September 5, 2006 2:14PM

California Single‐​Payer?

It’s been largely under the media radar screen, but California may be on the verge of establishing a single‐​payer health care system. Late last month, the California Assembly passed legislation establishing a Canadian‐​style, government‐​run health care system. The legislation had earlier passed the California Senate, and while there are small differences that will have to be reconciled, there is no doubt that the bill will be sent to Governor Schwarzenegger. The question now is whether Schwarzenegger will veto the bill. In the past he has said he would, but it’s an election year and he is under big pressure from unions and others to sign it. Schwarzenegger has caved in other issues recently, from prescription drug price controls for MediCal to vehicle emission controls to state budgeting. If he signs this bill it will be bad news for Californians and a terrible precedent for the nation.

Under the bill:

  • Private health insurance would be abolished. The state would become the sole payer for all health care services. The bill does not specifically prohibit paying for a procedure “out of pocket,” although it states several times that its intent is to have “a single payer.” We will probably have to wait to see how this would be interpreted by the commission established to oversee the new program, and later by the courts. The bill does, however, require that doctors take all patients and in the order that they apply for service. Thus, you couldn’t jump the queue by paying cash. Nor could a doctor set up a cash‐​only practice.
  • The bill establishes global budgets for health spending in the state. If the budget is exceeded the state could cut reimbursements to providers or prohibit capital expenditures. The latter would impact the quality of health care nationwide, limiting research and development and undermining many of the nation’s top hospitals.
  • The bill contains no funding mechanism (beyond using federal Medicare, Medicaid, SCHIP, and VA funding). Earlier versions of the bill proposed funding the proposal with a 3 percent income tax hike and a job‐​killing 8 percent hike in the payroll tax. The latest version would have a commission decide how to pay for it.

Interestingly, the Assembly amended the bill to strike out the words “health care consumer” wherever they appeared and replaced them with “patient.”