Will California go single-payer?
Universal health plan would save Californians $37 billion and cover more people, study finds
SACRAMENTO - As the California Senate considers voting this week on a proposal to replace private health insurance with a statewide plan that covers everyone, the proposal’s main backers on Wednesday announced it could save $37.5 billion in health care spending - even after adding the state’s nearly 3 million uninsured - according to a new study from economists at the University of Massachusetts, Amherst.
The highly favorable findings - commissioned by the bill’s lead sponsor, an umbrella group for the California Nurses Association - come a week after a Senate committee released eye-popping estimates that threatened to dampen enthusiasm for the bill: that it would cost $400 billion annually, half of which would likely need to come from workers and businesses through a 15 percent payroll tax.
But economists from UMass Amherst’s Political Economy Research Institute reached a different conclusion. They estimated that California would save so much by eliminating insurance-company overhead and controlling prescription drug costs, among other measures, that the state’s businesses and families would pay less for health care than they do now.
They estimate it would cost California $331 billion to provide universal health care to everyone living in the state under a single, government-run plan - even less than the $368.5 billion spent today in a system that leaves millions without coverage. To pay for it, they say, the state needs to find $106 billion in annual tax revenue - far less than the Senate committee’s estimate of $200 billion.
“Californians will get more and will definitely pay less,” said Sen. Ricardo Lara, D-Bell Gardens, the bill’s co-author, at a news conference Wednesday.
The nurses union also hired the Tulchin Research firm to conduct a statewide opinion poll. It found that 70 percent of Californians are in favor of a universal, single-payer health care system - a percentage that dropped to 58 percent after those surveyed heard arguments from the opposition about the cost. The firm surveyed 600 likely voters May 25-29.
Instead of premiums and out-of-pocket expenses, Californians would pay the state for their health care through higher taxes - the kind of “big government” idea the state’s Republican minority strongly opposes.
Senate Republican Leader Pat Bates, of Laguna Niguel, noted last week that Kaiser Permanente has testified the plan would put it out of business - an assertion the nurses union disputes. “That makes it a nonstarter for me from the get go,” said Bates, vice-chairwoman of the Senate Appropriations Committee.
SB 562 does not include tax provisions and would not take effect until the state had passed the needed taxes. Lara said he will take the report’s findings into consideration, but did not commit to incorporating the author’s proposals. It’s possible that the bill could pass the Senate this week without a funding plan and later be amended in the Assembly to include taxes, which would require a two-thirds vote in both houses.
The authors suggest a 2.3 percent sales tax and a 2.3 percent tax on business revenue, except for a company’s first $2 million - a measure to help small businesses. As an alternative to taxing businesses, they propose keeping the sales tax and levying payroll taxes of 3.3 percent on workers and employers.
They concluded that most families and businesses - with the exception of the wealthiest Californians - would come out ahead if the state adopted Senate Bill 562, by Sens. Lara, who is running for insurance commissioner, and Toni Atkins, D-San Diego.
“If you look at it, it’s pretty simple stuff,” said Professor Robert Pollin, the study’s lead author, speaking at the news conference. “It’s pretty much arithmetic.”
SINGLE-PAYER COSTS: DUELING ESTIMATES
Two May reports produced sharply divergent cost estimates for a California universal health care proposal, Senate Bill 562. The first came from the Senate Appropriations Committee. The second, released Wednesday, came from economists at UMass Amherst in a more favorable study commissioned by the nurses union, which is fighting for the bill.
Total cost of single-payer health care proposal - Senate committee: $400 billion; UMass Amherst: $331 billion.
Tax revenue needed to pay for it - Senate committee: $200 billion; UMass Amherst: $106 billion.
Tax rates - Senate committee: a 15 percent payroll tax; UMass Amherst: a 2.3 percent tax on business revenue (after the first $2 million) plus a 2.3 percent sales tax - or, alternatively, a 3.3 percent payroll tax, plus 2.3 percent sales tax.
Source
And if there are any Econ nerds in the house, the full UMass Amherst report (84 pages) can be found here
SACRAMENTO - As the California Senate considers voting this week on a proposal to replace private health insurance with a statewide plan that covers everyone, the proposal’s main backers on Wednesday announced it could save $37.5 billion in health care spending - even after adding the state’s nearly 3 million uninsured - according to a new study from economists at the University of Massachusetts, Amherst.
The highly favorable findings - commissioned by the bill’s lead sponsor, an umbrella group for the California Nurses Association - come a week after a Senate committee released eye-popping estimates that threatened to dampen enthusiasm for the bill: that it would cost $400 billion annually, half of which would likely need to come from workers and businesses through a 15 percent payroll tax.
But economists from UMass Amherst’s Political Economy Research Institute reached a different conclusion. They estimated that California would save so much by eliminating insurance-company overhead and controlling prescription drug costs, among other measures, that the state’s businesses and families would pay less for health care than they do now.
They estimate it would cost California $331 billion to provide universal health care to everyone living in the state under a single, government-run plan - even less than the $368.5 billion spent today in a system that leaves millions without coverage. To pay for it, they say, the state needs to find $106 billion in annual tax revenue - far less than the Senate committee’s estimate of $200 billion.
“Californians will get more and will definitely pay less,” said Sen. Ricardo Lara, D-Bell Gardens, the bill’s co-author, at a news conference Wednesday.
The nurses union also hired the Tulchin Research firm to conduct a statewide opinion poll. It found that 70 percent of Californians are in favor of a universal, single-payer health care system - a percentage that dropped to 58 percent after those surveyed heard arguments from the opposition about the cost. The firm surveyed 600 likely voters May 25-29.
Instead of premiums and out-of-pocket expenses, Californians would pay the state for their health care through higher taxes - the kind of “big government” idea the state’s Republican minority strongly opposes.
Senate Republican Leader Pat Bates, of Laguna Niguel, noted last week that Kaiser Permanente has testified the plan would put it out of business - an assertion the nurses union disputes. “That makes it a nonstarter for me from the get go,” said Bates, vice-chairwoman of the Senate Appropriations Committee.
SB 562 does not include tax provisions and would not take effect until the state had passed the needed taxes. Lara said he will take the report’s findings into consideration, but did not commit to incorporating the author’s proposals. It’s possible that the bill could pass the Senate this week without a funding plan and later be amended in the Assembly to include taxes, which would require a two-thirds vote in both houses.
The authors suggest a 2.3 percent sales tax and a 2.3 percent tax on business revenue, except for a company’s first $2 million - a measure to help small businesses. As an alternative to taxing businesses, they propose keeping the sales tax and levying payroll taxes of 3.3 percent on workers and employers.
They concluded that most families and businesses - with the exception of the wealthiest Californians - would come out ahead if the state adopted Senate Bill 562, by Sens. Lara, who is running for insurance commissioner, and Toni Atkins, D-San Diego.
“If you look at it, it’s pretty simple stuff,” said Professor Robert Pollin, the study’s lead author, speaking at the news conference. “It’s pretty much arithmetic.”
SINGLE-PAYER COSTS: DUELING ESTIMATES
Two May reports produced sharply divergent cost estimates for a California universal health care proposal, Senate Bill 562. The first came from the Senate Appropriations Committee. The second, released Wednesday, came from economists at UMass Amherst in a more favorable study commissioned by the nurses union, which is fighting for the bill.
Total cost of single-payer health care proposal - Senate committee: $400 billion; UMass Amherst: $331 billion.
Tax revenue needed to pay for it - Senate committee: $200 billion; UMass Amherst: $106 billion.
Tax rates - Senate committee: a 15 percent payroll tax; UMass Amherst: a 2.3 percent tax on business revenue (after the first $2 million) plus a 2.3 percent sales tax - or, alternatively, a 3.3 percent payroll tax, plus 2.3 percent sales tax.
Source
And if there are any Econ nerds in the house, the full UMass Amherst report (84 pages) can be found here