What Killed Single-Payer In California?

On June 25, RoseAnn DeMoro, leader of the union National Nurses United, tweeted an image of the grizzly bear on California’s state flag with a knife sticking out of its back. The words “Healthy California” are written on the bottom, and the name “Rendon” is on the knife. It has been retweeted more than 1,000 times, a reflection of the anger swirling around the decision two days earlier by Anthony Rendon, the speaker of California’s Assembly, to shelve the nation’s most ambitious proposal to institute single-payer health care.

What happened in California could have widespread repercussions for the national health care debate. At a time when Congress is threatening to deprive millions of people of health insurance, and when progressive activists are urging national Democrats to make a push for single-payer (or Medicare for All), the California experiment shows all the challenges and pitfalls that await a serious attempt to institute government-provided health insurance.

In a state where Democrats have super-majorities in both legislative chambers and a Democratic governor, the conventional wisdom is that if California can’t pass single-payer, it can’t be passed anywhere. In a statement in response to Rendon’s decision, Senator Bernie Sanders wrote, “If the great state of California has the courage to take on the greed of the insurance companies and the drug companies, the rest of the country will follow. The eyes of the country are on California today.”

The story is a little more complicated than that. The bill—SB 562, also known as Healthy California—had already passed in the Senate in June before Rendon unilaterally decided to take it off the table. Now it will lie in committee without any hearings “until further notice.” The nurses associations that are the lead sponsors of the bill called Rendon’s move “a cowardly act, developed in secret without engaging the thousands of Californians who have rallied to enact real health care reform.”

The timing of Rendon’s decision was especially egregious. Only a day earlier, U.S. Senate Republicans had revealed the first draft of their health care reform plan that would take insurance away from 22 million Americans, many of them Californians. This was a time to shore up support for those vulnerable residents of the Golden State, not leave them to the wolves.

In a statement, Rendon said the bill was “woefully incomplete” because it did not address serious issues such as “financing, delivery of care, cost controls, or the realities of needed action by the Trump administration and voters to make SB 562 a genuine piece of legislation.” Rendon was echoing the main objection that the bill’s detractors—many of them Democrats—have made: that single-payer is too expensive.

A legislative analysis found that California’s single-payer plan would cost $400 billion to implement, $200 billion of which would be new spending. Critics were quick to point out that this “hefty” price tag is twice the state budget. Furthermore, the bill did not include a funding plan (although the bill’s language ensured that Healthy California would not launch unless it was funded).

However, a report by professors at the University of Massachusetts Amherst, commissioned in part by National Nurses United, estimated that after taking in the savings of single-payer, such as lower administrative costs and prices of pharmaceuticals, the actual cost of the plan would end up at around $331 billion. And, because 70 percent of the state’s current health care spending is covered by public programs like Medicare and Medi-Cal, California would only need to come up with $106 billion in new revenue, which researchers proposed could be done through two new taxes (a 2.3 percent gross receipts and sales tax), with exemptions for small businesses and tax credits to offset costs for low-income families. In exchange, nearly all of Californians’ medical expenses would be covered, doing away with premiums, copays, and deductibles.

“What I think most people don’t understand is that, even with single payer we’re not going from 0 percent publicly funded to 100 percent publicly funded, we’re going from 70 percent to 100 percent,” Robert Pollin, one of the study’s authors, told the New Republic.

Rendon noted that appropriating public funding for the Healthy California plan would require approval by the Trump administration. Pollin said that while it’s impossible to know in advance what the Trump administration will do, “you can also pass the bill, and obviously it has to be contingent on us continuing to get 70 percent of funding that we now get.” Pollin felt that Rendon’s objections were technical ones—they need to be addressed, but don’t raise any issues that can’t be worked through. “The concerns that they raised were pretty narrow. Nobody said this is crazy, we can’t do this,” he said.

There are problems other than the fact that the bill did not include a specific funding mechanism. The biggest hurdle may be Proposition 98, a complicated California funding law that requires that around 40 percent of the state’s budget go to schools. This means that a huge portion of any increase in the state budget would have to go to education, so legislators would have to come up with almost double the money to cover the single-payer plan. To get around this, voters would have to first pass a ballot initiative.

But this is not the issue that critics bring up most often. Instead they are pointing to the sticker shock that comes from single-payer.

Single-payer supporters say that, in tabling the bill, Rendon gave up before even allowing the Assembly to try to hammer out the details. Chuck Idelson, spokesperson for the California Nurses Association, called Rendon’s objections to the bill a “dodge.” Idelson told the New Republic, “When he said it was incomplete, what is the job of a legislature if it’s not to hold hearings and consider amendments? What he’s basically saying is, ‘We can’t do our job.’”

Many blame corporate interests for the death of single-payer in California. According to reporting by the International Business Times, since 2012, groups opposing the single-payer bill have donated $1.5 million to Democratic Assembly members. Rendon himself has taken more than $100,000 from pharmaceutical companies and $50,000 from major health insurers. Single-payer would clearly hurt these industries, putting some entirely out of business.

The California Chamber of Commerce also opposed the bill, calling it a “job killer” that would “result in significant new taxes on all Californians and California businesses.” But according to Pollin’s study, most businesses, even those that would have to pay an extra gross receipts tax, would be significantly better off under single-payer because they would no longer have to pay for health care for their employees. “When the Chamber of Commerce comes out against it, they’re not acting in interest of majority of their constituents,” Pollin said.

Still, the politics of the issue are treacherous enough to spook lawmakers. While it’s true that California Democrats have a super-majority in the legislature, this also means that the party is a big tent with a number of ideological fault lines. As a state, California might look blue overall, but there are still conservative pockets—and it remains a challenge for progressives to push the party leftwards.

Another issue was that there wasn’t a broad coalition of labor behind the bill. “Labor traditionally is a supporter of universal access of care, not just in California, but nationally,” Gerald Kominski, professor of health policy and management at UCLA, told the New Republic. The Service Employees International Union of California, which supports single-payer, backed Rendon’s decision, stating that “there is a lot of work to do on SB 562, and we remain eager to engage in that conversation.” The State Building and Construction Trades Council also supported Rendon. Even state Senator Toni Atkins, one of the bill’s co-sponsors, told the Sacramento Bee that while she was “disappointed” in Rendon’s choice, she did not fault him for it.

Polling in support of single-payer in the state is high—two surveys showed 65 and 70 percent of people in favor of the policy. But, when people were confronted with the prospect of new taxes or the costs of the program, support for single-payer fell. This reveals a failure on the part of Democrats, and why the bill’s price tag was so effective as a scare tactic. A single-payer program would inevitably incur additional taxes, but the overall health care costs would be lower for most people and businesses. Democrats have to convince voters that those pocketbook benefits are as real as the higher tax bill they will receive. “What we need to do is tell the stories of people whose insurance doesn’t cover enough, or are still burdened with high health care costs,” state Senator Ricardo Lara, one of the bill’s co-sponsors, told the New Republic.

Rendon may have thrown a wrench into California’s push for single-payer, but the battle is far from over. “The public engagement of people in California around this legislation was almost unheard of,” Idelson said. Lara said that while Congress’s efforts to repeal and replace Obamacare adds uncertainty to continued federal funding, it is also “mobilizing people to care for their health care like never before. We didn’t see this passion to protect health care even during the push for the Affordable Care Act, when 20 percent of Californians were uninsured.”

California Democrats have to commit to working out the details of the bill—to showing that it is feasible. Single-payer has been lambasted as a utopian dream, but there is a clear path to making it work policy-wise. The question is if Democrats, both in California and elsewhere, can then make it work politically. If they continue to concede that single-payer is unaffordable and unachievable, it certainly will be.

Correction: A previous version of this article incorrectly stated Anthony Rendon’s first name and the function of the Affordable Care Act’s Innovation Waiver.