At the moment, California is considering the possibility of implementing a single-payer healthcare system. SB 562, the Healthy California Act, would essentially expand Medicare coverage so that it covered every person in the state of California. Having been approved by the Senate, the bill now goes to the state Assembly where it has a chance of passing. However, if it does pass, it would be a massive problem for the state as it would face significant increased state spending, higher taxes, and decreased quality of health care.
To start off with the simplest problem, the proposal is projected to be incredibly costly. Current projections show that the new California single-payer plan would cost roughly $400 billion. Putting that in perspective, that would double the state’s budget.
Such a great expanse of spending means that the state of California will need to find new revenue to cover the costs. Unfortunately, old sources of revenue will likely not be able to cover those costs. California has been trying to keep its budget afloat by taxing the top ten percent, who pay 79 percent of the state’s taxes, and since they have seen their income decrease, the state’s tax revenue has stunted.
So with revenue being a problem, a new source is needed to pay for it. However, the state legislature has not yet come up with a full plan to pay it off and current plans involve tax increases. Polls, however, have confirmed that support for the single-payer plan drops if taxes increase so it will be hard to sell that as a way to pay for it. Overall, this looks like it is just going to drive up the state’s deficit.
Of course, California is not the first state to try (and fail) to implement a single-payer healthcare system. Vermont tried a couple years ago and in the end had to withdraw plans to implement it. It actually went over so poorly that then Gov. Pete Shumlin (D-Vt.) had to announce his plans to drop it after his reelection in 2014 and then chose to not seek reelection in 2016.
The reasons to why Vermont had to dump the program were actually pretty similar to the problems California is now having to consider. In short, the program would have required a 160 percent tax increase on the citizens of the state in order to pay for it, doctors and healthcare providers saw their paychecks get cut, and the program would have almost doubled the state’s budget while the program would have ended up running deficits of $82 million by 2020 and $146 million in 2021. This simply was not feasible so it was doomed to failure.
The quality of care is also severely reduced when single-payer is implemented. A study by the Cato Institute found a list of problems single-payer systems had when compared to other countries. For example, only five percent of patients had to wait more than four months for nonemergency surgery while twenty-seven percent of Canadian patients and thirty-six percent of British patients had to wait over that time frame.
The United States actually outranked its opponents on having a higher percentage of patients being able to spend more than 20 minutes with their doctor, saw a higher usage of high-tech medical procedures, and had more access to modern medical technology.
The U.S. also saw lower mortality rates for prostate and breast cancer than the U.K., Germany, France, New Zealand, Canada, and Australia. Many of these countries also saw a problem of rationing the healthcare system which can benefit the wealthier and well connected so as a result “healthcare for all” becomes a misnomer. In the end, there is evidence that suggests the U.S. would see a decline in health if single-payer were implemented.
California would do well to end its dream of trying (and failing) to implement single-payer health care. Implementing it would be incredibly expense and drive taxes up even higher. It would also greatly reduce the quality of healthcare for its citizens which would greatly undermine SB 562’s objectives. Certainly reform is needed, but the method of “medicare for all” is not effective policy and will only lead to disaster.
FreedomWorks Letter to Congress in Support of Fiscal Commision Act (H.R. 5779)