An important detail, right?
Creating a single-payer health care system in California would cost $400 billion a year — including $200 billion in new tax revenue, according to an analysis of legislation released Monday by the Senate Appropriations Committee.So where does the rest of the money come from?
The projected cost far surpasses the annual state budget of $180 billion, and skeptics of the bill say the price tag is “a nonstarter.”
Half of the $400 billion would come from existing federal, state and local spending on health care. An additional $200 billion would have to be raised by imposing a 15 percent payroll tax on California employers and employees, the analysis found.
But the cost of the new tax would be partially offset by reduced spending on health care coverage by employers and employees — which is how nearly half of Californians receive health insurance.So does that mean single payer is more efficient? Or will that reduced spending come from slow-walking, or denying outright, procedures that currently get covered? Wouldn't you want to know that up front?
Meanwhile, across the country in New York, the math is also daunting:
The single-payer health care plan that cleared the lower chamber of New York's state legislature on Tuesday would require massive tax increases to double—or possibly even quadruple—the state's current annual revenue levels.So, about that math:
The state Assembly voted 87-38 on Tuesday night to pass the New York Health Plan, which would abolish private insurance plans in the state and provide all New Yorkers (except those enrolled in Medicaid and Medicare) with health insurance through the state government. The same proposal cleared the state Assembly in 2015 and 2016, but never received a vote from the state Senate.
New York collected about $71 billion in tax revenue last year. In 2019, when the single-payer plan would be enacted, the state expects to vacuum up about $82 billion. To pay for health care for all New Yorkers, though, the state would need to find another $91 billion annually.The money has to come from somewhere. Where would that be?
And that's the optimistic view. In reality, the program is likely to cost more—a lot more.
Gerald Friedman, an economist at UMass Amherst and longtime advocate for single-payer health care, estimated in 2015 (when the New York Health Act was first passed by the state Assembly) that implementing single-payer in New York would cost more than every other function of the state government. Even if New Yorkers benefit from an expected reduction of $44 billion in health spending, which Friedman says would be the result of less fraud and less administrative overhead, the tax increases would cancel out those gains.
To pay for the single-payer system, Friedman suggested that New York create a new tax on dividends, interest, and capital gains that would range from 9 percent to 16 percent, depending on how much investment income an individual reports, and a new payroll tax that would similarly range from 9 percent to 16 percent depending on an individual's income.When you factor in the taxing that's already taking place in California and New York, you're looking at an effective tax rate approaching 60%. Do you think that will fly?