Sunday, June 11, 2017

A Single-Payer Test Drive

If Democrats are serious, why not try it out in California?


By Review & Outlook
The Wall Street Journal
June 12, 2017

California’s state Senate recently passed a single-payer health-care bill, and we’re warming to the idea as an instructive experiment in progressive government. If Democrats believe the lesson of ObamaCare is that the government should have even more control over health care, then why not show how it would work in the liberal paradise?

The legislation guarantees free government-run health care for California’s 39 million residents—no co-pays, deductibles or insurance premiums—as well as virtually unlimited benefits. Patients could see any specialist without a referral and receive any treatment that their provider says is medically appropriate. Democrats seem to believe this will have no effect on the incentive to use health care.

A University of Massachusetts Amherst study commissioned by the California Nurses Association—which favors government-run health care—claims that single-payer would reduce health-care spending by $37.5 billion a year. This miracle would be achieved largely by slashing administrative costs as well as provider and drug reimbursement rates. According to the study, letting people get treated whenever and wherever they want would save money. We don’t think Jonathan Gruber did this study, but he could have.

The study also asserts that California could reallocate $225 billion a year in Medicaid, Medicare and ObamaCare spending for single-payer assuming a federal waiver. Thus the legislature would only have to come up with $107 billion.

The Senate didn’t pass the bill with a funding mechanism, leaving that to the Assembly. The Senate appropriations committee contemplated a 15% payroll tax, but the nurses’ study suggests instead a 2.3-percentage point increase in the state sales tax (to 9.55%, not including local add-ons) and a 2.3% business gross receipts tax on revenue exceeding $2 million. The latter would be baked into the cost of everything from a taco to a Tesla. The lesson here would be to show middle-class taxpayers that there aren’t enough rich people even in Silicon Valley or Hollywood to pay for this.

Governor Jerry Brown has hinted that he might not sign such a bill, even rolling out the Latin phrase “ignotum per ignotius” to describe it. “In other words,” he said, “you take a problem and say, ‘I’m going to solve it by something that’s even a bigger problem,’ which makes no sense.” But if Mr. Brown believes this, maybe he should sign it and force progressives to live with the consequences before they foist another health-care experiment on the entire country.


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