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Universal Health Care For California: Closer To Reality, But Big Hurdles Remain

State Sen. Toni Atkins, D-San Diego, talks with Sen. Ricardo Lara, D-Bell Gardens, at the Senate in Sacramento on May 31, 2017.
Associated Press
State Sen. Toni Atkins, D-San Diego, talks with Sen. Ricardo Lara, D-Bell Gardens, at the Senate in Sacramento on May 31, 2017.
Universal Health Care For California: Closer To Reality, But Big Hurdles Remain
Universal Health Care For California: Closer To Reality, But Big Hurdles Remain GUEST: Elizabeth Aguilera, reporter, CALmatters

This is KPBS Midday Edition. I am 33. Legislators have tried it before but the memento -- momentum seems stronger than ever. The Senate has approved a single-payer healthcare proposal cosponsored by's is meant by Atkins. It was the first hurdle of the race for the race. So far, there is no financing plan and Governor Brown has publicly been skeptical. The state may need federal approval to use Medicaid funds for healthcare systems. Joining me via Skype is Elizabeth Aguilera. She is with Cal matters. Welcome to the program. Thank you. Let's start with a short overview. Who with this program cover and how it work? The way this has been set up, it would cover everyone in California. Think about a health plan for everybody run by the state. They would set up a state agency that would run the program. It would negotiate rates and it would be the place that sends payment out for whatever services you get. They want to include everybody. It includes people on Medicaid or Medi-Cal or those insured by employers and every possible health plan in between. Is there an agreement on how much it would cost? There is a range of agreements if I can say that. The senators behind the plan have not put a price tag on it but they are using a study that was released last week by the nurses Association. There is a -- they were big backer of the bill. The price tag was $331 billion. That is less than what the Senate appropriations committee summarized. They did an analysis when this came before them. They estimated it would cost $400 billion. The UCL center for research has often put a number on it about 367.billion dollars. -- $367 billion. What about the money they get from Medicare and Medicaid. Can we tap into those? The senators behind the bill plan on trying to do that. I think most people say they cannot do this. It would not get off the ground. Medicaid and Medicare consist of half of what they expected to cost. Think $200 million-$225 billion, depending on which plan you follow. Getting that money to California for this effort requires a federal waiver. The federal government would have to sign off because what they would want to do, whatever money is coming to California from Medicare and Medicaid, instead of it being paid to your health plan that you choose like Kaiser or Edna Blue Cross or whatever plane have, that would go to the state bond that will be created. Then from there, it would go out to pay for the care of the people who are on that program. It would channel the money to one state find and then go out from there so the federal government has to approve of that. We talked about this universal health tell -- Universal Health Care Bill. There was not a plan to find it. Now that it has passed the Senate, why is there no funding plan attached? We're talking perhaps getting half of the cost from the federal government but where is the other half coming from? You are right. They do not have a plan in place. That was a contention in a discussion. The senators voted for and they said they were willing to go along but they recognize it was not fully cooked, as they said. They were waiting to see what the senators will suggest. Ricardo who is from Los Angeles and is Tony Atkinson's cosponsored a bill spoke about the numbers and the nurses plan and they talked about the cost that they came up with and a plan they are putting forward on how to pay for it. It is not in a bill. It is not concrete. They are using studies and estimates and they hope it comes back soon with an actual plan so people can start looking at what is it actually going to cost and where the money will come from. What are ideas they were are working with? I am assuming higher taxation. You are right. They have tax implications. The Senate appropriations summary suggested beyond what comes from Medicare and Medicaid, there would need to be an earned income tax. They put the number at 15%. There were not sure whether that would be employees or how that would breakdown between the groups. The California nurses plan was more specific. That plan talks about a business tax on certain businesses and mostly larger businesses, about 2.3% on their receipts. There is a sales tax on things that are nonessential. You would not say that -- see that on food or utilities. Then and other option was a payroll tax. Is something that is shared between the employers and employees plus the sales tax. There is taxes for the second half of the expense but they do not know yet how it will come down because it could be consumers. Who is lining up against this idea of a single-payer? There has been groups that have come out against it. Business groups, the chamber, the large insurance carriers like Kaiser have come out and said this is not the best way to provide healthcare. The business groups like the chamber are concerned about how expensive this would be for businesses. They call it a job killer. They're worried about if an employer needs to pay more taxes, can they hire the workers they need. They are worried about employers leaving California and for the providers, those who are providing the insurance, they are concerned about what happens to them. This plan, essentially means they go away. This is passed the state Senate. It needs to pass the assembly. Of course Governor Brown would have to sign it. Has he said anything about the plan? Governor Brown has not said much about this plan. The only thing he has asked is how are you going to pay for this. As you know, Governor Brown is often talking about the fiscal future of the state, if there is a coming recession and how do we continue to pay for things. The experts are following this issue and they do not expect him to sign this bill should get to his desk. That is because it will require new taxes and we are not sure how it will be paid for. It it is a $300 billion-$400 billion cost, that is more than double the state budget. They see him having concerns. What is the next step? What happens now? It goes before the assembly. They expect to debate about that. During that time, those who are watching us say they expect for the senators to come forward with their own financing plan. Based take the studies and put something together. I have been speaking with Elizabeth Aguilera with cow matters. Thank you. Thank you.

Should state government become the health insurer for all Californians? With support for that idea growing amid federal efforts to dismantle the Affordable Care Act, the state Senate passed a measure Thursday that would create a new state agency to oversee health care and pay providers directly, eliminating premiums and co-pays for patients.

Similar proposals have been made before — even passed the full Legislature, then fell short of gubernatorial approval. Proponents hope this year will be different, given the new momentum for a health care overhaul and the support of powerful unions.

But the measure has a long way to go, facing the same challenges that bedeviled earlier efforts: cost, a skeptical governor, deep-pocketed opponents and the need for certain federal approvals.

State Sens. Ricardo Lara (D-Bell Gardens) and Toni Atkins (D-San Diego) authored the “single-payer” proposal that now goes to the Assembly. They say California today can be a leader on universal health care, while Congress regresses by attempting to repeal the Affordable Care Act and change Medicaid funding.

“We are on a collision course for rising health care costs and a crisis for California’s middle class,” Lara said while presenting the bill to his Senate colleagues. “The good news is that California will get a lot more for our money.”

The proposal, SB 562, would cover all California residents, including those without legal immigration status — a notable departure from previous efforts, although the bill lacks information about how much this group adds to the bottom line. Many such residents are already covered with public funds; a Senate Appropriations Committee analysis of the bill says 1.8 million undocumented adults are not covered under any program.

But that is the only substantive new provision. The bill has drawn criticism for lacking a guaranteed financing plan and for a hefty price tag: perhaps as much as $400 billion a year, more than twice the state’s entire budget.

Sen. Ben Hueso (D-San Diego) said during Thursday’s floor debate that he couldn’t vote for the bill, despite his approval of the single-payer concept. “I want to support a single-payer bill that covers the important elements of how to do delivery of service and how we are going to pay for it,” he said.

The $400 billion figure came from the Senate Appropriations Committee, which Lara chairs, though at least one other analysis attached a much lower figure. The senator, who is a candidate for California insurance commissioner, has not yet issued a cost projection or a financing plan, although he says those are coming. The committee’s analysis said half the cost of the new system could be covered by money diverted from existing government programs such as Medicare and Medicaid – assuming federal waivers on those funds are granted. Most of the rest would likely come from new taxes.

The committee estimates a new payroll tax for this purpose could be 15 percent of earned income but offers no information about how such a tax might be split between employers and workers, or whether it would fall wholly on one or the other. And new taxes require a two-thirds vote of the Legislature — a tough ask despite Democrats’ domination of the statehouse.

Currently, Lara says, Californians spend $367 billion annually on their health care. He told the Senate on Thursday that his bill would cut expenses “through better administration and lower prescription drug costs. Having one publicly run system will reduce inefficiency and missed prevention opportunities.”

Lara will use a new financing study, commissioned by the California Nurses Association and released Wednesday, as a jumping off point for his own funding plan, according to his staff. The study, done by a researcher at the University of Massachusetts at Amherst, pegged the annual price at $331 billion, with savings culled from such areas as administration, pharmaceuticals and unnecessary services.

The study also says taxes could fund costs not covered by Medicare or Medicaid, through a new 2.3 percent fee on some businesses and a new 2.3 percent sales tax on non-essential purchases. Alternatively, the study outlines a potential new 3.3 percent payroll tax on both employers and employees, combined with the sales tax.

Even with the higher taxes, the study says, some California families could save as much as 9 percent annually on health care and some small businesses, as much as 22 percent (the largest employers might save 1 percent). The taxes would replace consumers’ premiums, co-pays, deductibles, and other costs.

Supporters concede that funding is a challenge. But they say it’s surmountable with the government’s power to negotiate limited rates in a state the size of California and with the elimination of insurance companies from the equation.

“We spend the money on hospitals and doctors and drugs already; the question is reorganizing those dollars,” said Anthony Wright, executive director of Health Access California, a consumer advocacy organization. “The money we spend already on taxes and through premiums and deductibles would be funneled into one payer. And it would not be an increase in cost, but it would be collected differently.”

Still, according to the Senate analysis, nearly $40 billion more could be needed to cover such things as a spike in the use of health care services and administrative costs.

Large insurers such as Kaiser Permanente, Blue Cross and Aetna, for whom California is a huge market, strongly oppose the bill. So does the California Chamber of Commerce, which considers it a “job killer.” Those interests have well-paid lobbyists fighting the proposal in the Legislature, where some members may be on board with the concept but not necessarily this proposal, at least in its current form.

“I support the goal of universal health care, but we need to figure out a real plan on how to pay for it,” said Assemblyman Al Muratsuchi (D-Torrance).

Business interests also say employers and workers would be hard pressed to absorb additional taxes.

“There’s a well-established reason that previous governors and other states have rejected such a concept – it’s poor policy,” said John Kabateck, president of Kabateck strategies and former California executive director of the National Federation of Independent Business. “Californians are already faced with some of the highest tax burdens in the nation.”

Beyond the cost and tax issues is the question mark that hovers over federal waivers. President Trump, in his 2000 book, “The America We Deserve,” praised universal health care as a way to improve life for everyone. He has said little about single-payer health care since he took office. But he has railed against California’s opposition to his administration, saying the state “is out of control.”

Lara acknowledges there are no guarantees. But he notes that the federal government has previously granted waivers to states when they amended or added programs to their healthcare systems — even states that expanded their Medicaid programs, as California did under the Affordable Care Act. California has several past and ongoing waivers, approved under both Democratic and Republican administrations.

“We’ll make sure under state rights that we will be able to get the waivers like other states,” Lara said at the committee hearing.

The Centers for Medicare & Medicaid Services said it does not comment on pending or proposed legislation or waivers.

Washington’s inclinations and the need for more bill details notwithstanding, state lawmakers have political incentives to pass SB 562. The influential nurses union, for example, has threatened to campaign in the next election against those who vote no.

Still, many who are following the issue say they don’t expect the bill to be signed into law. Gov. Jerry Brown, California’s fiscally prudent chief executive, has expressed concern about the cost.

Proponents say that if the measure does fail in the Assembly or at the governor’s desk, the current spotlight on the issue will help build support for a future effort — putting the matter before the next governor or on the ballot again. That is unlikely to happen without a fight.

“This is going to a be a long-term, fiercely fought battle in California,” said Rob Lapsley, president of the Business Roundtable, a Bay Area group that opposes the current measure. “The stakes are enormous,” he said. “People’s health is at stake, jobs will be at stake, the state’s financial footing will be at stake.”