California’s new governor, Gavin Newsom, wants it understood that he’s not declaring war on Big Pharma, all appearances to the contrary notwithstanding.
Yes, he wants to give Medi-Cal more power to negotiate drug prices and, yes, he wants to make those prices significantly lower.
But Newsom was surprisingly candid when we spoke Wednesday about his healthcare agenda.
He told me he gained a whole new appreciation for the value that drug companies can bring to people’s lives while seeing his father grapple with dementia for months. William Newsom, a retired state appellate court justice, died last week at age 84.
“I don’t see Pharma as the enemy,” Newsom said. “I’m not saying anyone’s evil.”
He paused, shifting gears back into politician mode.
“I just don’t like paying 50% more for drugs than the rest of the free world.”
He’s been in office only two weeks, and already Newsom is making waves with sweeping proposals to tackle major healthcare issues. Pharmaceutical executives, he said, “are lighting up my phone lines.”
Along with drug pricing, he’s announced plans to stabilize the Covered California insurance program — our version of the the Affordable Care Act exchanges — with a restored coverage mandate.
He’ll also seek cooperation from the federal government for a statewide single-payer insurance system.
Newsom’s ambitious policy goals have been sneered at by conservatives as the usual lefty-progressive-socialist dream of government-run healthcare.
In reality, they show what’s possible when complex issues are approached maturely and reasonably, rather than ideologically.
“You can’t be ideological,” Newsom said. “Healthcare is a fundamental right.”
That’s not how President Trump and Republican lawmakers see it. They’ve been obsessed with rolling back former President Obama’s signature accomplishment, regardless of the harm this inflicts on millions of Americans.
As a result, the number of uninsured is rising after significant improvement on Obama’s watch. About 5 million more people will be uninsured by 2027, according to the Congressional Budget Office. That would bring the total number lacking coverage to 35 million.
In California, more than 4 million people under 65 could be uninsured by 2023, according to researchers at UC Berkeley. That would mean an increase in the state’s uninsured rate to nearly 13% from 10.4% in 2016.
Republicans “vandalized the Affordable Care Act,” Newsom said. “But we don’t have to be victims. We’re pushing back, and not just with a tweak.”
Restoring the insurance mandate on a statewide basis — a move that would require legislative approval — would be a big step in the right direction.
Conservatives say the mandate stripped people of personal choice. What an insurance requirement actually does is spread healthcare risk throughout the population — young and old, healthy and sick — which keeps costs down for everyone. It’s a fundamental principle of insurance.
The Affordable Care Act didn’t live up to its name. Insurers did a lousy job of forecasting claims under the system, so their costs quickly rose and rate hikes followed.
Trump doing away with the federal mandate only exacerbated the problem. The price of some Obamacare plans will rise by 15% this year, according to the CBO.
“We’re addressing the legitimate anxiety we should all have about this,” Newsom said.
His goal is to stabilize Covered California rates by creating a more equitable risk pool. Mandates also are being brought back in Vermont, New Jersey and Washington, DC.
Newsom would use revenue from any fines imposed for lack of coverage to help subsidize insurance for individuals earning up to $72,840 annually and for families of four earning up to $150,600. These subsidies would be added to existing federal assistance for people at lower income levels.
The part of Newsom’s healthcare plan that’s caused the most apoplexy among conservatives is allowing Medi-Cal to cover young immigrant adults in the country illegally. Why should the state be paying for the insurance of illegal immigrants?
Here’s why: Because otherwise such people will wait until they become seriously ill and will go to an emergency room, where by law they can’t be turned away.
This represents the most expensive treatment possible and results in sky-high healthcare costs for everyone as hospitals recoup their expenses through “cost sharing” with other patients.
“A lot of these folks claim to be fiscally conservative,” Newsom said of his critics. “If they really were, they would support what we’re talking about.”
He added that if you support universal health coverage, which Republicans say they do, then you don’t get to cut corners. “Everyone means everyone,” Newsom said.
His appeal to federal lawmakers to facilitate a statewide single-payer system is more ambitious. Because such a system would need to incorporate Medicare, veterans assistance and other federal programs, it couldn’t be done without an act of Congress.
For that reason, it’s unlikely it could be pulled off with Republicans in power. But when political circumstances change, California, because of its size and diversity, would be a perfect laboratory to demonstrate for the rest of the nation that universal coverage is possible.
Single-payer proponents have long said the economies of scale involved would lower overall healthcare costs, and the elimination of premiums, copays and deductibles would more than offset the taxes that would fund such a system, resulting in lower out-of-pocket expenses for most people.
Let’s find out. California can lead the way, just as Canada’s single-payer system began in one province and then gradually expanded nationwide.
“We are uniquely positioned to do something big and bold,” Newsom told me.