How about all your health care for free or more accurately at a cost to you of a 2.3% sales tax … and I do mean free; no deductibles, no co-pays, no out-of-pocket costs. Sounds like a pretty good deal doesn’t it? Well California thinks it can do it through a single-payer plan (70% funded by federal government payments).
This is nothing short of a joke. First, even if the initial costs were reduced, what happens thereafter? How will the rate of increase be controlled?
Beyond that if the California supporters of single-payer believe they will receive health care as they do now, they are sadly mistaken. This concept is based on one thing; regulation of health care and all its components.
We only have to look to other similar systems to learn the steps, limitations and even rationing to keep such approaches to health care going and even then controlling costs is a struggle. This may all be fine with Californians, but politicians and supporters have an obligation to explain the full story. It is not health care as usual.
Excerpts from U Mass -Amherst study.
Thus, net health care spending for middle-income families will fall by between 2.6 – 9.1 percent of income. Small firms that have been providing private health care coverage for their workers will experience a 22 percent decline in their health-care costs as a share of payroll. The small firms that have not provided coverage will still make zero payments for health care under Healthy California through their gross receipts tax exemption. Medium-sized firms will see their health care costs fall by between 6.8 and 13.4 percent as a share of payroll relative to the existing system. Firms with up to 500 employees will experience a 5.7 percent fall, and the largest firms, with over 500 employees, will experience a 0.6 percent fall as a share of payroll relative to the existing system.
All for the cost of a 2.3% gross receipts tax and a 2.3% sales tax.
We estimate that, through implementation of Healthy California, overall costs of providing full health care coverage to all Californians could fall by about 18 percent relative to spending levels under the existing system.
There will be two broad areas of cost saving under Healthy California.
The first is a set of structural changes in the areas of: 1) administration; 2) pharmaceutical pricing; and 3) fee structures for service providers. We estimate that cost savings in the range of 13 percent of total costs are achievable through structural changes in these areas.
The second is through significantly reducing the high level of inefficiency that currently prevails in service provision. The major 2010 study of the U.S. Institute of Medicine found that, as a lower-bound estimate, cost savings in the range of 19 percent of total expenditures are achievable through addressing four major problems with service delivery: 1) unnecessary services; 2) inefficiently delivered services; 3) missed prevention opportunities; and 4) fraud. We assume that achievable cost savings in these areas through Healthy California will be around 5 percent—i.e. roughly one-quarter of the Institute of Medicine’s lower-bound 19 percent figure.
Healthy California proposal would eliminate all forms of cost- sharing, including all deductibles, co-payments and other out-of-pocket expenses.
Yet it is clear from the evidence he reviews that the extent of physician-induced demand will diminish within a health care system that establishes effective controls in the areas of provider fees, pharmaceutical pricing, hospital price-setting, and effective regulation over the level of service provision. That is, the incentive to engage in physician-induced demand will fall when the financial rewards provided by such behavior are limited by regulations. We consider these types of regulatory controls in what follows, within the overall context of the Healthy California proposal.