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January, 2004

California's Single-Payer Health Care Bill Moving Forward
By Louis Nuyens

 

A state bill introduced last year to create a universal-care, single-payer health insurance system for California is still alive and moving forward.

Senate Bill 921 (SB 921), also known as the "Health Care for All Californians Act," is authored by California Senator Sheila Kuehl. The bill has steadily gained co-authors in both the senate and the assembly and has long list of endorsing organizations from around the state.

If successful, SB 921 would provide medical insurance coverage for all California residents in a publicly financed insurance system administered directly by the state. The system would cover the vast majority of health care needs, and offers to do so at a substantial savings when compared to existing public and private insurance programs.

The system would be funded by a mix of revenue sources including a low percentage payroll tax on all employers and employees, on the self-employed and on recipients of unearned income, as well as a small tax on tobacco products and alcohol. These sources would be consolidated with federal, state and county money currently expended on health care into a state health fund that would replace private health insurance premiums.

SB 921 would not create a socialized medical system, i.e. a system in which medical personnel are employees of the state. Private sector medical practices and companies would continue to operate as private entities. In addition, the program permits private insurers to continue to operate in the state, allowing the private sector to render competitive and complementary insurance services..

 

Key Elements

According to legislative analysis of its latest version, SB 921 intends the following goals:

Universal Coverage: Everyone would have the ability to choose his or her personal health provider. Eligibility is conferred based on residency, instead of randomly by employment. Residents traveling out of state are covered for up to 90 days. California retirees with vested benefits and/or paying applicable California health taxes are covered.

All care would be compensated.

All California licensed and accredited providers, group practices, HMOs and integrated health care systems may participate, subject to best medical practice and cultural and linguistic standards.

The plan would create financial incentives to provide high quality care, to encourage practice in under-served areas, to promote the formation of comprehensive group practices and to encourage general practitioners, internists and pediatricians (i.e.) to serve as primary care doctors.

There would be special programs to educate, recruit and retain nurses.

The plan would utilize a two-year transition period, overseen by both a transition commission (to be appointed by the Governor) and a public commission composed of representatives for consumers, healthcare providers, policy experts, businesses, labor, the public health community, the health care industry, hospitals, clinics, health researchers and educators.

 

SB 921 Background

The main motivations for the bill are that existing publicly financed healthcare programs require an immense bureaucracy in order to support over 2,500 different private health care plans and that the existing system wastes healthcare dollars by supporting the additional 'overhead' of profits required by private industry. While the SB 921 creates a "new" governmental spending program, it would consolidate and replace less efficient existing programs, resulting in a net savings.

Arguments that private-sector economic efficiency is largely mythological when it comes to healthcare have been put forward based on "common sense" for several decades. However, recent studies have supported those assertions. In one 2000 study focusing specifically on California, a bi-partisan report commissioned by the Universal Health Care Technical Advisory Committee (UHCTAC) of the California Senate Office of Research modeled and analyzed alternate various approaches to health care in California, ultimately focusing on nine different models, three of which were 'single-payer' models. The single-payer models resulted in higher degrees of coverage while yielding savings of several billions per year.

A program of this magnitude requires an immense degree of fine-tuning in order to avoid vulnerability to arguments from those opposed, and to ensure smooth, economical operation once in effect. The architects of SB 921 learned from the defeat of 1994's Proposition 186 -- a single-payer ballot initiative whose opponents outspent proponents 2-to-1 -- and have carefully crafted SB 921 to avoid criticisms associated with 186 and with healthcare insurance programs in other countries. What has emerged is a highly refined, well though-out bill.

Recognizing that the burden of proof lies with SB 921 proponents, Senator Kuehl has refined the bill on numerous occasions and is currently seeking a thorough analysis of the bills potential effects as currently written. Results of that analysis should be available by Spring 2004.

 

SB 2

In the meantime another 2003 bill, SB 2 ("Health Insurance Act of 2003"), authored by Senators John Burton and Jackie Speier, passed through the legislature and is due to go into effect by January 2006 for large businesses (200 or more employees) and in January 2007 for medium-sized businesses (20 to 199 employees). SB 2 creates a "Pay or Play" system for California, in which employers will be required to provide medical benefits or pay taxes toward creation and/or operation of a publicly subsidized plan.

In some ways, many single-payer supporters view SB 2 as a first step to an improved system. SB 2 increases coverage for employees and some dependents. However SB 2 puts most of the burden of cost on employers, and it does not attempt to extend coverage to all state residents.

 

Outlook for SB 921

While the potential for savings and increased coverage is a strong inducement for a close look at a well-designed single-payer program, a confluence of trends may promote discussion of SB 921, improving the possibility of its adoption.

During the last two years, employers nationwide have experienced double-digit increases in health-care costs, with even higher jumps in California. For example, according to a survey released by one human-resource consulting firm, Northern California companies with over 500 employees saw average health care costs rise 12.3 percent in 2003 with projections of 15.4 percent next year. Employers may see a system that spreads costs like SB 921 as welcome relief.

In addition, ongoing state budget woes may provide additional incentives to look at the potential for cost savings under SB 921.

Economic and administrative benefits for employers may bring a supportive nod from the business sector, which is deemed crucial by many observers.

Supporters include a long list of local governments, progressive organizations, and healthcare advocacy organizations. Thus far, opposition is limited and is put forth mainly by insurance companies who have a vested interest in perpetuating the existing system.

For more information, see http://www.leginfo.ca.gov and the March 2003 issue of the Coastal Post.

 

 

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