Today the California State Assembly will vote on a proposal – AB No. 1400 — to create a single-payer healthcare system.
They system would be similar to Medicare: a fee-for-service model. It would eliminate premiums, copays and deductibles. It would provide broad coverage, including:
- inpatient and outpatient, emergency and non-emergency medical and health facility and professional services;
- primary and preventative services;
- prescription drugs;
- medical devices and equipment;
- mental health and substance abuse treatment services;
- diagnostic imaging and lab services;
- reproductive, maternity and newborn care;
- dental services;
- vision services; and
- long-term care services.
Needless to say, the coverage is comprehensive.
California attempted to establish a single-payer system in 2017, but could not come up with a sustainable and agreeable way to fund the system. Other states have attempted to enact and enforce single-payer systems, but all have failed. The most prominent was Vermont’s system, Green Mountain Care. The system ultimately failed because of an inability to fund it to pay for ever increasing health care costs. Funding the system would have doubled Vermont’s budget and would have caused state income taxes to increase by up to 9.5% and placing an 11.5% payroll tax on all employers. Vermont abandoned its single-payer system in 2014.
Even if enacted, California’s system is likely to meet the same fate as Vermont. Some of the issues facing the California system include:
- Funding a system that is estimated to cost between $314 billion and $391 billion per year;
- Incentivizing already stressed healthcare workers to stay in the field despite the risk of lower pay due to lower rates paid to the providers;
- Recruiting health care workers;
- Potential for increased utilization of services (and, therefore, cost); and
- Integrating private providers into the system.
A companion amendment – AA No. 11 – addresses the funding of the system. The system would be partially funded through tax increases, including an increase to income taxes and payroll taxes. It is not scheduled for a vote today.