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California Narrowly Escapes Health Care Disaster

SB810,California-Legislature a bill creating a single-payer state health care system was narrowly defeated in the California legislature recently.  Its proponents said it would save money and provide quality health care; but, in reality, it would have been a health care and financial disaster.

The proposed legislation would establish a state-wide health care system run by a mammoth new bureaucracy, the California Healthcare Agency (CHA).  This new government agency would take the place of all the health insurance companies in the state.  In fact, the bill would outlaw the sale and use of any health insurance, preventing any health insurance company from doing business in California.

Dubbed the “Medicare for All” plan,  the law provides health care benefits for all California residents, based solely on their physical presence in the state.  An enrollment system would ensure that all such people, regardless of their ability to read, speak or comprehend English, understood their right to health care under the new system.   In addition to doctor and hospital coverage, the law would include vision, dental, mental health, and drug benefits.  Incredibly, the bill’s supporters claim it will save money.

The consequences of providing health care to anyone who shows up asking for it should be obvious.  The sickest, neediest people in the U.S. and Mexico, if not the world, will move to California.  All the monies currently spent on health care by the state, and by people and their employers within the state, would be re-directed to run this behemoth.   Instead of buying health insurance premiums to cover their own health care expenses,  residents and their employers will bear the brunt of the burden in extra state taxes to provide health care for everyone.  It doesn’t take a psychic to envision a long line of companies leaving the state.

Supporters of the law say that won’t happen because a state-controlled health care system, an only-game-in-town type health care system, would have the power to exact lower prices from health care providers.  We only have to look at Medicaid, the state-controlled health care system for the poor, to see how this would turn out.  To make health care  ‘affordable’, Medicaid pays health care providers only 56% of the discounted amount Medicare pays.  As a result, Medicaid patients find it difficult to find doctors who’ll accept them.  Consequently, they fill hospital emergency rooms waiting for care or go without health care entirely.  Given no alternative to a single-payer system,  many doctors will either require cash and credit or leave the state.  And there goes your “quality” health care.

Another claim that a public single-payer health insurance plan saves money is based on Medicare’s supposedly small administration costs of 2-3% compared to the 15 – 20% of that of private health insurers.  However, that’s like comparing bananas to cucumbers.  For one thing, many administrative tasks supporting Medicare such as collecting premiums and taxes, accounting, auditing, maintaining facilities, and conducting fraud investigations  are actually conducted by other government agencies and not counted.

Moreover,  Medicare patients are elderly and have much higher patient care costs than private insurers serving the general population.  As a result, administration expenses as a percentage of the much higher total of Medicare costs will be a smaller number, giving a false picture of efficiency.

Actually, referring to SB810 as “Medicare For All”  should have shut this bill down from the start.  Medicare is the biggest driver of the U.S. government’s whopping debt.  This is a fact even though the government collects payroll taxes and monthly premiums from people to pay for it.  How can that happen?  It’s because Medicare benefits cost the government 3 times more than what people contribute.  On top of that, original Medicare doesn’t cover vision and dental expenses.  So how could this “Medicare For All”, aka SB810,  possibly work for California?

Thankfully, a health care and financial disaster was averted; and SB810 was narrowly defeated.  However, it will be introduced again in 2013; and its supporters are already lining up new support.


  1. wtf_dude says:

    >> As a result, Medicaid patients find it
    >> difficult to find doctors who’ll accept them.

    You need to provide a reference for this which compares California regular patients and Medicaid patients’ ability to find a doctor. Previously you’ve reported Medicaid patients having only X% success finding a doctor, but neglected to report that non-Medicaid patients have less than 100% success themselves. For example, I’m regularly insured and can hardly find a dentist now because so many aren’t accepting new patients.

    However, regardless of those numbers, of course doctors would accept Medicaid patients less — they get more money from other patients. Now if all patients resulted in the same profits for doctors (as SB810 would mostly achieve) then doctors wouldn’t have any incentive to accept other more profitable patients. Economics 101.

  2. Ray Thomas says:

    Recent debates about the future of Medicare have included a range of proposals that would restructure the program to operate more like private insurance. Findings from The Commonwealth Fund 2001 Health Insurance Survey, however, show that Medicare outperforms private sector plans in terms of patients’ satisfaction with quality of care, access to care, and overall insurance ratings.


    In Medicare Versus Private Insurance: Rhetoric and Reality, Commonwealth Fund President Karen Davis and colleagues Cathy Schoen, Michelle Doty, and Katie Tenney present new evidence on how well Medicare works for beneficiaries compared with how well private insurance works for persons under age 65. Their analysis is based on data gathered by Princeton Survey Research Associates from April through July 2001. Interviews were conducted with a random national sample of 3,457 adults age 19 and older.

  3. Carole S. says:

    The most important issue regarding Medicare right now isn’t its quality but its cost. Please check out my September 7, 2011 blog, “The Resistance to Changes in Medicare.” Medicare, in its present form simply isn’t viable.

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