Democratic California Sen. Ricardo Lara — Bell Gardens — wants California to do away with health insurance companies and put together a government-run health care system. He proposed it a few weeks ago and it is being pushed by the California Nurses Association.
Late last week the price tag became clear. It’s $400 billion a year.
Lara says the plan is to have much of that cost to be offset by state, federal and private spending but the rest will have to come via significant tax increases. And then there’s the prediction of annual health care costs jumping by $50 billion to $100 billion a year. These figures are massive and the task daunting when you consider the yearly California state budget for the entire general fund is $125 billion.
Here’s how Lara’s plan works. Health coverage with absolutely no out-of-pocket costs will be provided to all living in California and that’s including those here illegally. The state then contracts with doctors, hospitals and other health care providers for prices and then pays all the bills.
This is much how the federal government does Medicare.
All public money spent on healthcare — from Medicare, Medicaid and other federal public health funds and ObamaCare subsidy dollars will go into the pot to pay the bills.
The current estimate is that’s about half of what is needed to support Lara’s single payer system. The rest will have to come from higher taxes on business and a 15% payroll tax.
Tax increases? No problem Lara said. He, the California Nurses Association and other liberal supporters are totally energized by the idea and a tax plan to pay for the system is currently on the drawing board. The good news — they say — is we’ll be doing away with insurance company profits and the administrative costs of insurers. That will mean more money can be spent on the care of patients.
Republicans like Sen. Jim Nielsen of Gerber and business groups and health insurers aren’t too keen on the idea. “The impact on employers I think is going to be absolutely astounding. How can you possibly say this is going to be fiscally prudent for the state of California, not a burden for the state?” Nielsen said.
Businesses say — if this passes and is enacted — it will be much harder to expand their workforce.
For the tax increases to be implemented, two-thirds of the Assembly and two-thirds of the Senate must approve. That’s a daunting task. Even if it does pass, it must pass muster with Governor Jerry Brown. He’s a Democrat but has expressed skepticism at the logistics of the plan and the high cost.
Then if by some miracle the Legislature gets the two-thirds vote and Brown signs it into law, California will need to convince the Trump administration to waive the rules about how Medicaid and Medicare dollars are spent in California.
By the way, if you’re curious, Lara’s bill is SB562.
Source link: Insurance Journal