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September 15, 2008
Real Reform: California
Tiptoes Again Toward Single-Payer Health Care
Too bad Massachusetts
didn’t take a page from California’s health care reform playbook.
Awaiting a signature,
or, more likely, another veto from California Gov. Arnold Schwarzenegger
is the second incarnation of legislation that would establish
single-payer health care in the Golden State. This means real reform
instead of the boondoggle giveaway to the health insurance industry
masquerading as such in the Bay State.
Small wonder MassCare
received tons of national media attention right out of the starting
gate, while this bill, the genuine article, is all but ignored. S.B.
840, the California Universal Healthcare Act, terrifies the health
insurance and pharmaceutical industries that spend so many television
advertising dollars and make such hefty campaign contributions.
This bill and its
predecessor were authored by state Sen. Sheila Kuehl. It’s about time
someone stood up to the well-funded special interests that have such a
costly stranglehold over this nation’s health care.
S.B. 840 is a major
departure from the current model of health care financing – the model
that consumes almost one-third (at least 30 percent) of annual health
care spending in this country. This financing model is not set up to
ensure profits for private health insurance underwriters. It is designed
to fund actual health care in the most efficient manner possible.
It does so by
eliminating all private insurance risk pools in the state and putting
every California resident, including illegal aliens, into one big pool –
young or old, healthy or chronically ill. The bigger the pool, the more
people exist to contribute to paying for the costs, meaning less money
is required from each person to make the system work. (That’s why a
national pool would work even better to spread risks and costs.)
According to the
state’s Legislative Analyst Office, if the governor signs the bill,
single-payer health care would actually begin on Jan. 1, 2011, and the
transition would be challenging, to say the least. In fact, there are
more questions than answers at this point. This is complex legislation
with lots of moving parts. In addition to centralized financing, the
bill also establishes a new state agency headed by an elected
commissioner to administer the funding via new contracts with
physicians, hospitals and other covered health care providers.
In a letter to
Schwarzenegger, Kuehl points out that by establishing centralized
financing and administration, the bill will help encourage faster and
more widespread adoption of electronic medical recordkeeping, a
cost-saving technology that also lowers preventable medication and other
often deadly errors. The bill also grants the commissioner authority to
negotiate payments for drugs and durable medical equipment and to
encourage adherence to evidence-based standards of care.
should help level out disparities in health care quality between the
state’s affluent and poorer communities. Unlike the present funding
system, which rewards pricey acute care, the central administration will
also emphasize primary and preventive care as another means of keeping
costs in check. In other words, while most private insurance balks, this
system will pay for the preventive tests that detect disease in the
early stages when it’s cheaper to treat (and more likely to be
The new health care
commissioner will also have to negotiate with the federal government to
incorporate federal funding for programs like Medicare and Medicaid (Medi-Cal
in the state). There’s no guarantee this will run smoothly. The LOA also
notes that retired state employees might sue to prevent the tax revenues
that currently fund their health care diverted into the centralized
According to the LOA,
the economic impact of the bill is uncertain. No one can predict what
will happen to jobs in the state after the private health insurance
industry goes away and the new payroll tax of 8 percent (11.5 percent
for the self-employed) goes into effect.
consequences: California employers would no longer need to provide
health care coverage to workers. This potentially could result in
savings for the businesses that already pay for this kind of benefit
while imposing greater costs on companies that do not. But this bill
also grants California employees the freedom to ditch jobs or even be
laid off and not worry about losing access to health care. That kind of
peace of mind is priceless and well worth additional payroll taxes.
In short, S.B. 840 is a
big gamble. But the risk of doing nothing is even higher – just more of
a patchwork system that doesn’t work for those who most need it and
costs billions of dollars more than necessary. Just how unhealthily
miserable and impoverished from outrageously high health care costs do
we need to be to do something about it?
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