Will Single-Payer Health Care Be California's Next Big Fiscal Crisis?
Investor's Business Daily
Health Care: Once again, a California politician has put forward what he believes is a great idea: A single-payer health care plan for all Californians. Sorry, but such plans don't work — and never have.
It must be something in the water. Since California's drought ended early this winter, its loopy politicians seem to have gone ga-ga over imposing a single-payer health care plan on the state.
The idea has a history. During the former GOP Governator Arnold Schwarzenegger's terms in office, he vetoed not one but two single-payer bills that crossed his desk, in 2006 and 2008.
For a while, the notion seemed to die. The state struggled desperately during the financial crisis, its deficit hitting $26 billion at one point, and there was just no way it could pay for single-payer.
But in February of this year — despite Gov. Jerry Brown's new budget projecting a $1.6 billion deficit in the middle of an economic boom — State Sen. Ricardo Lara once more put forward a bill to adopt a costly single-payer health care program.
As the Los Angeles Times put it, the program would be a "state-run 'single-payer' system that would operate similar to Medicare."
And this week the leading candidate to take over for Brown in 2018, Democratic Lt. Gov. Gavin Newsom, says he backs the idea. The idea is gathering political steam.
What's wrong with that? Plenty.
As Institute for Policy Innovation scholar Merrill Matthews recently noted in these pages, a number of states have tried to impose single-payer health plans on their citizens and failed.
Impeccably progressive Vermont, home of far-left Democratic candidate Howard Dean and socialist Democratic candidate Bernie Sanders, actually passed a law in 2011. But leaders there quickly found out that it would cost the tiny state a whopping $2.5 billion — nearly doubling the state's total spending. The bill was killed in 2014.
Both Kentucky and Tennessee passed plans in the 1990s based on HillaryCare, a top-down health plan that was intended to move the country toward a single-payer plan. But both states' plans failed as costs soared, insurers refused to participate, and they were forced to cut thousands of people from the covered rolls to stay solvent.
Indeed, once the real costs of single-payer become obvious, politicians and voters usually come to their senses. That was the case last year in Colorado, where single-payer was put on the state ballot, only to be rejected by nearly 80% of voters.
In California's case, such a bill would no doubt be popular. But, given the large numbers of immigrants and welfare recipients in the state, it would be extraordinarily costly and likely ruinous of the state's already shaky finances.
As IBD noted recently, the state's nonpartisan Legislative Analyst in 2008 looked at single payer and found the costs would be enormous. Even with an 11% tax on workers and using all the money now used on health care to fund single-payer, it would still be about $40 billion per year in the hole.
In short, it will be a red-ink machine, requiring massive tax hikes and federal aid to sustain it.
Ironically, California could get some help from the GOP's promised repeal of ObamaCare, especially if it includes turning current Medicaid spending into block grants. That would limit the amount spent, but give states greater flexibility. Proponents of single-payer say that could mean California could take its Medicaid money and just spend it on a single-payer plan instead.
Beware of what you wish for, as the saying goes, because you just might get it. California's spending is already soaring, especially for Medicaid. Since 2010, spending is up 53%. And of total state spending today, more than a third already comes from the federal government.
But once Congress starts controlling spending through block grants, the state would have less to spend. And a new plan to exempt unionized teachers from having to pay state income tax would make things even worse. The state would have to either cut the number of people covered, or deny services to some. Private insurers would flee the program, as would private hospitals and care centers.
In a state facing many budgetary challenges, California may soon have to make some tough choices.
Does it want Jerry Brown's $68 billion high-speed rail to nowhere? First-class transportation and water infrastructure, with an estimated price tag of nearly $200 billion? Does it want to pay for the $1 trillion in underfunding for public employee pensions? Or does it want a massively expensive single-payer health care system?
It can't have them all. The money simply isn't there. Trying to pay for everything that California's politicians want is a recipe for the biggest state budget crisis ever. And in fiscally irresponsible California, that's saying something.