Affordability issues
1. How can the universal health care system
cover every resident without spending more than California now spends
on health care?
A 2005 Lewin Group analysis estimates that total
spending for health care in California under the current system
would be $184.2 billion in 2006. This includes spending for administration
and benefits currently covered by all payers including governments,
employers and families. This amount would have been more than enough
to provide all California residents with universal coverage.[1]
Other developed countries find it more efficient
and cost effective for their governments to provide universal coverage
and control their health care costs. Current health care spending
for the United States' market-driven system at $6,100 per person
is more than double the amount that is spent by Canada ($2,980 per
person) or France ($2,740 per person) to provide universal coverage.[2]
Without increasing the current amount in the
aggregate that is spent on health care in California, an efficiently
administered and publicly funded universal health care system could
direct current health care spending into comprehensive coverage
and improved care quality for all residents.
2. How can the universal health care system
provide comprehensive benefits with no co-pays and deductibles without
increasing spending?
The total operating cost of the universal health
care system would be less than the cost of maintaining the insurance
agencies and policies that it would replace. Further, the publicly
financed health care system could save billions in spending during
the first year even as utilization of health services increased.[3]
A study by Boston University researchers finds
that the current health care insurance system now spends nearly
50 percent of each health care dollar on administrative and clinical
waste, excessive drug prices, and fraud.[4]
Instead, SB 840 provides for a single payer universal health care
system with streamlined administration that uses its purchasing
power to negotiate price discounts for pharmaceuticals and medical
equipment. It also establishes an Inspector General for Health Care
and strong investigative tools to deal with fraud. When all bills
are submitted to a single payer system, patterns of fraud would
be easier to detect than they are under the current multi-payer system.
3. How can the universal health care
system provide pharmaceutical benefits with no co-pays?
SB 840 provides a mechanism for the state to
achieve large discounts by using its purchasing power to negotiate
the cost of drugs for 36 million residents. Californians would no
longer have to pay nearly 50 percent more than Europeans, Australians,
Japanese, and Canadians now pay for the same pharmaceuticals produced
by the same companies.[5]
4. How can California afford major health
care reform during this period of budget deficits?
Budget deficits are caused in part by health
care misspending in California’s dysfunctional health care system.
SB 840 provides for a publicly financed health care system that
is a major step toward deficit reduction and a balanced budget.
The Lewin Group finds that over the 2006-2015 period, a single payer
model similar to SB 840 would save California $345.6 billion in
overall health costs. This includes state savings of $43.8 billion
on public employees' health insurance costs.[6]
A 2005 Lewin Group analysis estimates that total
spending for health care in California under the current system
would be $184.2 billion in 2006, which would have been more than
enough to cover every resident.[7]
Health care dollars should be spent on providing health care and
not on inefficient administration and waste. Uncontrolled costs
in the current multi-payer system are causing an unsustainable burden
on government budgets.
5. How can the General Fund provide SB 840
transition costs while budget deficits threaten existing health
care programs?
SB 840 provides that the General Fund lend the
California Universal Healthcare System money to cover the transition
costs. The General Fund is to be repaid from the Universal Healthcare
Fund and any available private sources, which also could contribute
to the transition costs. First year budget savings under the publicly
financed health care system could provide enough funds to reimburse
the loan from the General fund.[8]
6. Would costs increase for individuals
and families who are already insured or who become seriously ill?
Overall, the insured could save on health care
costs. A 2005 Lewin Group analysis estimates that under a bill similar
to SB 840, the average savings per family in 2006 would be $340
while receiving full comprehensive benefits.[9]
The savings reflect the elimination of out-of-pocket costs for health
services and high insurance premiums that would be replaced by affordable
premiums under the publicly financed health care system.
However, other factors currently exist that could increase what the insured now pay for
health care. Out-of-pocket costs are not the only cost they could
incur. Multiple treatments, expensive prescriptions and ongoing
office visits could become a financial burden if they were to become
seriously ill. Insurance companies place a cap on how much they
pay in total annual benefits, which could be reached quickly. Under
SB 840, health care costs do not increase for someone who becomes
ill. This benefit is a safeguard from financial ruin.
Funding under the publicly financed health care
system would be more equitable than current market system funding
that does not provide secure comprehensive benefits for all residents.
Age, race, employment status, pre-existing conditions, high inflation
of health care cost and the type of coverage one needs or could
afford would not affect the amount of coverage or premium cost under
SB 840.
Also, the publicly financed health care system
could control future cost increases and save money on an ongoing
basis. The Lewin Group finds that under a bill similar to SB 840,
health care spending between 2006-2015 is about $68.9 billon less
than the current system’s projected spending of $345.6 billion.[10]
The current health care system is unstable and trending toward repeated
increases in premiums, co-pays and deductibles. Many employers are
dropping coverage altogether or passing on more of the cost to their
employees.[11]
7. Would seniors pay more under SB 840
than they do now?
Based on analysis of a bill similar to SB 840,
a Lewin Group report finds savings on average for a family headed
by a person 65 or older to be about $1,275 annually.[12]
Out-of-pocket health care costs could be lower for seniors because
SB 840’s publicly financed health care system provides comprehensive
coverage including prescription drugs, vision, dental, and other
benefits that often are not covered under the current
However, seniors could be required to pay premiums
into the Universal Healthcare Fund on earned income greater than
their non-taxable Social Security income.
