Blog

05/31/17

A Guy Walks Into A Bar

We are in a series exploring the idea of a single payer healthcare system.  Click here to find the prior posts.

In the early days of email, before we figured out this was really a Satanic tool that could make us work all the time, its primary purpose was for forwarding jokes.  I know this because I got a lot of jokes sent to me about being from Arkansas, which I quickly edited and then forwarded to my friend from West Virginia. 

There is probably no more common a joke set up than ‘A guy walks into a bar…’  Maybe it is two guys, or three.  In a sign of ecumenical fellowship, priests and rabbis seemed to walk into bars often.

Well, I am sorry to disappoint you, but I don’t have a good joke for you today.  But, how about ‘an object lesson walked into the story?’  Nope, probably not as interesting, but none the less, right in the middle of our thinking about a single payer system, California floats a bill to move to a single payer system.  That’s convenient.

It is not that California is the first state of late to run single payer up the flag pole.  Vermont, of course, tried and failed in 2014.  My home state of Colorado had it on the ballot last year, where it was roundly defeated (Weed, yes.  BernieCare, no).

But California is…California.

With 39 million people, the state is more populous than Canada, so the idea of a single payer system there is an interesting thought experiment.

Already, almost half of the population in California is on Medicare (5.6M) or Medicaid (12.3M), so hey, they are halfway there.  Hold on to this fact for a second. Everyone else is either a surfer with no income of a tech gazillionaire, so neither would care too much about the inevitable tax increase to pay for it.

The California bill is estimated to cost $400 billion, which works out to about $10,000 a person, right in line with the US per capita average, so that seems about right.  Sponsors think about half of that would be covered by existing government spending, money from that really high 47% already on Medicare or Medicaid and ObamaCare subsidies. 

But other half of the $400 billion would require new funding sources. For context, the entire budget for the state of California is about $125 billion.  If the gap were to be funded just by a payroll tax, it would require an additional 15% rate.  Last year’s Colorado bill called for a 10% payroll tax and 80% of the people said no, which means even a lot of Democrats didn’t like that idea much.  And this is for a state that already has an estimated total tax rate of about 9.5% percent.

For consumers, the plan is great – absolutely no out of pocket costs.  For providers, just expect Medicare rates across the board.

Even Democratic Governor Jerry Brown has expressed skepticism and a lot of cooperation would be required from the Trump administration, so this is likely not going further than the first barstool where the cowboy sat down next to a duck…

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ALN

Tim Coan, ALN’s CEO, writes an insightful and witty blog three times a week about a variety of topics relevant to independent physician practices.

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