Ready for One-Size-Fits-All Healthcare?

Jose Cervantes’ article in the May 31 Beachcomber discusses California Assembly Bill 2200 Universal Healthcare For All or CalCare. This bill is currently moving through Sacramento somewhat under the public’s radar.

There is a Veto Proof Super Majority in both Houses of the California State Legislature. In simple terms this means one political party can pass and enact major legislation and the necessary taxes to fund without agreement from the other party. The voters of California also have no say in much of the new legislation. There are no checks and balances in Sacramento.

With passage of this legislation a real possibility it seems prudent to read AB 2200 and understand some of the associated statistics. A comparison of the proposal to the United Kingdom’s [UK] National Healthcare System [NHS] would also prove interesting.

The UK’s NHS was established in 1948, 76 years ago, and currently serves a population of 66 million people at a cost of $231 Billion Dollars annually. The system is considered by many to be the role model for single payer healthcare systems in the world. It provides womb to tomb healthcare including vision, dental, prosthetics, prescription drugs, etc.

To receive benefits, one must be a legal UK resident, regardless of nationality, and have a NHS I.D. Number. The system is publicly funded through Income Taxes with Brackets of 20, 40, and 45% with 40% being the middle-income tax bracket.

The NHS had a major advantage during the implementation phase in 1948 because healthcare in the UK was very basic and difficult to access. The UK’s economy was just beginning to recover after WWII so life was more about maintaining basic needs which in turn made universal access to healthcare more attractive to the general population.

Most hospitals in the UK are owned by the NHS. They are publicly funded with taxes and run by Trusts. Nearly all hospital staff doctors and nurses in the UK are employed by the NHS and work in NHS owned and operated hospitals.

Most general practitioners are self employed but provide services to the NHS on contract. There is some for-profit medicine in the UK but under contract to the NHS. The NHS has the ability to negotiate and control most medical costs including salaries, wages and benefits.

AB 2200 CalCare will replace all existing government healthcare programs such as Medicare, Medicaid, Medi-Cal and most all private health insurance in the State of California. Any private insurers left after the transition would be very limited in the services they could provide and would not be allowed to overlap CalCare coverage.

CalCare intends to provide full universal healthcare to 39 million Californians for around $400 Billion a year. It states that every resident of the state shall be eligible and entitled to enroll as a member of CalCare. No matter what an individual’s citizenship or immigration status they will be entitled to full and equal healthcare services under CalCare. The bill as written does not define what constitutes residency, nor does it require legal residency as does NHS in the UK.

The text of AB 2200 requires that before any implementation of CalCare would begin the establishment of a reliable, sustainable source of funding to maintain a CalCare Trust Fund must be identified and certified. Part of the funding will come from the California Department of Health Care Services whose charter appears to read the same as CalCare’s. DCHS’s annual budget is currently set at $164 Billion.

California seniors on Medicare and working taxpayers contribute roughly $55 billion a year to the Medicare program through Social Security and Payroll Taxes. When CalCare is implemented California seniors would probably opt-out of Medicare Part B and their approximately $13 billion annual contribution to the federal fund would end. Those monies would not be available to transfer back to CalCare and the payroll tax portion Californians pay would probably stay in the federal Medicare fund.

CalCare plans to ask the Federal Government for waivers for all monies associated with California Healthcare Programs held by HHS, Medicare, Federal Public Health Programs and the Affordable Care Act.

California taxpayers and employers pay billions of dollars a year for private healthcare insurance. It’s logical to assume that California plans to redirect those monies into the CalCare Trust fund probably through income and business taxes.

If we assume the CalCare estimate of $400 billion a year is valid and subtract existing DCHA funding of $164 billion, the current shortfall to implement is $236 billion a year.

There are approximately 19.6 million taxpayers in California. Without federal funding the average new tax per taxpayer could amount to $12,000 a year to fund the shortfall. This would be assessed through a tax bracket adjustment and paid for by state income taxes based on annual income. Businesses would probably face increased taxes as well.

When one looks at the overall logistics of implementing AB 2200 it can be overwhelming. In the UK all doctors, nurses, hospitals, drug suppliers and supporting entities are under contract to, run by, or answer to the government. Most UK hospitals and facilities are not for profit.

The healthcare industry in California is quite the opposite with 25% of the hospitals operating on a for-profit basis. The others are run by non-profit organizations or are government owned.

Many nurses and hospital support staff are members of powerful unions, which protect pay and benefits for their members. Doctors and nurses, especially those with sought-after specialities, command high salaries. Bringing California’s healthcare workers, hospitals, pharmaceutical companies etc. to the negotiating table and fitting them all into a $400 billion a year budget seems a daunting task.

Over 90% of California residents have some form of health insurance. Only 6.2% do not. At first glance one would assume CalCare’s purpose is to increase that statistic to 100%. That’s not the intent. The main goal is equity in healthcare. California politicians intend to totally dismantle a functional, thought admittedly not perfect, healthcare system in order to create one that suits their vision of equitable healthcare for all.

It’s difficult to envision a Sacramento-run healthcare organization and various boards of political appointees managing the healthcare of 39 million California residents. But that is the ultimate plan. CalCare implementation will result in a single payer healthcare system run by the California Government. The system will determine what level of care you receive and what procedures, tests, and drugs are necessary or authorized by CalCare.

It will essentially be totally funded by tax dollars, including state income taxes, taxes on business and through federal funding returned to the state on waivers from funds which are supported by income taxes.

If this looks like a train wreck waiting to happen consider how Sacramento politicians have mismanaged the implementation of the high-speed rail program in California. The original cost estimate was $33 billion, now projected to cost at least $128 billion. If the CalCare implementation is mismanaged in a similar manner continual tax increases would probably be the only solution. Imagine a future where state income taxes could exceed the amount you pay in federal income taxes.

A CalCare ballot measure would probably not pass if put to a vote of the tax paying public, but passage does not require a public vote. Are voters willing to accept a one size fits all healthcare system, run by politicians, and paid for by a huge increase in income and business taxes? If the answer is no, then tax payers need to make themselves heard now.