economic analysis of the healthy california single-payer ... · california single -payer proposal...
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Economic Analysis of the Healthy California Single-Payer Proposal
(HB-562) Robert Pollin
University of Massachusetts-Amherst Presented to: California Assembly Select Committee on Health Care Delivery Systems and Universal Coverage
February 7, 2018
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Dual Purpose of Healthy California
• Provide decent health care coverage to all California residents • Achieve decent universal coverage while also reducing overall
healthcare costs • California health care = ~ 14% of state GDP • US health care = ~ 18% of national GDP • 8 Comparison OECD economies = ~ 9% - 11% of GDP
• Can Healthy California accomplish these dual goals? • Short answer: “Yes.” • More specifically: Healthy California is economically viable
• There will still be major questions and challenges • These can be successfully tackled
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Estimating “Underinsurance”
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Sources of Potential Cost Saving through Single-Payer • “Structural” saving
• Administration • Hospitals • Physicians/clinics • Insurance provision
• Pharmaceutical pricing • Medicare rates for hospitals and physicians/clinics
• Service Delivery • Unnecessary services—”physician-induced demand” • Insufficiently delivered services • Missed prevention opportunities • Fraud
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Total Health Care Expenditures with Healthy California
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How to Finance 1: Existing Public Funds
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Total Funding from Existing Sources plus New Tax Revenues • 68 percent of total expenditures
• = $331 million x 0.68 = $225 billion
• Remaining 32 percent must come from new tax revenues • = $106 billion
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New Taxes to Raise $106 billion
• Gross Receipts Tax of 2.3% • Exempts first $2 million of receipts • 80% of firms will pay no taxes • Raises: $92.6 billion
• Sales Tax of 2.3% • Exempts: housing, utilities, food at home, broad range of services • 2% income tax credit for MediCal families • Raises: $14.3 billion
• Total New Tax Revenue: $106.9 billion • Alternative tax measures also workable
• Payroll tax: 3.3% on employers and employees = $92.6 billion
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Distributional Impacts of Single-Payer vs. Existing System: Middle-income Families
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Further Considerations
• Getting from here to there • How long a transition? • How to manage transition in insurance markets?
• Just Transition for Health Insurance Industry Workers • Includes: Reemployment; wage insurance; retraining; relocation; pension
guarantees