When cost neutral becomes -$42 Billion and why

A fiscal analysis of SB 840 (Kuehl), which would establish in California a single-payer health care system and its companion financing mechanism. (PDF)

Fiscal Projection Overview. We estimated the revenues and costs of the [single-payer plan] for 5.5 years.. Our estimate indicates that that the SPP would result in a net shortfall of $42 billion in 2011-12 (the first full year of operations) and $46 billion in 2015-16.

Wow. Single-payer in California will cost the state $42 billion in its first year, this is much different than the analysis done five years ago by The Lewin Group where the program rolled out as cost neutral. What happened and is it the death knell of single-payer in California?


What happened is simple and it has nothing to do with single-payer costing more to operate.

Over half is due to the fact that California has faced another five years of outrageous health care inflation, and that alone has raised the baseline by over $20 billion.

Almost half (40 percent) is due to use of more recent wage data indicating that payroll tax revenue would be less because wages are comparatively lower than previously modeled.

Different assumptions used by the Legislative Analyst account for most of the remaining shortfall - a very modest amount.

This $42 billion shortfall is not a reason to turn away from single payer, but rather it confirms that single payer reform is even more urgent. Health care inflation is killing us, and it must be harnessed immediately. The financial burdens of wage earners are killing them (sometimes literally), and they must have immediate relief from the financial hardships caused by
their health care needs.

In short, medical care now costs the state an extra $20 Billion a year because nothing was done to contain it. Another $16 Billion a year in the shortfall is due to low wages in California which means the state will bring in LESS in income tax.

This does not mean that single-payer is more expensive, it means that IT STILL PERFORMS in a cost-neutral way, but that the economy has tanked and that people have less money for health care.

The LAO report confirms that single payer provides the financing structure that we need, and enacting it has become an emergency.

If you are in North Carolina you can fight for Universal Health Care by:

  1. Joining Health Care for All NC.
  2. Emailing Bill Brooks and join the Two Over Ten network that is taking our argument to the lawmaker's themselves.
  3. Contacting your representative and asking them to support Rep. Insko's HB1897.

Comments

HB 1897 is being rewritten after much input from people like you

And:

I want to alert you that the bill might be calendared for discussion in House Health the week of June 23rd.

Jesus Swept ticked me off. Too short. I loved the characters and then POOF it was over.
-me

Thanks for the update, Robert

I see sound-bite wars in our near future.

42 billion is a lot of money

Where did the 42 Billion come from? Lower projected earning (and therefore lower tax revenue) and skyrocketing costs? Why is this NOT an argument against single payer? I think I believe in single payer, but this makes me wonder.

- - - - -
McCain - The Third Bush Term

Ask yourself this question.

Without single-payer, won't there be more cost-increases like this and won't those people with less projected income have an even harder time buying insurance? Under this plan, everyone would be covered and the extra costs are really not "extra" at all, because that is what will be paid if there is no single-payer. If there is single-payer the report suggests that health cost inflation will slow down.

Jesus Swept ticked me off. Too short. I loved the characters and then POOF it was over.
-me

Universal Health Care does not necessarily mean single payer.

What we should be striving for is a system where everyone can receive quality, affordable health care. The health insurance should be available to everyone regardless of employment status. It should be affordable, meaning that for some it will be free of premiums, deductibles, and co-pays. However, those that can afford reasonable premiums, deductibles, and co-pays should be expected to pay them.

Exceptions for pre-existing conditions should be eliminated. Unreasonable delays and determinations by insurance companies as to the appropriateness of treatment options should be eliminated (certainly the payer will want to consider the fact that there are a few doctors who will want to abuse the system with unneeded treatment).

Single payer is one means to obtaining our goad: universal, affordable health care. But it is only one means to the end.