There are few things quite as expensive in this world as “free health care.” And the nation’s most populous state may be about to find out the hard way. On June 1, the California Senate voted 23-14 in favor of a bill, the Healthy California Act (SB 562), to authorize the state to act as a “single payer” in place of insurance carriers in negotiating prices with doctors, clinics, hospitals and other service providers. The measure covers all residents regardless of financial ability or immigration status. Annual costs may reach $400 billion – and that’s just for starters. As existing state and local Medicare and Medicaid programs would pay for around half that, new business taxes most likely would cover the rest. It’s fitting that this prescription for economic disaster and, indirectly, illegal immigration is driven by a union, the California Nurses Association.
National Legal and Policy Center has taken note of the central role played by organized labor in advancing the Left’s long-term goal of socialization of health care costs. Back during 2009 and early 2010, unions and their principal federation, the AFL-CIO, vigorously lobbied on behalf of the Patient Protection and Affordable Care Act (“Obamacare”) legislation then before Congress. Aided by eleventh-hour backroom dealing, they secured passage, conveniently exempting themselves from certain costly mandates. The Obamacare law, which farms out non-employer health care plans to state-established “exchanges” and imposes burdensome requirement on individuals and employers alike, wasn’t organized labor’s first choice. Unions wanted a Canadian- or British-style system in which a centralized entity – i.e., the federal government – would establish price structures and service eligibility. Notwithstanding, the law was a huge step in that direction. That’s why unions and their allies have blocked every effort to repeal it, as they work to develop stronger proposals – like in California.
Now with a population of around 40 million, California is the leader among the 50 states in a race to achieve government health care monopoly. True to form, the chief sponsors of the SB 562 legislation, State Senators Ricardo Lara, D-Bell Gardens, and Toni Atkins, D-San Diego, are touting their bill as a “win-win” for everyday people. Under the guise of simplifying things, the bill would do away with premiums, co-payments and deductibles, effectively abolishing private health insurance. The Senate Appropriations Committee, which Lara chairs, estimated last month that the new system initially would cost around $400 billion annually. As existing Medicare and Medicaid payments would cover roughly half of this total, the state would have to raise additional money to fill the gap. To put this in perspective, total state spending for the upcoming fiscal year has been projected at $290 billion, with $107 billion of that offset by federal subsidies. Sen. Lara, now running for state insurance commissioner, is unfazed. “With President Trump’s promise to abandon the Affordable Care Act as we know it, it leaves millions without access to care and Californians are once again tasked to lead,” he remarked. “Senate Bill 562 will finally enable California to cover all of its residents, creating a healthier and stronger state.” Senator Atkins likewise said: “I took this on because it (health care) is a right that I believe people should have. I’m more convinced of that today than I ever have been.”
The numbers, unfortunately, don’t look convincing. According to a recent legislative analysis, SB 562 would require a 15 percent payroll tax on employers. The report concluded: “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.” That doesn’t sound like a ringing endorsement. And with an estimated two million illegal immigrants eligible for coverage, only a naif could deny the law’s capacity to act as a magnet for future unauthorized immigration. A good many middle-class households would see their state tax bill rise by $10,000 or more.
At least a few senators have mustered the spine to voice objections. “I can’t think of a more effective way to cripple the state financially than to charge ahead with what appears to be a reckless plan,” said Sen. Ted Gaines, R-El Dorado Hills. Sen. Ben Hueso, D-San Diego, while not rejecting the idea behind the legislation, believes his colleagues should have thought things out more thoroughly before sending the bill to the Assembly. “We are not debating single payer today because we are not debating a funding source,” he said. “We are not debating delivery of service. We are not debating where the health savings will come from. None of that is in the bill. This is the Senate kicking the can down the road to the Assembly and asking the Assembly to fill in all the rest of the blanks.”
One organization, more than any other, has been driving this misguided legislation: the California Nurses Association (CNA). The Healthy California website lists the group as a “lead sponsor.” To some uninitiated observers, this might be a case of mistaken identity. The nursing profession doesn’t seem to be a purveyor of economic radicalism. In California, however, it is. The 86,000-member CNA, a fast-growing affiliate of the 150,000-member National Nurses United, for years has been a powerful force in collective bargaining and politics. In last year’s California presidential primary, the CNA endorsed Bernie Sanders, who made “free” health care a centerpiece of his platform. The union contributed $1.3 million to his campaign.
The California Nurses Association isn’t shy about showing up in person to give the legislature an earful. On April 26, at the Senate Health Committee’s first hearing, hundreds of registered nurses, led by the CNA, rallied outside the hearing room. RoseAnn DeMoro, co-president of the CNA and executive director of the National Nurses United Organizing Committee, declared afterward: “The most important thing today was the breadth and depth of support by the dozens of people lining up to back the bill, representing 250 organizations across the state. These are organizers who are going to be with us to make the Healthy California Act the law of the land in California.” In a subsequent article for the Huffington Post, DeMoro issued a blast to Congress: “[Our union] will never be silent in the face of the mortal threat to our nation posed by your immoral assault on health care.” On May 19, a large gathering of registered nurses, again organized by the CNA, lobbied state lawmakers and then held a rally on the State Capitol steps. From there, they marched through the streets of Sacramento to the convention center.
These nurses, needless to say, intensely dislike Republicans. But they also have it in for Democrats whom they see as prevaricating or backsliding. At the May 19 rally, many of the demonstrators taunted Democratic National Committee Chairman Thomas Perez for his lack of enthusiasm for the single-payer bill. That Perez served as labor secretary during President Obama’s second term and was as far to the Left as anyone in Obama’s cabinet, didn’t impress CNA rank and file. After this show of force, Association Executive Director DeMoro, described by one supporter as “Mother Teresa with brass knuckles,” egged on the faithful, warning California Senate Democrats that if they don’t support the health care overhaul, the union will work to defeat them in the next election cycle. The CNA has a proven track record of success in this area. Back in 2005, they helped torpedo four ballot initiatives supported by Republican Governor Arnold Schwarzenegger that were intended to close a growing state budget deficit. Overall, the state’s unions, led by the California Teachers Association, pooled together more than $100 million to defeat the propositions.
To make their point on the SB 562 legislation, the California Nurses Association commissioned an impact study by the economics department of the University of Massachusetts-Amherst. The principal author, Robert Pollin, is a well-known progressive who two decades ago co-wrote a book that shifted the national living wage movement into high gear. Released last month, the study concluded that the health care overhaul would cost $331 billion a year, a figure significantly down from the original Senate annual estimate of $400 billion. The lower figure, they claimed, represented the cost savings from the removal of insurance co-payment, deductible and premium requirements. The study also recommended that California lawmakers create two taxes to meet the funding gap: 1) a 2.3 percent gross tax on businesses with annual revenues of at least $2 million; and 2) a 2.3 percent general sales tax on all consumer items except housing, utilities, groceries and other necessities. This would seem an efficient method of chasing employers, especially insurance companies, out of the state. But one wonders if the California Nurses Association would bother to notice.
It’s not as if the nursing profession in California is underpaid. The average salary of a registered nurse there is $135,000. In equivalent dollars, Canadian nurses under their single-payer system make $65,000 per year. Compensation is even lower in other modern nations with socialized health care. In Great Britain, nurses make the equivalent of $26,082; in Germany, the figure is $29,978. But if California nurses are faring well under the current system, given their propensity to win favorable collective bargaining contracts, why is the CNA so eager to overturn that system? Part of the explanation lies in self-interest. The State of California, their would-be opponents at the bargaining table, would make for an easy strike threat target. “Single payer,” after all, means single negotiator. Another and related explanation is the nature of public-sector unionism. All public-employee unions have an interest in enlarging government. When the employer gets larger, the number of employees get larger and so do their unions.
Even though Democrats hold a majority in both legislative houses, the California universal payer legislation still must clear several formidable hurdles if it is to become law. The sheer complexity of the bill will necessitate far closer analysis even among its believers. The multiplicity of competing interests will delay things even further. The State Assembly, moreover, isn’t as keen on this measure as the Senate is. Aside from being more politically moderate, even a few supporters within that body are hesitant. “I’m philosophically in favor of single-payer,” said Assembly Speaker Anthony Rendon, D-Paramount. “Whether or not now is the time, and looking at that particular bill, I don’t know.” Should a final bill clear both houses, it would await the signature of Democratic Governor Jerry Brown, who has expressed skepticism about the sources of financing and may veto it on that basis. In addition, any tax hike associated with the legislation needs two-thirds support from both the Senate and Assembly. Voters would have an opportunity to cap state spending via ballot initiative. And any waiver from Medicare and Medicaid rules to institute a single-payer plan would require approval from a reluctant Trump administration.
“Universal health care” is a euphemism. The master of the universe would be government. Under such a system, only the wealthy will find it practical to contract with private insurance carriers – the ones, that is, that remain in the state. At a time when California and other state governments are facing unprecedented pension liabilities, they hardly need unprecedented health care liabilities as well. As a rhetorical device, universal health care is superficially appealing. In practice, it is a ticket for long waits for standard as well as life-saving medical procedures. Sen. Jeff Stone, R-Temecula (Riverside County), recently provided a scenario: “If you think that lines at the DMV are long, just wait until you need an MRI at your doctor’s office or hospital.” Under Obamacare, many insurers have dramatically hiked premiums or dropped their employer-based coverage or health exchange participation. States are feeling the pinch. In Iowa, officials recently declared that their state is facing a “collapse” of its Affordable Care Act health exchange; they are seeking emergency federal funding for 72,000 residents covered by the law. If the leaders of the California Nurses Association think their state will be insulated from such consequences with SB 562 on the books, they are utterly removed from reality.
Postscript: Skepticism thankfully has won out for now, if more out of politics than economics. On Friday, June 23, Assembly Speaker Anthony Rendon shelved the Lara-Atkins bill, calling it “woefully incomplete.” He announced plans to keep the measure in the Assembly Rules Committee “until further notice.” Rendon remarked: “Even senators who voted for Senate Bill 562 noted there are potentially fatal flaws in the bill, including the fact that it does not address many serious issues such as financing, delivery of care, cost controls or the reality of needed actions by the Trump administration and voters to make SB 562 a genuine piece of legislation.” Five days later, on June 28, he revealed that he and his family had received death threats.
Union supporters of the legislation, predictably, were outraged. Deborah Burger, co-president of the California Nurses Association, denounced the move as “a cowardly act, developed in secret without engaging the thousands of Californians who have rallied to enact real health care reform.” Rendon, she insisted, wanted to “destroy the aspirations of millions of Californians.” Not to be outdone, the CNA’s prime mover, RoseAnn DeMoro, denounced Rendon as carrying the water for wealthy corporate donors, sending out a Time magazine-style tweet, “Insurance Industry’s Man of the Year.” All this should serve as evidence, as if it were needed, that passion alone cannot make for sound policy. Perhaps these overheated activists can ponder exactly where universal (i.e., government monopoly) health insurance has lived up to its promise.