January 26, 2022

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States Consider Universal Healthcare Ballot Initiatives
Connecticut Announces New Broker-Training Program
California Single-Payer Advocates Attempt to Pass Bill Ahead of Deadline
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California Single-Payer Advocates Attempt to Pass Bill Ahead of Deadline

There are just two days left on the Golden State legislative calendar for lawmakers to consider AB 1400, a bill that would institute a single-payer healthcare system in California. Since AB 1400 is considered a “holdover proposal” from the previous legislative session, it must clear the state’s Assembly by January 31.

The bill would create a new government entity, “CalCare,” overseen by an independent board of directors, that would theoretically provide health coverage to all Californians. CalCare would allow any California resident access to any doctor, regardless of network, and a broad range of medical services. AB 1400 claims that CalCare would push to decrease provider reimbursement to bring prices more in line with the “actual” costs of care. AB 1400 also includes long-term care coverage and services for senior citizens and disabled people, and California residents would be covered by CalCare regardless of immigration status. Additionally, the new government program would negotiate prescription-drug prices on behalf of beneficiaries.

The CalCare Board would be made up of nine voting members with “demonstrated and acknowledged expertise in healthcare” and appointed as provided, plus the secretary of California Health and Human Services or their designee as a non-voting, ex-officio member. The bill would require the board to convene a CalCare Public Advisory Committee with specified members to advise the board on all matters of policy for the single-payer system. AB 1400 would also establish an 11-member Advisory Commission on Long-Term Services and Supports to advise the board on matters of policy related to long-term services.

How do CalCare proponents contend to pay for the program? By introducing a constitutional amendment that would impose a new excise tax on businesses equal to 2.3 percent of any annual gross receipts more than $2 million. AB 1400 would also create a new payroll tax equal to 1.25 percent of total annual wages to be collected from businesses employing 50 or more people, as well as another payroll tax that would be required for employers with workers earning more than $49,900 per year. Regarding personal income tax, the proposed constitutional amendment would raise taxes on salaries exceeding $149,509 annually. All state residents reporting an annual taxable income of greater than $2.5 million would see a new 2.5 percent surcharge, and personal income tax increases to pay for the healthcare plan would likely increase with inflation over time. Overall, the amendment would raise taxes by approximately $163 billion per year.

The Assembly Appropriations Committee, which passed AB 1400 onto the general Assembly floor last week, estimated the annual cost of a state-funded single-payer healthcare system in the Golden State at between $314 billion and $391 billion, with the funding coming through taxes and the reallocation of federal funds currently earmarked for Medicare and Medi-Cal. Now, proponents have just two voting days left to push the legislation through the Assembly: tomorrow and January 31, the deadline itself. If the bill fails to advance by then, it will need to be reintroduced and will likely have greater difficulty passing out of committee a second time.

If you are a health insurance professional based in California, please contact your state assembly member today and urge them to oppose AB 1400!

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