even more financially beneficial than the current system. A comprehensive system in which everyone is equally covered brings equality and simplicity, two attributes the current system does not offer.

“If you look at the big picture, if you get a product like CalCare that’s really comprehensive and covers everything, and you don’t have any cost sharing, why wouldn’t you go for a better product?” Pourat said.

Prior to the pandemic, 27.5 million Americans did not have any form of health insurance, according to a 2018 United States Census Bureau report on health insurance coverage in the United States.

According to Gov. Gavin Newsom’s proposal, an alternative to AB 1400 is for the Medi-Cal program to cover 700,000 Americans regardless of immigration status.

Expanding Medi-Cal is the best we can do right now, but single-payer health care is a better way, Kominski said.

Kominski added that CalCare may not be beneficial for populations in affluent areas that have mostly private insurance, as those options would be essentially eliminated. However, it would help level the playing field for individuals without private insurance, he said.

Government programs like Medicare and Medicaid pay hospitals less than the cost of caring for the beneficiaries these programs cover. In 2015, 63.9% of hospitals lost money providing to Medicare and Medicaid patients, as the U.S. Congress and state governments set hospital payment rates for program beneficiaries, according to the American Hospital Association.

Beyond topics of funding, the bill will also have a board for meeting its core objectives.

Nine voting California residents will serve on an executive board that will govern CalCare, determining when individuals may start enrolling in CalCare, employing necessary staff, negotiating the prices of covered pharmaceuticals and medical supplies, establishing a prescription drug formulary, and negotiating and entering into necessary contracts.

On Jan. 24, the legislature approved the implementation of CalCare by statute. The bill requires a fiscal analysis to be conducted and delivered by July 1, 2024, which will determine whether or not the revenue will be sufficient to pay for program costs within eight years of CalCare’s implementation.

“It is good that people are thinking about how we can make changes,” Pourat said. “Whether this particular plan is going to work or not, we’ll just have to wait and see.”