California Advances Bill That Would Create Nation’s 1st Single-Payer Health Care System

Dr. Thomas Yadegar, medical director of the Intensive Care Unit (ICU), walks out of the Cardiovascular Intensive Care Unit at Providence Cedars-Sinai Tarzana Medical Center in Tarzana, California on Sept. 2, 2021. (APU GOMES/AFP via Getty Images)

California lawmakers this week advanced a bill that would create a single-payer health care system, or government-run universal health care, in an 11–3 vote in the Assembly Health Committee.

Assembly Bill 1400, also known as the Guaranteed Health Care for All Act, would set in motion “CalCare” for all California residents regardless of citizenship status. The bill, authored by Assemblymembers Ash Kalra (D-San Jose) and Alex Lee (D-San Jose), would be coupled with a constitutional amendment to fund the coverage.

The constitutional amendment ACA 11—also authored by Kalra—proposes a slew of taxes to push AB 1400 into reality. The amendment relies on a gross receipts tax, payroll tax, and a personal income tax on those earning above $149,509 to fund the single-payer health care system.

“AB 1400 and ACA 11 provides Californians a clear understanding of what they can expect from a truly publicly financed, single-payer health care system and allows them to decide for themselves if they are better off paying for the most expensive health care in the world with the worst outcomes of any wealthy nation, or guaranteed health care for all with CalCare while reducing overall health care costs,” Kalra said in a statement.

California’s current multi-payer health care system is paid for through several entities: private insurance companies, out-of-pocket patients, and government programs. AB 1400 and ACA 11 would reduce that to a single source, run by the state.

The state Capitol in Sacramento, Calif., on Oct. 22, 2003. (Robyn Beck/AFP/Getty Images)

The policy has received praise from the state’s House Democrats, but criticism from businesses, some Republicans, and taxpayer associations, who say the motion would burden the already tax-heavy Golden State. Republicans in the health committee argued the bill would cost too much and underpay health care workers, which could further contribute to the health care worker shortage.

Kalra’s office said 57 percent of all Californians are in favor of replacing private health care insurance with a government-run program. ACA 11 will have to pass in the state legislature to make it on the November ballot to be approved by voters.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, told The Epoch Times the tax hikes will “have an accelerating effect on the number of people and businesses leaving California.”

“There are a lot of people who are not rich—who are going to be making between $50,000 and $100,000 a year—which barely covers the cost of living in California, but they’re going to have the state demand that their employer take out 1 percent to give to the state, so they’re actually hurting the middle class and the working poor with this proposal,” Coupal said.

Since AB 1400 would extend to noncitizens, it would apply to roughly a million illegal immigrants living in the state and eliminate the state’s current model of private and government insurance programs, which sets it apart from Obamacare or Covered California. It’s similar to Sen. Bernie Sanders’ (I-Vt.) “Medicare for All” bid, but on a state level.

“I look forward to hearing Democrats explain how they plan to successfully take over more than 10 percent of the state’s economy when in the last decade they’ve proven themselves incapable of simple things like building a railroad, providing clean drinking water, keeping the lights on and filling potholes,” Assembly Republican Leader Marie Waldron said in a statement earlier this month.

A tax sign is pictured on an H&R Block tax office in Los Angeles, Calif., on April 26, 2017. (Mike Blake/Reuters)

An estimate by the California Taxpayers Association, which opposes the bill, found that it would cost businesses and individuals $163 billion annually to sustain the system—a stark contrast to Gov. Gavin Newsom’s estimate of $2.7 billion. Not only will ACA 11 need the governor’s signature and the legislature’s approval, but voters would have to approve the tax increases, which may not reach the ballot box until 2024. California voters rejected a similar initiative in 1994.

Jim Stanley, press secretary for the Assembly Republicans, told The Epoch Times in a previous interview that ACA 11 “would increase payroll taxes on anyone earning more than $49,000 a year.”

“That would be a massive middle-class tax increase,” he said. “If the fund that they create to pay for this runs out of money, they will be allowed to increase taxes with a simple majority vote in the legislature, so that is repealing part of Prop. 13 requiring two-thirds approval. And it would also include payroll tax increases on businesses.”

CalChamber, a business advocacy association, called AB 1400 and ACA 11 “job killer bills of 2022.” The chamber sent a letter to the bills’ authors, stating that the top personal income tax rate on individuals and sole proprietors would increase by 2.5 percent.

“Single payer health care is not free health care,” CalChamber Policy Advocate Preston Young said in a statement on Jan. 11. “AB 1400 and ACA 11 would not only ruin quality health care delivery in the state but create the largest tax increase in state history.”

Young said the bill would drive out more businesses and discourage companies from relocating to California. Employers may be forced to cut down on costs to survive another layer of taxes, too. According to ACA 11, employers with 50 or more employees would have to pay 1.25 percent payroll tax rate on wages and other compensation for their employees.

CalChamber estimates that 94 percent of Californians already have some form of health care coverage.

Newsom said in a press conference on Jan. 11 that he “campaigned on universal health care” and that his government is “delivering on that.”

“For those that are critical of this proposal, I would only offer this—we have universal health care in this state and in this country, but it’s on the back end,” he said. “It’s called the emergency room, and it’s costing you, the taxpayer, a fortune.”

Despite Newsom touting the bills as a relief for taxpayers, Coupal said even with the state’s hefty $31 billion surplus, “it’s not going to last forever.”

“And I just fear that California is pinning itself into a corner here,” he said. “When a recession comes—which inevitably will—it’s going to have built up all these expectations for a level of [health care] service that’s not sustainable.”