A week and a half after the Senate Committee on Appropriations (COA) released a fiscal analysis that determined the proposed Healthy California Act would generate annual costs of $400 billion per year, the state Senate passed the legislation. SB 562 now moves to the State Assembly.


Conceived and authored by Sens. Ricardo Lara, who represents Long Beach and Signal Hill, and Toni Atkins, the bill, Senate Bill 562, would totally overhaul the state’s health care insurance system with a government-run, single-payer, fee-for-service system that would replace Medicare and Medicaid. It contains no specific plans for funding.


The COA analysis contended that $200 billion in existing federal, state and local funding could contribute to the annual cost to run the new health care system.


“About $200 billion in additional tax revenues would be needed to pay for the remainder of the total program cost,” the report states. “Assuming that this cost was raised through a new payroll tax (with no cap on wages subject to the tax), the additional payroll tax rate would be about 15% of earned income.”


By comparison, the total state budget is currently about $180 billion per year.


Following the vote, the National Federation of Independent Business swiftly released a statement of condemnation from Executive Director Tom Scott: “For the last several years, small business owners have consistently ranked the rising cost of health care, regulations, and high taxes as their top concerns. SB 562 creates an enormous bureaucracy which would add unbearable costs on struggling small business owners, at a time when the state is already burdening them with higher minimum wage costs and drastic gas tax increases.”


In a May 23 article on proposed health care legislation in the Business Journal, Lara stated: “California has made huge progress under the Affordable Care Act and brought our uninsured rate to a historic low. But too many Californians still pay too much for health care that doesn’t cover enough. Healthy California will create one high standard of care for all.”


A cost and revenue analysis of the proposed federal American Health Care Act was also released in recent weeks. That bill was passed by the U.S. House of Representatives in early May and is now in the hands of the Senate.


The Congressional Budget Office (CBO) found that, if implemented, the bill would “reduce the cumulative federal deficit over the 2017-2026 period by $119 billion.” The largest of these reductions would come from significant cuts to Medicaid.


There would be far fewer people with health insurance under the bill, the CBO found. “The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 23 million in 2026,” a summary of the report stated. “In 2026, an estimated 51 million people under age 65 would be uninsured, compared with 28 million who would lack insurance that year under current law. Under the legislation, a few million of those people would use tax credits to purchase policies that would not cover major medical risks.”


To read the CBO’s analysis, visit www.cbo.gov/publication/52752.