CalCare costs less and provides better care to all Californians.
Per CNA:
“How is CalCare Affordable?
Simply-put, single-payer systems save money, and CalCare is no exception. Under CalCare, California would spend less money on health care every year than we do under our current system while providing more, comprehensive care to all Californians. Multiple recent studies show that a single-payer health care system would result in lower overall health care costs than our current system. In its April 2022 final report, the Healthy California for All Commission found that under a single-payer model with no cost sharing and long-term care for all, California would save between $32 billion to $213 billion over 10 years compared to our current system. Similarly, an analysis from the Political Economy Research Institute (PERI) in 2017 found that a statewide single-payer health care system in California would reduce net overall costs by 8 percent relative to the existing system.
How Do We Develop a Financing Plan for CalCare?
In the legislative process, the policy details of proposed programs and their financing are typically worked on at the same time. The policy bills move along in the legislature, through hearings, until the budget is debated and a financing plan is added to the policy bill or approved separately. It is very common for bills that implement a new program or policy to be passed into law with financing added through a separate bill or else through the budgeting process.
What Exactly Would Developing a Financing Plan in the Legislature Look Like?
In the California state legislature, policy bills go through hearings in various policy committees before they are voted on by the full chamber (Senate or Assembly). In the case of CalCare, the bill will need to be approved by the Health and Appropriations committees in the Senate and Assembly and then voted on by the full Senate and Assembly before going to the Governor for their signature.
Financing for policy bills going through the legislative process is typically worked on as bills move through the legislative process. The author will work with stakeholders, committee chairs, legislative leadership, and other members of the legislature to figure out details of how a policy will be funded. That funding can then come through an appropriation resulting from the annual budget process, an amendment to the policy bill that adds financing, or a separate bill altogether.
So, Financing Doesn’t Have to be Figured Out Before We Pass CalCare?
No, it does not. It is common for opponents of a major policy proposal to attack the proposal based on it being “too expensive” or “not paid for,” but that standard is only selectively applied when there is a big proposal on the table. Financing is just another part of the legislative process, and it is the job of the legislature to decide if a policy is worth implementing and how that policy should be funded. The California Nurses Association (CNA) is asking that the legislature treat CalCare like any other policy that will eventually need a funding component – that the legislature start the process of considering a policy bill (i.e., holding hearings and debating the legislation) and start the process of debating and developing a financing plan on a parallel track just as they do with every other bill. It’s a fallacy for any legislator or CalCare opponent to argue that funding for a big dollar program/policy must be discussed, agreed upon, and passed first before the legislature ever formally starts considering or has a hearing about a new program.
But What Happens if the Policy Bill for CalCare is Ready to Pass but There’s No Financing Yet?
A standard inclusion in California state single-payer bills is a clause stating that the program would not be operative until the Secretary of California Health and Human Services gives written notice to the Secretary of the Senate and the Chief Clerk of the Assembly that the program’s trust fund has the revenues to fund the costs of implementing the program. This clause would be included in CalCare legislation. This language ensures that the policy bill can move forward regardless of the status of financing conversations in the legislature because the program won’t actually take effect until it’s fully funded. This means that there is no excuse to delay legislative action on a policy bill even if financing is still being worked on. If the legislature decides that single-payer health care is good policy, they should pass CalCare. Financing can come at the exact same time or after the policy bill is enacted.
Where Does the Money to Finance CalCare Come From?
Financing a single-payer system, like CalCare, comes down to combining existing public health care dollars with progressively structured state revenue sources into a single, public program that replaces the enormous premiums, deductibles, copays, and surprise bills that individuals and employers are now paying to insurers and providers. In California, spending by the federal government on public health care programs (Medicare, Medi-Cal, and the Affordable Care Act) already represents close to 40 percent of all direct health care spending in the state while state and local spending represent about another 9 percent. For the remainder of financing, CalCare would replace our current system of insurance premiums, copays, and other cost-sharing – which disproportionately hurts working families – with a progressive financing system in which the vast majority of households would have a net savings.
How Can California Use Federal Money to Pay for CalCare?
To capture federal health care dollars in a state single-payer system, states can obtain federal health care waivers to administer health care programs paid for with federal funding in new ways (see CNA’s CalCare Waivers fact sheet). These waivers would make it easier for California to consolidate federal health care dollars into a state single-payer program and be more flexible with how it uses them.
Non-Federal Revenue Options
It is important that any examination of potential new state revenue sources consider a diversity of revenue sources as well as multiple combinations of such revenue sources. There is a wide variety of sources that should be considered to cover the costs of the CalCare system not paid for by federal dollars. These revenue sources could be progressively structured or have appropriate exemptions or rebates for families with low-income and small businesses, including but not limited to:
● Payroll employer-side
● Payroll employee-side
● Gross receipts tax or fees
● Corporate income and profit tax
● Marginal personal income tax on high-income individuals/households
● Sales tax
● Elimination of tax exemptions for corporations, including those identified in the California Budget & Policy Center’s January 2020 report on California tax breaks
● Reducing health provider tax breaks for charity care or hospital fees to compensate for the reduction in charity care under CalCare
● Redirecting state funds from policing and incarceration into the CalCare system
● Wealth taxes
● Use taxes
● Sin taxes
● Oil or other natural resource extraction taxes
Exemptions and tax credits for families with low-incomes and small businesses included in the Political Economy Research Institute (PERI)’s 2017 financing analysis for the single-payer bill introduced in California in the 2017-2018 legislative session, SB 562, could serve as a model for CalCare financing. Additionally, the legislature can examine varying levels and types of new taxation for each revenue source. For example, one financing combination for a California single-payer system analyzed by the PERI institute is a 2.3% gross receipts tax (with an exemption of the first $2 million in business receipts so that small businesses would pay no gross receipts tax) and a small payroll tax divided equally between employers and employees.”
As a reminder: