Heavyweight health care plans confront lawmakers

California could soon be seeing an unprecedented overhaul of its state health care system — but only if the politics and money come together.

Two proposals are making the rounds at the Capitol which, if approved, would greatly expand eligibility for publicly funded health insurance.

The plans – one from Gov. Gavin Newsom and the other from Assemblyman Ash Kalra (D-San Jose) – have reinvigorated the debate over universal health care in the state that stretches back decades.

It would establish an entity called CalCare. CalCare would extend health coverage to all Californians, including undocumented immigrants.

The proposal capturing the most attention is Kalra’s AB 1400, which easily passed two Assembly committees — one on Jan. 11 and the other on Jan. 20 — and is expected to be taken up Monday on the Assembly floor.

His bill, which would create a first-in-the-nation type of health care system, was originally introduced in February of 2021 and then shelved in April for further research.

It would establish an entity called CalCare. CalCare would extend health coverage to all Californians, including undocumented immigrants. The proposal envisions a “single-payer” system, and in this case,  the single payer is the state government, with its mix of state and federal money.

The bill would make it possible for California to petition the U.S. Department of Health and Human Services for federal waivers that would “make it easier for California to consolidate health care dollars, provide flexibility, expand benefits, and eliminate cost-sharing,” according to Kalra. AB 1400 would set up an independent nine-member board meant to make decisions about the CalCare system.

But the biggest question about AB 1400 is about the source of the money.

Kalra and his supporters have proposed an Assembly Constitutional Amendment, ACA 11, which recommends levying several new taxes on Californians to properly finance a CalCare system. The amendment requires two-thirds votes in each house of the Legislature — but not the governor’s  signature — and voter approval on the statewide ballot. If passed, ACA 11 would likely not take effect until 2024.

In 2019, there were some 11 million immigrants residing in California, comprising 27% of the total population, according to the Public Policy Institute of California.

These would be a Gross Receipts Tax on certain businesses at 2.3% of their gross income above $2 million, a Payroll Tax at 1.25% on wages and compensation at businesses with more than 50 employees, a Payroll Tax on workers making more than $49,900 per year at a rate of 1% of earnings above that figure, and a Personal Income Tax on those making more than $140,509 per year.

By one estimate, the amendment would authorize some $168 billion in new taxes to finance virtually all of California’s health care system. California health care currently costs about $400 billion annually, a figure that includes insurers’ profits. A critical dollar reduction under AB 1400 is the elimination of funds currently spent on insurance through HMOs and other providers.

Newsom’s plan, which he announced Jan. 10 as a part of his 20-22-23 draft budget, would expand the current eligibility guidelines for Medi-Cal to include all low-income persons regardless of immigration status, a move that would add an estimated 700,000 people to Medi-Cal’s rolls.

Medi-Cal, which serves poor and low-income Californians,  is the state’s version of Medicaid. It covers more than 13 million people, about a third of California’s population

Newsom’s proposed change would be significant for California’s large immigrant population.

In 2019, there were some 11 million immigrants residing in California, comprising 27% of the total population, according to the Public Policy Institute of California.

Of these 11 million, around 22% were undocumented, and another 25% in the state under a different legal status, like a visa or a green card.

Currently, Medi-Cal is available to different types of immigrants, but with certain stipulations. Those in California on an H-1 visa may use a limited version of Medi-Cal if they qualify, while those with a green card may have access to full benefits.

Opponents argue that AB 1400 would require $163 billion in new taxes to get off the ground.

The limited version, which only includes emergency services and pregnancy care, can also be used by immigrants who make less than $36,136 each year for a family of four. Those under 26 may also qualify for Medi-Cal regardless of legal status, as will those over 50, starting in May.

Despite this, it is estimated that 65% of undocumented immigrants will remain uninsured in 2022 (1.27 million individuals), meaning that Newsom’s proposal may stand to bring many into the Medi-Cal system who otherwise would not have the option.

The price tags of both proposals are big.

Opponents argue that AB 1400 is too costly to be feasible, since the bill would require $163 billion in new taxes to get off the ground. Those favoring the bill cite California’s rising health care expenditure under the present system, which is estimated to grow by $158 billion by 2031, to more than 17% of the Gross State Product.

AB 1400 is not the first universal health care proposal to emerge in California. Recent attempts to form a CalCare system go back to the late nineties.

If it continues to advance in the Legislature, AB 1400 could make California the first state in the nation to implement a universal health care system. It would be a major step forward for a state which still has some 3.2 million uninsured, around 9.5% of its total population.

The Healthy California for All Commission ,  which researches the possibility of a unified financing health care system, 52% of uninsured Californians have no usual source of care, compared to only 11% of insured Californians.

Similarly, 44% of uninsured people have gone without a doctor visit in the past year, as opposed to 13% of insured people. Uninsured Californians are also significantly less likely to find a physician or specialist who is accepting new patients, by margins of 21% and 23% when compared to Medi-Cal recipients, and 47% and 46% when compared to those with private insurance.

Of those who do receive care, the commission states that 20% of Californians at large reported difficulty paying medical bills. 26% of Latinx adults reported difficulty, as did 30% of Black adults, and 32% of those with income below the federal poverty line.

On a national level, 33% of people in the U.S. have difficulty with their medical costs, a rate much higher than other similarly developed nations (England sits at 7%, the Netherlands at 8%, and France 17%). Health care spending overall is similarly much higher in the U.S. than other nations.

AB 1400 is not the first universal health care proposal to emerge in California. Recent attempts to form a CalCare system go back to the late nineties.

In 1998, SB 2123, the Cal-Care Health Insurance Act, was introduced by Sen. Diane Watson, before being amended significantly in the committee phase and losing momentum.

In 2006, the bill was vetoed by then Gov. Arnold Schwarzenegger, who deemed it “socialized medicine.”

The next year, Sen. Hilda Solis introduced SB 480, a bill which would commission a report to explore options for implementing universal health care, and then eventually set up that system by a set date. SB 480 passed through the Legislature, and is signed by then Gov. Gray Davis, albeit without any set date for implementation. State funding for AB 480 was approved, but was cut down by Davis. Federal grants which would have also funded it failed to materialize.

In 2003, Sen. Sheila Kuehl introduced SB 921, the Health Care for All Californians Act. It was suggested that SB 921 could be funded by a payroll tax from both employers and employees, a self-employed earnings tax, and a tax on non-wage income. The bill passed the Assembly Health Committee but progress stopped at the Assembly floor.

In 2005, Kuehl introduced SB 840, the California Health Insurance Reliability Act. It was paired with SB 1784, the California Health Insurance Reliability Funding Act, which put forward new taxes on self-employment, non-wage income, and taxable income exceeding $1 million, although without specified rates. SB 840 passed the Legislature, though its sister bill was never given a hearing. In 2006, the bill was vetoed by then Gov. Arnold Schwarzenegger, who deemed it “socialized medicine.”

In 2007, SB 840 was reintroduced. It again passed the Legislature and goes to Schwarzenegger’s desk. He vetoed it a second time.

When questioned about the bill, Gov. Jerry Brown responded,  “Where do you get the extra money?”

In 2009, incoming Sen. Mark Leno introduced SB 810, a close facsimile to 840. After it died in the Assembly, it was introduced again in 2011. At this point, it reached the Senate, but fell short.

In 2017, SB 562 , the Healthy California Act, was put forward by Sens. Ricardo Lara and Toni Atkins. It recommends a 9-member “Healthy California Board” to oversee a universal health care system. The bill did not specify how the program would be funded, leaving that up to the Legislature.

When questioned about the bill, Gov. Jerry Brown responded,  “Where do you get the extra money?” SB 562 was soon held in the Rules Committee by Assembly Speaker Anthony Rendon and died.

In 2018, Newsom campaigned for governor on single-payer health care. He told the California Nurses Association “you have my firm and absolute commitment as your next governor that I will lead the effort to get it done …  [w]e will have universal healthcare in the state of California”.

Should its current momentum persist, there is a distinct possibility that AB 1400 may make its way through the Legislature and onto the governor’s desk.

If its predecessors are any indication, though, it will be up to those lawmakers in favor of it to show that a CalCare program can be adequately funded and feasibly executed. It will also be up to Newsom, whose previous support of single-payer is now being tested at the same time as his own health care expansion is under scrutiny.

Otherwise, California’s debate over universal health care will remain just that — a debate.