If California’s share of total U.S. healthcare expenditures in 2021 is 12%, as it was in 2020, then such expenditures can be estimated at about $510.6 billion in 2021 (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet; https://khn.org/news/article/new-single-payer-bill-intensifies-newsoms-political-peril/). That’s more than a half-trillion dollars annually and includes all payments by private businesses, households and non-profit institutions for private health insurance premiums, deductibles, co-payments, co-insurance plus direct, out-of-pocket payments to hospitals, medical professionals, pharmaceutical and medical device companies and other providers. To this must be added all public expenditures on behalf of Medicare and Medicaid beneficiaries (including the Children’s Health Insurance Program); the federal and state subsidies paid for private business employee health plans and the Obamacare private insurance plans; and the funds directly expended by the state, the counties, the municipalities and the public universities, colleges and school districts on providing health care services and to insuring the health of their employees.

Federal, state and local government healthcare expenditures–that is public sector healthcare expenditures–on behalf of Californians accounts for about 70% of all healthcare expenditures in and for the state’s residents (https://pubmed.ncbi.nlm.nih.gov/27845515/), the remainder being born by private businesses, households and non-profits. By consolidating insurance funding sources and vastly reducing and simplifying administration, a single publicly-administered health trust fund can unify and standardize fees and prices paid to providers and streamline the payments system generally. It would be akin to a combined, improved and expanded Medicare and MediCal fund able to pay healthcare providers on behalf of all Californians. That would result in tens of billions in savings each year while expanding coverage to the more than 3 million Californians who are currently uninsured.

Pooling all the public sector funds spent on healthcare in California, as noted, would cover about 70% of healthcare expenses. The remainder would come from a set of new payroll, sales and income taxes, all progressively structured, such that the burden would be distributed according to ability to pay. Revenues from those new taxes would be added to the pooled public funds in a single publicly administered fund (this was the proposal that California Democrats defeated in January 2022 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml? bill_id=202120220ACA11).

But the key to understanding healthcare financing under a single payer system is that all private insurance premiums and the vast bulk of all out-of-pocket medical expenses would be eliminated, resulting in massive savings to businesses, households, governments and non-profits across the board. These savings–-purposely overlooked by neoliberal Democrats and libertarian bots alike–are actually larger than the new taxes required by a single payer system.

To repeat, a single payer system of health care financing reduces expenses for businesses, households, governments and non-profits in excess of what those entities will pay in new, progressively structured and dedicated taxes. The health expense savings are greater than the new taxes that will be paid, resulting in a net reduction in total healthcare spending for everyone, except for the wealthiest households and the largest businesses and corporations. For 90% of households and businesses, there is a real reduction in what they spend on healthcare–they will experience higher savings rates from current income all other things being equal.

These savings are derived from the massive buying power–referred to as “monopsony” power in economics–of the publicly-administered and unified health care fund. As that fund will be paying for all necessary healthcare for all Californians, the fund’s buying power counterbalances the entrenched selling power–“monopoly” power–of the consolidated for-profit hospital systems who charge patients an average 400% of the actual costs of providing care (https://www.nationalnursesunited.org/press/new-study-hospitals-hike-charges-18-times-cost); counterbalances the monopoly power of prescription drug companies who charge Americans about 256% more than what they charge people in other countries for the same drugs (https://pharmanewsintel.com/news/us-prescription-drug-prices-256-higher-than-other-countries); and counterbalances the pricing power of nursing homes and assisted living facilities who charge exorbitant fees in this state (https://www.medicaidplanningassistance.org/nursing-home-costs/). Bargaining power allows a single payer to eliminate pricing inefficiencies, over-treatment of patients, fraud and abuse.

The other source of savings stems from the elimination of insurance company bureaucracies and human resource department bureaucracies of businesses, governments and other institutions that are presently needed to administer complex health plans and to interact with insurance companies (including in doctors’ offices). Those bureaucracies are dead weight–they add no value whatsoever. Households, businesses (including doctors and other individual health providers), governments and non-profits who now spend an inordinate amount of time, and endure the stress, of dealing with insurance company adjusters, will be able to save time and money from a greatly simplified system. They can focus on keeping people healthier or taking care of their core businesses.

Researchers estimate that at least one-fifth of total health care spending in the U.S. is unnecessary or wasted (https://www.chcf.org/wp-content/uploads/2020/01/GettingAffordabilitySpendingTrendsWaste.pdf; https://laborcenter.berkeley.edu/high-health-care-prices-are-the-primary-driver-of-california-workers-health-care-cost-problems/). Applying this ratio to California suggests there are more than $100 billion in unnecessary expenditures each year. A single payer system would radically and permanently reduce such waste. As the single payer, it will hold all the receipts needed to contain costs and optimize healthcare delivery performance.

The obvious alternative to fighting about who will pay what portion of private health insurance premiums and/or out-of-pocket expenses to providers is a single payer system along the lines of the nearly half-century old Medicare system. For those with doubts about this, have a look at Exhibit 4 of a recent Commonwealth Fund report. That picture will tell how much of an outlier the U.S. is in terms of health care costs as compared to health care system performance, i.e. the impact of the health care system on improving people’s health (or not) (https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly).

California and U.S. residents generally pay–and have been paying for decades–more than any country in the world for health care and we have the worst health outcomes relative to the 10 other wealthy countries in the Commonwealth Fund surveys. It’s as though Californians have been grocery shopping at 7-11, paying inflated prices for junk food while the rest of the world has been shopping at COSTCO where they get more food of higher nutritional value and pay a much lower price per unit. Anyone who is not on the payroll, or under the influence of the health care mafia (private insurers, hospitals, drug companies) or ideologically-motivated neoliberals (like California’s deep blue political echelon) or backlash libertarians, will tell you that a single payer system is the least costly and most effective health care solution for the tens of millions of Californians (and hundreds of millions of Americans) struggling with inadequate health care coverage and its grinding human and financial costs. Even the U.S. Congressional Budget Office confirmed the overall cost savings to society associated with the total coverage of a single payer system (https://www.cbo.gov/system/files/2020-12/56811-Single-Payer.pdf).

A single payer system would establish a public health care insurance system (an improved and expanded version of existing Medicare) that would allow every Californian to choose the health care provider(s) they want (including those they have presently) anywhere in the state. No more “in-network” or “out-of-network.” The “network” becomes the sum total of all California providers that will be available to all. It would eliminate all premiums, deductibles, co-pays, co-insurance and other out-of-pocket costs, as well as enrollment periods (everyone would be permanently enrolled). It would expand health coverage to all necessary medical care and procedures including vision, hearing, prescription drug and devices, mental health and long-term care.

For the 3.2 million Californians who have no health care coverage at present, it means complete coverage. For the 5 million underinsured Californians (for whom out of pocket costs account for more than one-tenth of household income) it means massive financial and health care access relief. For the 31 million insured Californians (including 6.5 million Medicare beneficiaries and 14 million MediCal beneficiaries) it would mean an expansion of benefits and the elimination of premiums and co-payments and a fundamental simplification of access and administration.

For everyone, it means less costly, less complicated and more readily accessible health care. In other words, it means we would all be relieved of bureaucratic burdens and costs imposed by the government-sanctioned profit models of private insurance, private hospital and drug corporations. This would allow patients and health care providers to focus on improving health, what should be the only task of the health care system.

(See https://a27.asmdc.org/ab-1400-ca-guaranteed-health-care-all-act; https://laborcenter.berkeley.edu/undocumented-californians-projected-to-remain-the-largest-group-of-uninsured-in-the-state-in-2022/; https://www.goodrx.com/insurance/health-insurance/insured-vs-underinsured; https://www.kff.org/medicare/state-indicator/total-medicare-beneficiaries/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D; https://www.dhcs.ca.gov/dataandstats/Pages/Medi-Cal-Eligibility-Statistics.aspx; https://www.chcf.org/publication/2021-edition-medi-cal-facts-figures/#related-links-and-downloads.)

“It is amazing that people who think we cannot afford to pay for doctors,
hospitals, and medication,
somehow think that we Can Afford to pay for doctors,
hospitals, medication AND
a GOVERNMENT BUREAUCRACY to administer it.”
― Thomas Sowell, Knowledge And Decisions

———-Rhetoric Vs. Reality: Americans Oppose Medicare For All Tax Hikes————-
Polls show that most Americans Oppose Medicare for all once they learn
it would force Americans to pay Higher Taxes.
A national poll by the Kaiser Family Foundation revealed that:
-60% of Americans Oppose it when they learn it would require most Americans to pay higher taxes,
-70% Oppose Medicare for all when they learn it would “lead to DELAYS getting some medical tests and treatments”
-60% Oppose it when they learn it would Threaten the already at-risk Medicare program,
and
-58% Oppose it when they learn it would ELIMINATE Employer-Provided and other private coverage.

Polling also shows that a Majority of Americans are SATISFIED with their
CURRENT Coverage & Care – and they don’t want their choices taken away.

The key to understanding this report–something Kristen Hwang has completely ignored–is that health care in California and the U.S. is largely channeled through hundreds of private insurance plans. Patients make payments called “premiums” to private insurers who in turn pay the health care service providers who treat patients. In other words, the payments to health care service providers for actual care come from hundreds of entities that profit from their role as intermediaries between care givers and patients.

For the vast majority of insured patients, however, which health care providers they can see is circumscribed by their private insurance plans and, in addition to the premiums they pay, they will pay additional fees called “deductibles,” “co-payments” and/or “co-insurance” to health care providers when they seek care. From the patients’ point of view, the total costs of health care are the sum of the premium and the additional fees they pay when they seek care (in addition to prescription drug costs, etc.)

Thus, private insurers can increase patient costs by increasing premiums and/or increasing the additional fees and/or by reducing the quantity or quality of health care services they will pay for under the insurance plans. Increasing patient costs and/or limiting patient care boost private health insurance corporations’ profits. Given that such corporations seek to maximize profits, profit-seeking behavior of health insurance corporations constitutes a built-in, inborn danger to the physical health and financial well-being of tens of millions of people in the U.S.

Ms. Hwang concerns herself here with the class of private insurance plans purchased by individuals through the so-called Covered California insurance marketplace, the state’s name for the Affordable Care Act (Obamacare) insurance exchanges established in 2014. The premiums and/or the additional fees (deductibles, co-payments and/or co-insurance) for private plans sold through Covered California are subsidized (i.e. discounted) by the federal and state governments based on the income levels of the patients purchasing the insurance.

Keep in mind that the insurance companies receive the full premium that they alone set each year; the subsidies to help patients pay those premiums come from taxpayer money, i.e. public funds. The debate as to what the level of those public subsidies should be is the subject of Ms. Hwang report. The “affordability” referred to in this report is limited to the share of premium and additional costs that patients are required to pay from their own money excluding the public subsidies they would receive from federal or state sources. Affordability here does not address the level of the premiums set by private insurance companies and how to reduce those premiums or how to reduce the levels of deductibles, co-payments and co-insurance that patients pay to providers.

The federal or state governments, rather than using their considerable power to negotiate premiums with these insurance companies on behalf of the buyers in the Covered California marketplace, just allow the insurance companies to set prices. In paying for an increasing share of the monopoly-priced premiums, governments, in effect, encourage the private insurance companies to raise premiums, something they have done consistently since 2014. In general, this is the most costly and wasteful type of health insurance in the entire U.S. healthcare system. Private insurance companies add a layer of needles costs and unnecessary bureaucracy for patients and governments with which to contend.