Why We Shouldn’t Wait on Washington for Better Health Care

Dave Marin
Director of Research and Policy, California Freedom Coalition

Let’s face it, health care in California is a mess. For the average person, buying insurance and accessing care is expensive and confusing. Small business owners must choose between paying enormous amounts of money to insure their employees, or hiring from the much smaller pool of people who have some other way of accessing care. State and local governments pay even more to provide the high level of coverage public employee unions demand. And health care providers spend time they could have spent seeing patients arguing with insurance companies. Believe me, no one went to medical or nursing school for this.

If you look at other industrialized countries, there are many models for running a universal health care system, and all of them are better what we have now. Of these, Single Payer is the one that’s gotten the most political traction in California.

Single Payer is easy to understand: instead of paying premiums to insurance companies, you pay taxes. Businesses and local governments get out of the insurance business, and state employees get the same care as everyone else. And instead of having to fumble through a blizzard of insurance forms and formularies, doctors and nurses can focus their time on patient care, meaning greater access for everyone. Medicare is a single-payer system, and the people on it generally seem to love it.

Joel Fox just wrote an article basically arguing, too bad, Californians under age 65, no Single Payer for you. Advocate all you like, but the only way it’s going to happen is through the federal government. You know, the guys who were just a few votes short of slashing health care funding in California and kicking millions of Americans off health insurance.

Joel’s argument has three points: (a) that California’s financial structure couldn’t handle a single-payer system, (b) that the system couldn’t weather a recession, and (c) that we’d never get the waivers to use federal funding the way we wanted. Let’s look at these one at a time.

The state’s current financial structure

Joel has a point here. Single Payer would both be an enormous cost savings overall (this study estimates we’d spend 18.8% less) and an unprecedented increase in the size of state government (because most of what we now pay insurance companies would now go through the state). There are at least two aspects of the state’s current financial structure that make this difficult, if not impossible:

  • Prop 13, which specifies that new taxes require a two-thirds vote in each house of the legislature
  • The Gann Limit, which caps state spending at 1979 levels (except, if that spending is mandated by the federal government)

Ironically, it was Joel Fox himself who played a key role in getting these into the state Constitution.

However, like Joel says, this is the current system. It was California voters who made these limitations, and California voters can un-make them.

That’s exactly what the California Healthcare Roadblock Removal Act aims to do. If passed, it would reset the rules for funding health care back to the way they were in 1977. A majority of legislators could create a single-payer system, or another sort of universal health care system, or do nothing, and be held accountable for the consequences. The catch: the money can only be used for health care. The state can’t even borrow money from the special fund the Act creates.

And yes, we’d get to vote on it one way or another. If there’s an initiative to repeal something as comparatively small as the gas tax, you can bet there’d be one for for Single Payer.

The earthquake of a recession

Joel’s next argument is that even if California created a single-payer system, it could never weather a recession the way a federal program could.

For some reason, Joel assumes that the Single Payer would be funded by income taxes on high earners. In fact, pretty much everyone involved in efforts to implement single-payer in California cites this study, which recommends a 2.3% sales tax increase, and a gross receipts that exempts the first $2 million of revenue. Sales taxes are at least stable in recessions, and gross receipts taxes tilt the playing field heavily towards small businesses at the expense of big ones. As the former president of the Small Business Action Committee, Joel Fox might want to give this some serious consideration.

In contrast, Bernie Sanders’ Medicare-for-all-Plan suggests we fund Single Payer at the national level using a combination of payroll taxes, estate taxes, and, you guessed it, tax increases on high earners.

The California Healthcare Roadblock Removal Act also contains a provision that would allow the legislature to create a Rainy Day reserve within the healthcare fund, that could only be undone by a supermajority of the legislature. (I know this because I personally advocated for and helped draft this provision, and I’m frankly a bit miffed that Joel overlooked it.)

I got in trouble with Debra Does, Executive Director of the Sacramento Taxpayers Association, by suggesting, in a comment on Joel’s article, that even if the Rainy Day reserves ran out in a recession, California might float a bond. But this is exactly the way the federal government weathers a recession! Which is why it bothers me to no end when Joel Fox writes blithely about the “flow of funding from the federal government.” In Debra Does’ own words: You know that’s a loan, right? You know it needs to be paid by someone, right? You know where those funds come from, right?

Actually it’s worse that that. Most Californians don’t know that when we pay taxes to the federal government, only about 90% of that (as a conservative estimate) makes its way back to California. The federal government only looks like a good deal because it borrows so heavily.

As for who pays that back? The last time the federal government ran a surplus was 1998-2001, with the biggest surplus in 2000. In 2000, only 17 states, including California, actually helped pay down the debt; the other 33 continued to take out more than they put in.

My advice to Ms. Does and other taxpayer advocates is to take the standards of efficient, economical government and fair and equitable taxation you apply to our state, and apply them to the federal government, starting with the military. You will be astounded.

And Californians should think twice about advocating to move any social program from the state level to the federal one. Thanks to the Senate, if Medicare-for-All ever gets implemented, you can bet it’ll be a better deal for Vermont than for California, and it’ll be California, not Vermont, that pays back the debt the program racks up during recessions.

Check-offs from Congress

Finally, Joel points out that (despite being California taxpayers’ own money), federal funding for healthcare comes with strings attached, and might not fit so neatly into whatever single-payer system we design. He only touches on this briefly, so I’ll be brief too.

Every year, our legislators manage to pass a budget, working around a host of special funds and spending formulas, including the Gann Limit itself. To us, state-administered federal funding looks complicated. To them, the federal government is just another poorly-designed spending formula they don’t have direct control over.

California voters have been training our legislators in the fine art of budgetary garbage collection for at least the last 25 years. They’ve got this.

Hiding the ball

In sum, the argument that Californians should wait on the federal government for Single Payer (or until we turn 65, whichever comes first) only makes sense if you omit most of the relevant facts.

Look, if you think that Single Payer is the wrong path to universal health care in California, or even if you think it’s morally wrong to expect some Californians to fund other Californians’ health care through taxes, just come out and say it. Don’t hide the ball by suggesting that California is incapable and the federal government has to do it for us. Californians know better.

 

 

 

 

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