Will Single-Payer Healthcare Work For California? (SB562)

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Photographer: Steven Styles/ Belator Media

SB562 is a California Senate Bill authored by CA Senators Lara (D) and Atkins (D), also known as ‘The Healthy California Act’. Proposed right before the new legislation deadline passed on February 17th, SB562 aims to “replace private medical insurance with a government health care system covering all 38 million Californians — including its undocumented residents).”

This bill is the latest in a rash of legislation aimed at transforming state health system into Single-Payer systems. The term “single-payer” describes the funding mechanism, referring to healthcare financed by a single public body from a single fund, not the type of delivery or for whom physicians work. Canada adopted just such a system approximately 25 years ago, a publicly-funded insurance program where costs are controlled and both hospitals and doctors are private. It is called single payer because there is only one “payer”; there is no alternative program, such as private health insurance that Canadians can turn to.

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Photographer: Steven Styles/ Belator Media

Question: is this legislation even necessary for California? According to a Forbes article by Tim Worstall, Medicaid is already a single-payer system with multiple providers:

“The Feds pay for (mostly) everything but it’s all the hospitals and doctors out there that provide the treatment in return for the government’s cash. The US does have a single payer, single provider, health care system, that run by the VA. This is not, to put it mildly, regarded as a model for the health care for everyone else to follow.” – Tim Worstall, Forbes

California legislators have attempted passage of a single-payer bill before–as early as 1994, and the first successful passages of legislation through the California State Legislature, SB 840 or “The California Universal Healthcare Act” (authored by Sheila Kuehl), occurred in 2006 and again in 2008. Both times, Governor Arnold Schwarzenegger vetoed the bill.

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Photographer: Steven Styles/ Belator Media

Single-payer legislation has failed to pass in other states, most recently in Colorado. During the 2016 November election, about 80% of voters cast ballots against ColoradoCare measure Amendment 69 according to a tally by the Denver Post and despite heavily-publicized rallies in its favor by single-payer advocate Bernie Sanders. Fears of rising costs seem to have quieted calls for change in Colorado.

Regarding California’s costs (of the current health-care system) the state’s share of Medi-Cal costs breaks down into percentages based on a set formula, according to the LAO (Legislative Analyst’s Office) 2016-2017 Analysis of Medi-Cal Budget:

“For most families and children, SPDs, and pregnant women, California generally receives a 50 percent FMAP—meaning the federal government pays one–half of Medi–Cal costs for these populations. However, a subset of children with higher incomes qualify for Medi–Cal as part of the state’s CHIP. Currently, the federal government pays 88 percent of the costs for children enrolled in CHIP and the state pays 12 percent. Finally, under ACA (Affordable Care Act), the federal government will pay 100 percent of the costs of providing health care services to the newly eligible Medi–Cal population from 2014 through 2016. Beginning in 2017, the federal cost share will decrease to 95 percent, phasing down to 90 percent by 2020 and thereafter.”

In his 2017 budget, Governor Brown identified a net increase in General Fund costs relative to the June 2016 budget package, including $1.8 billion in costs related to Medi–Cal. In 2016, the governor allocated $19.1 billion General Fund for Medi–Cal, an increase of $1.4 billion—or 8 percent—above the estimated 2015–16 spending level. (The Governor’s budget assumed total annual Medi–Cal caseload of 13.5 million for 2016–17, an increase of 2 percent over revised 2015–16 caseload.)

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Photographer: Steven Styles/Belator Media

According to the California bond accountability website—established by Governor Schwarzenegger– California’s population expected to increase by 23 percent over the next two decades.

The Golden State currently relies on about $22 billion in federal funding annually to cover private insurance subsidies linked to plans purchased through the state’s health insurance exchange; the federal government also pays for a provision of the law that greatly expanded Medicaid — a health care program for the poor, known as Medi-Cal in California. The percentage of Medicaid costs paid by the federal government is known as the federal medical assistance percentage (FMAP).

According to the California State Senate website, SB562 has been printed and may be acted upon on or after March 23, 2017.

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Article by L. R. Styles – Photographer: Steven Styles/Belator Media

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