Single-payer advocates in the California legislature simply did not have the votes required to pass AB 1400 out of the state Assembly last week, resulting in a major victory for health insurance professionals across the Golden State. AB 1400 would have eliminated private health coverage in California and replaced it with a single-payer, state-run healthcare system.

Specifically, AB 1400 would have created 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 claimed 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 have negotiated prescription-drug prices on behalf of beneficiaries.

The CalCare Board would have been 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 a designee as a non-voting, ex-officio member. The bill would have required 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 have also established 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 did 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 have also created 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 have raised 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 have raised taxes by approximately $163 billion per year.

Since the bill was introduced in 2021, it was considered a holdover proposal, which means that the bill needed to be passed on the Assembly floor by January 31, the end of the first half of California’s legislative session. While it was successfully passed out of two committees, proponents failed to garner enough “yays” to put AB 1400 on the Assembly floor for a vote. While this was not the first time that Golden State lawmakers have introduced a universal healthcare bill, this is the furthest that such a measure has progressed. This was also the first time that single-payer legislation was passed out of committee with a source of funding.

Instrumental to this fight was NAHU’s California statewide chapter. In addition to the chapter’s extensive lobbying work in the state, over 3,200 health insurance professionals and 859 of their clients in the Golden State participated in an Operation Shout campaign, sending thousands of messages to lawmakers making it clear how harmful AB 1400 would be if passed. To learn more, listen to last week’s episode of the Healthcare Happy Hour featuring California’s VP of Legislation Dawn McFarland and the chapter’s lobbyist Faith Borges.