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Single Payer Savings in California

March 8, 2022

Summary: An excellent commentary in The Nation reviews the cost advantages of single payer in California and generally, the current health care cost explosion, and the unsavory trade-off foisted on us every day: corporate profits up, family health down.

The Plan to Save Californians $117 Billion a Year by Switching to Single-Payer
The Nation
February 25, 2022
By Michael LIghty

Why is universal health care seen as prohibitively expensive when the status quo costs far more?

In the public debate over Medicare for All, the first casualty is always the truth about costs, savings, and taxes. And the recent struggle in California over a proposed statewide single-payer health care bill, the California Guaranteed Health Care for All Act, has been no exception. Scouring the media coverage of the bill, also known as AB 1400, you would find a multitude of statistics and figures, but nowhere would you find this simple fact: Under the current system, health care in California will cost an estimated $517 billion in 2022.

Reports from the Healthy California for All Commission, a single-payer health care task force appointed by the state government, estimate that the present system, characterized by huge inequities, coverage gaps, restrictions on access to care, and administrative complexity, will cost an estimated $323–$496 billion more in 2031 than would a single-payer system covering everybody.

But what about taxes, the favorite scare tactic of those who profit from the current dysfunctional system? According to a study from the Healthy California for All Commission, it turns out that the current cost of health care is the biggest “tax” paid by the middle class—ranging from 25 to 40 percent of a household’s income. Single-payer financing eliminates that burden. Replacing the cost of premiums, co-payments and deductibles with modest public tax increases on businesses and high-income individuals seems like a very good deal. (Under California’s AB 1400, households making less than $600,000 per year would see no more than a 1 percent tax increase.)

If readers are surprised to hear about the savings from single-payer, chalk it up to the influence of the health care industry, which has been repeating the lie that we cannot afford universal health care since 1993. Because the industry can literally charge whatever it wants now, single-payer represents a direct challenge to its profits and power.

Consider the industry’s ability to set the health policy agenda. Counting lobbying expenditures and campaign contributions, the health care sector spends more on influencing lawmakers than any other industry. A study published in The Journal of the American Medical Association found that between 1999 and 2018 “the pharmaceutical and health product industry spent $4.7 billion, an average of $233 million per year, on lobbying the US federal government; $414 million on contributions to presidential and congressional electoral candidates, national party committees, and outside spending groups; and $877 million on contributions to state candidates and committees.”

The profits of the biggest health care corporations are obscene: Kaiser Permanente had a net income of $8.1 billion in 2021, a record. The same year, HCA, the largest for-profit hospital corporation, booked $7 billion in profits, while United Health, the largest commercial insurer, reported profits of $17.3 billion. … Meanwhile, patients die for lack of insulin, and Congress has so far failed to limit the price of this decades-old drug (as it has failed to limit the price of any prescription drug, which single-payer will do).

Sifting through the scare tactics, misrepresentations, and influence buying of the health care industry reveals a pattern of profiting from human suffering and protecting financial interests at the expense of our health. California, like the rest of the United States, can both save money and address our health inequities by adopting a single-payer system. Yes, we can afford to provide the health care that we need and deserve. In fact, we can’t afford not to.

Comment by: Jim Kahn

My comment is short and sweet – Michael does a stellar job of summarizing favorable single payer cost analyses, rapidly rising healthcare costs in the current system, sky-high industry profits and salaries, political influence through donations and lobbying, and a “pattern of profiting from human suffering and protecting financial interests at the expense of our health.”

This piece is a must-read.

Single payer is a must-do.

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