No 'California Dreamin' for Single Payer Healthcare

California is dreaming about a government takeover of health insurance once again.

Earlier this month, state Sen. Scott Wiener, D-San Francisco, introduced SB 770. The bill would seek a federal waiver to allow the state to use federal funds earmarked for Medicare and Medicaid to create a state-run health insurance system that would cover all Californians — whether they like it or not.

Previous efforts in California to ban private health insurance and force everyone into a government-run plan have failed. The odds of Wiener's bid succeeding are long, too. Good thing, because a government takeover of the health insurance system would be fiscally ruinous.

California Gov. Gavin Newsom came to office in 2019 promising a statewide single-payer system. On his first day in office, he asked the Trump administration for a waiver similar to the one Sen. Wiener is now agitating for. That went nowhere.

He set up a commission to explore how to implement single-payer within the Golden State. That commission's final report in June 2022 called for a "unified financing" system but stopped short of insisting on single-payer.

Sen. Wiener is trying to speed things up. His bill would hold the Newsom administration to several deadlines for securing a federal Medicare waiver. Without the billions in federal dollars that currently pay for coverage for Medicare and Medi-Cal beneficiaries in California, a state-run health plan will never get off the ground.

Sen. Wiener's strategy for achieving single payer isn't as direct as earlier efforts. For instance, a bill introduced by Assemblyman Ash Kalra, D-San Jose, in 2021, which stalled in the legislature this past January before coming to a vote, would have abolished private health insurance entirely and replaced it with a single government-financed coverage program known as CalCare.

Wiener's piecemeal approach doesn't make it any less dangerous than those previous single-payer proposals. The truth is that single-payer is simply cost-prohibitive, with or without federal dollars.

It could cost anywhere from $314 billion to $391 billion a year, according to an analysis from last year. That's more than the entire state budget. A Medicare waiver will only do so much to defray those costs.

California's budget deficit is expected to reach $22.5 billion next year. This has left Newsom scrambling for ways to tighten the state's belt. A massive, taxpayer-financed restructuring of the healthcare sector is the last thing lawmakers should be considering right now.

Earlier single-payer proposals sought to pay for the new government-run health system through some combination of payroll tax increases and a new excise tax on businesses. But tax hikes of this magnitude are incredibly short-sighted.

California already levies some of the highest personal and business taxes in the country. If lawmakers raise taxes further, it could prompt even more companies and high-earning individuals to leave the state. State revenues would plummet.

At the same time, the quality of care available to Californians would decline dramatically under a single-payer system. Consider that, once the government takes control of health insurance, doctors will become de facto public employees. Those who remain in the state will be forced to settle for whatever income the government decides to pay them. And that won't be much.

In short order, doctors will flee for freer healthcare markets in which their skills and expertise are valued more fairly. When that happens, medical care will become a scarce commodity. Rationing and long waits for care will follow, as has happened in the Canadian and British systems of universal coverage.

Many parts of California already suffer from critical doctor shortages. Eight million state residents currently live in areas that lack a sufficient number of primary care doctors. By driving physicians away from the state, single-payer would only exacerbate this crisis — and make medical care harder to come by.

Of course, single-payer advocates like Wiener and Kalra ignore these bleak realities. Instead, they simply assume that abolishing private insurance and shifting everyone onto a government-run health plan would be a gift to Californians.

They're wrong. Single payer would exact an unthinkable toll on the health of all Californians and the finances of the Golden State.