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Will California fail financially without single-payer health care?

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Will California fail financially without single-payer health care?

Picture of Angela Hart

Angela Hart's reporting on single-payer health care was undertaken as a 2017 California Data Fellow at the USC Annenberg Center for Health Journalism.

Randall Benton Sacramento Bee file
Bob Hart of Roseville demonstrates during a rally supporting Senate Bill 562 on the west steps of the Capitol in Sacramento on May 19, 2017. Randall Benton Sacramento Bee file
The Sacramento Bee
Thursday, April 26, 2018

Lt. Gov. Gavin Newsom, the front-runner for California governor says he "doesn't see an alternative" to a taxpayer-financed single-payer health care system run by state government.

If California doesn't drastically reshape the way health care is financed and delivered, he said, soaring health care costs will create a fiscal emergency that could bankrupt the nation's wealthiest and most populous state.

"We're on a path to insolvency," Newsom said in an interview with The Sacramento Bee's editorial board this month. "This is the budget. It's not a gross overstatement to say what I just said – insolvency."

Though he's characterized it as imperfect, Newsom has praised the single-payer bill currently held up in an Assembly committee, Senate Bill 562, and said it provides the framework for a taxpayer-financed, single-payer system for California.

But fellow Democratic candidate Antonio Villaraigosa, the former Los Angeles mayor, blasted the legislative proposal as political fantasy that would be too costly for the state, which Gov. Jerry Brown predicts is headed for another recession.

"I don't think it's moderate to say that SB 562 is a farce," Villaraigosa said in a separate interview with The Bee's editorial board. "Anybody for it is selling snake oil ... It's got to go to a vote of the people. The people would have to double their taxes, to the tune of $200 billion dollars."

The issue is front-and-center as California heads toward the June 5 primary.

John Cox, a Republican real estate investor who polls show is leading Villaraigosa for second place and a spot in a November runoff against Newsom, is a stalwart opponent of a single-payer system. "The trouble with health care is that frankly, the government has asserted itself too much in our health care system and it's become too bureaucratic and uncompetitive. The last thing we want to do is turn it over to the government."

Assemblyman Travis Allen, the other Republican in the race, also opposes single-payer.

The most striking difference is between the top two contenders on the Democratic side.

Single-payer health care is being pushed by the liberal wing of the Democratic Party as a new litmus test, fueled in part by Vermont Sen. Bernie Sanders and his national push for a "Medicare-for-all" type system.

Both Newsom, as mayor of San Francisco, and Villaraigosa, as Assembly speaker, undertook major initiatives to expand health care access to the undocumented and uninsured. The politically risky moves drew intense criticism years before Obamacare dominated the health care debate on the national stage. 

Newsom signed into law Healthy San Francisco when he was mayor, making it the first major American city to extend robust health care offerings to undocumented immigrants and those who couldn't afford insurance. Newsom is touting his role in creating the universal health care program in the campaign, as Republicans seek to undo Obamacare and California considers its own path.

Villaraigosa authored measures in the Assembly that in the late 1990s led to the creation of California's Healthy Families program, which provided nearly 750,000 uninsured children with low-cost medical coverage.

"I've been for universal health care my entire life," Villaraigosa said. But on single-payer health care – which would provide both universal coverage and reorganize health care payments under a government-run system instead of through private employers and insurance companies – Villaraigosa said he backs the model only "in concept."

Though he doesn't support the current single-payer bill, Villaraigosa when he was mayor of Los Angeles backed a 2006 single-payer health care proposal from former state Sen. Sheila Kuehl, now a Los Angeles County supervisor. His thinking on the issue has shifted, however. He cannot support a radical change to the state's health care system without an explanation of how to pay for it, he said.

"We've got to be straight with people," he said.

Newsom, who has the endorsement of the California Nurses Association – chief sponsor of the single-payer bill currently stalled in the Legislature – said he's committed to pursuing it if elected, though he said the bill as written would require major changes.

"One thing single-payer is, is a radical departure from a multi-payer system. One thing it's not is more expensive," Newsom said. "The difference between me and a number of the other (Democratic candidates) is rather than telling you all the reasons it can't be done, I am committed to pursuing ways that it can be done."

He could also face political pressure from the California Medical Association, which staunchly opposes single-payer and endorsed him last week.

Newsom said "no one knows" how implementing such a system would work because "it's never been done." Vermont and Colorado got the closest, but abandoned their plans due in large part to the tax increases needed to pay for the proposals. Though it could take years, he said, "California is the only state uniquely positioned" to do it.

Rising health care costs are gobbling up a larger share of California's budget. State, federal and local spending on Medi-Cal, the low-income health care program, has nearly doubled since 2010, rising to $101 billion in 2017, up from $54 billion in 2010. General fund spending has also grown from $12 billion to $20 billion over the same period, according to budget data from the state Legislative Analyst's Office.

Newsom disagrees with the premise that single-payer would cost more. Though large tax increases would be needed, the state ideally wouldn't spend any more than it currently does, and it could even save money. Taxes would replace what people currently spend on insurance premiums and out-of-pocket health care costs, and the state would also have to secure federal waivers to ensure it retains federal health care dollars.

"This is the budget issue, so I feel an obligation to pursue this," Newsom said.

Villaraigosa said single-payer, as envisioned under the current legislative proposal, would be hugely unpopular because it would cause a major disruption, shifting people into a whole new insurance system and potentially requiring patients to change their current providers. Under the concept, insurance companies would no longer exist. There would be no insurance premiums, co-pays or deductibles. Medi-Cal would end, as would Medicare and the Covered California individual marketplace.

"Let's focus on ... protecting people by focusing on prevention, on cost containment ... let's focus on a drug formulary that needs some re-work," Villaraigosa said.

He said the state should explore a state-run public insurance option that could compete with private insurers. He also endorsed instituting a state individual mandating that would require people to have health insurance or pay a penalty.

Newsom opposes the incremental approach, saying the only way to control soaring costs is to move to a system more like Canada's.

"If you can point to a single-payer financing system anywhere else in the world that, per-capita, is more expensive than the (U.S.) multi-payer system ... then I will submit that I was wrong," Newsom said.

[This story was originally published by The Sacramento Bee.]