The Plan to Save Californians $117 Billion a Year by Switching to Single-Payer

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. Many articles have quoted the California Republican party’s objection that AB 1400 would cost $400 billion annually. Given the alternative, that sounds like a deal!

Perhaps supporters of the current system should be asked how they are going to afford that $517 billion cost. How could they possibly justify spending $117 billion more for health care while failing to guarantee health care to every Californian?

Reports from the Healthy California for All Commission, a single-payer health care task force appointed by the state government, estimate that the present systemcharacterized by huge inequitiescoverage 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. That means every Californian adult and child would pay $8,000-$12,000 more for health care than we should.

We see the same dynamic in debates over Medicare for All at the national level. In 2020, economists at the University of California–San Francisco reviewed 22 national health care financing studies, and found that 20 of them demonstrated savings through a single-payer model. The nonpartisan Congressional Budget Office, meanwhile, determined that federally Medicare for All would generate $650 billion into savings.

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.)

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