SACRAMENTO — As the California Senate considers voting this week on a proposal to replace private health insurance with a statewide health plan that covers everyone, the bill’s main backers on Wednesday heralded a new study that says the plan could save Californians $37.5 billion annually in health care spending — even after adding the state’s nearly 3 million uninsured.
The favorable findings by economists at the University of Massachusetts, Amherst, comes a week after a Senate committee released eye-popping estimates that threatened to dampen enthusiasm for the bill. The committee’s analysis projected that the statewide plan would cost $400 billion annually, half of which would likely need to come from workers and businesses through a 15 percent payroll tax.
If the state adopts a single-payer plan, “Californians will get more and will definitely pay less,” Sen. Ricardo Lara, D-Bell Gardens, the co-author of Senate Bill 562, said at a news conference Wednesday.
But a statewide poll released Wednesday night could foreshadow the political challenges ahead for enacting a single-payer system — which would inevitably be funded through new taxes. The first-ever question to Californians on the topic by the Public Policy Institute of California shows that the vast majority of state residents were in favor of a universal, government-run health care system — as long as it doesn’t raise their taxes.
But the prospect of paying the government for health care through new taxes caused support for the proposal to fall from 65 percent to 42 percent.
Another poll, commissioned by the nurses’ union, found that 70 percent of Californians were in favor of a universal, single-payer health care system — a percentage that dropped to 58 percent after those surveyed heard arguments from the opposition about the cost.
“What I see in the polls that have been released so far is that the support for single-payer is fragile,” said Melissa Michelson, a professor of politics at Menlo College in Atherton. “People like the idea of the government providing health insurance. But as with any program, they don’t really want to have to pay for it.”
Supporters are hoping that the findings of the UMass Amherst study — commissioned by National Nurses United, an umbrella group of SB 562’s main sponsor, the California Nurses Association — convince lawmakers and voters that the average Californian will save money on health care, even if they pay higher taxes. They also noted that the study’s lead author, economist Robert Pollin, is a friend and former adviser of Gov. Jerry Brown — who has expressed deep skepticism about the cost of California turning to a single-payer plan all alone.
“If you look at it, it’s pretty simple stuff,” said Pollin, speaking at the news conference. “It’s pretty much arithmetic.”
Pollin and other economists at UMass Amherst’s Political Economy Research Institute estimate that California would save so much by eliminating insurance-company overhead and controlling prescription drug costs, among other measures, that the state’s businesses and families would pay less for health care than they do now.
The new study estimates it would cost California $331 billion to provide health care to everyone living in the state — less than the $368.5 billion spent today in a system that leaves millions without coverage. To pay for it, they say, the state needs to find $106 billion in annual tax revenue — far less than the Senate committee’s estimate of $200 billion.
The figures are probably on the optimistic side, said Laurence Baker, a professor of health research and policy at Stanford, because they hinge upon California’s ability to negotiate lower costs with the powerful pharmaceutical industry and other key players, such as hospitals and doctors.
“It may be that they could do that,” Baker said, “but getting from where we are now to there would be a tricky, difficult proposition.”
Proponents argue that Californians would no longer have to pay premiums and out-of-pocket expenses, and that they could come out ahead, even if their taxes go up.
That appeals to Beth Woerner, 55, a self-employed, independent-turned-Democrat from Martinez who has been following the single-payer bill and was one of those polled by the Public Policy Institute of California.
“Yeah, your tax bill may look a little higher,” she said, “but in the long run it’s going to save people thousands and thousands of dollars.”
Democrats are far more likely than Republicans to favor a single-payer policy, however, which means that Democrats would have to pass taxes without any support from their colleagues across the aisle.
Senate Republican Leader Pat Bates, of Laguna Niguel, noted in an interview that Kaiser Permanente has testified the plan would put it out of business — an assertion the nurses’ union disputes. “That makes it a nonstarter for me from the get go,” said Bates, vice-chairwoman of the Senate Appropriations Committee.
The president and CEO of the lobbying group for the state’s health insurers called the projected cost savings “overly optimistic.”
“This new analysis doesn’t change the fact that a single-payer health care system is unaffordable and would be incredibly disruptive to the 90 percent of California’s residents who currently have health insurance,” said Charles Bacchi, of the California Association of Health Plans..
The UMass Amherst economists propose paying for the plan with a 2.3 percent sales tax and a 2.3 percent tax on business revenue, excluding a company’s first $2 million in annual revenue in order to shield small businesses from the tax. As an alternative to taxing businesses, they propose keeping the sales tax and levying payroll taxes of 3.3 percent on workers and employers.
SB 562 does not currently include any provisions for raising taxes and would not take effect until the state has passed the needed taxes. So it’s possible that the bill could pass the Senate this week without a funding plan and later be amended in the Assembly to include taxes, which would require a two-thirds vote in both houses.
In either case, Menlo College’s Michelson said, the bill is a risky proposition for Democrats.
“I think if this moves forward in a way that makes it look like it might happen,” she said, “there will be such an enormous amount of lobbying, public opinion, commercials and mailers trying to get people to change their opinion: `Who do you want making these decisions — you or bureaucrats in Sacramento?’ The ads write themselves.”
