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California Legislature

Single-payer healthcare could cost $400 billion to implement in California

Supporters of single-payer healthcare march to the Capitol in Sacramento on April 26. (Rich Pedroncelli / Associated Press)
Supporters of single-payer healthcare march to the Capitol in Sacramento on April 26. (Rich Pedroncelli / Associated Press)

A single-payer healthcare system in California — a galvanizing cause among the state's progressive flank — would cost $400 billion annually, according to a legislative analysis released on Monday.

The analysis, released in advance of the proposal's hearing in a key fiscal committee, fills in what has so far been the biggest unanswered question concerning the plan to dramatically overhaul California's healthcare coverage.

The analysis found that the proposal would require:

  • A total cost of $400 billion per year to cover all healthcare and administrative costs.
  • Of that, $200 billion of existing federal, state and local funds could be repurposed to go toward the single-payer system.
  • The additional $200 billion would need to be raised from new taxes.

The analysis proposes one scenario in which a new payroll tax on employers — with a rate of 15% of earned income — could supply the new revenue. But the measure itself does not contain a specific tax proposal, and therefore would not, at this point, need a two-thirds vote to approve a new tax.

The write-up also notes that a  universal healthcare proposal would likely reduce spending by employers and employees statewide, which currently ranges between $100 billion and $150 billion annually. Therefore, the total new spending under the bill would be between $50 billion and $100 billion each year.

Under the bill, the state would cover medical care for every resident in California, including those without legal immigration status. Enrollees would not have to pay premiums, co-payments or deductibles. 

The analysis cautions that the single-payer bill, SB 562 by Sens. Ricardo Lara (D-Bell Gardens) and Toni Atkins (D-San Diego), would required "unprecedented changes to a mature healthcare system."

"Therefore, there is tremendous uncertainty in how such a system would be developed, how the transition to the new system would occur, and how participants in the new system would behave," it notes.

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