Idiotic Commentary on California’s Single Payer Push

As I noted in an earlier post, California’s single payer plan is turning out to be shockingly cheap, if a recent report estimating its costs is to be believed. Sadly, the coverage of the plan so far is largely full of idiotic commentary that fails to think correctly about the costs associated with the plan, and so we get stuff like this CNBC article from Jake Novak.

When the estimates of the report were first covered by Angela Hart at the Sacramento Bee, she decided to divide the costs in the report by the state budget for reasons that genuinely elude me. The result was a headline and story noting that, after the plan, health care expenditures in CA would be greater than the size of the current state budget. Because the media is mostly just derivative of one another, this became the figure that took off among pundit types like Novak.

Because as the politicians in California just found out, providing government paid-for health care isn’t just expensive, it’s more expensive than everything else… combined.

But here’s the thing with this statistic. It’s already the case that government expenditures on health care in California are larger than the size of the state budget. You don’t have to do any sort of advanced snooping to see this. It’s right in the report Novak and others’ takes are responding to.

The report says that federal, state, and local funding of health care is currently $200 billion. And, as Novak notes in his piece, the total money allocated for the CA state budget is $179.5 billion. So governments in California spend 111% of the state budget on health care right now! Disaster! Panic! Impossible!

Aside from noting that the California health care sector is larger than the California state budget and then becoming apoplectic, the only other thing Novak does in his piece is confusingly pretend like the state of California cannot levy taxes on employers.

Novak notes that almost all of the additional money needed for a single payer system could come from redirecting payments employers already make to private insurers into the single-payer fund, but then has to this to say about how that’s ridiculous:

The study tried to be a bit more optimistic, noting that private employers currently pay between $100 and $150 billion per year to provide health insurance for their workers and hypothesizing that money “could” be made available to the single payer plan. But that assumes those employers and employees would be okay with choosing a government-run option instead of their private insurance.

Yeah, none of that is going to work.

I can’t tell if Novak is actually confused or being deceptive, but to state the obvious: it is not the case that the only way you can access this $100-$150 billion is by asking employers to choose to pay it into the single-payer system. There is another way to access it wherein you levy an employer-side payroll tax that forces employers to send the money into the universal state insurer. You know kind of like how the federal government levies Medicare payroll taxes already?

If the single-payer plan on offer in California costs as little as they say it does, it is so easily achievable as a fiscal policy matter that it’s almost laughable. Whether there are political hurdles to passing it, I can’t say. At present, the only major persuasive hurdle seems to be that those who write about it pollute the discourse with takes that are on par with perpetual deficit-mongering in their wrongness.

  • Andrew

    Matt – do you know if the $100-$150B that “employers pay” currently is inclusive of the amount that employees get taken out of their paychecks for insurance premiums, or is the employee portion another chunk of money (that I haven’t seen accounted for elsewhere?)