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California Democrats propose $163 billion tax hike to fund single-payer health care

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California Democrats propose $163 billion tax hike to fund single-payer health care

January 07, 02:00 PM January 07, 02:00 PM

Democratic lawmakers unveiled a plan Thursday to fund what could be the nation’s first universal healthcare program, announcing a proposal that would increase taxes for certain individuals and businesses to fund government-run healthcare for all Californians.

The new measure proposes increasing taxes for certain individuals and businesses across the state, depending on individual income and business revenue and size.

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Proponents of single-payer healthcare said Thursday that the financing proposal would save California residents and employers money in the long term by stripping back tens of billions of dollars in administrative costs and lowering per-patient spending, despite the increase in taxes upfront.

“The reality is that our healthcare system has been broken for decades and has gotten increasingly more costly with California workers and employers more and more picking up the tab of spiraling out of control costs,” Assemblyman Ash Kalra, D-San Jose, the proposal’s principal author, said Thursday. “This is not the norm anywhere else but here in our country.”

“The public financing options suggested today are only a fraction of what current Californians and employers are paying for,” he later added.

Specifics of the financing plan include raising taxes for individuals making more than $149,500 a year, with marginal increases spanning from 0.5% for those making the baseline amount to up to 2.5% for those making over $2.48 million.

For businesses, the plan would impose a 2.3% excise tax for any gross receipts exceeding $2 million. It would also create a new payroll tax that would require employers with 50 or more employees to pay 1.25% of total annual wages and compensation. An additional payroll tax would be imposed on employers whose employees make more than $49,900 annually.

According to CalTax, the proposal would be the largest tax increase in state history, culminating in an increase of nearly $163 billion per year. The organization said Thursday that the estimates outlined in the proposal “do not appear to account for the exodus of business and individual taxpayers that likely would occur.”

“This measure would add to the cost of living in California and lead to job losses, without any guarantee that the $163 billion in new taxes would benefit anyone,” CalTax President Robert Gutierrez said in a statement Thursday.

In February 2021, Kalra introduced Assembly Bill 1400, which initially outlined the plan for a single-payer healthcare system for all California residents called “CalCare.” The bill is sponsored by the California Nurses Association, which rallied outside the Capitol on Thursday to support universal healthcare for all.

“We need a healthcare system in California built around patient care, instead of a system dedicated to making profit for health care corporations,” the CNA said Thursday. “It’s time for Assembly leaders to pass AB 1400 now.”

When the bill was first introduced, legislators did not have a funding plan and the bill never received a committee hearing. With a financing plan in tow, AB 1400 is set to go before the Assembly Health Committee on Jan. 11.

On Thursday, Assemblyman Jim Wood, D-Santa Rosa, the chair of the Assembly Health Committee, announced he would vote to advance the bill when it is heard next week.

“As chair of the Assembly Health Committee and author of multiple major health care reform and affordability bills that have been signed into law, I continue to feel the frustration, desperation and, quite frankly, the anger that many Californians experience in their efforts to access quality and affordable health care,” Wood said in a statement Thursday.

Because the bill was introduced last year, it must pass the policy committee by Jan. 14 and the Assembly by Jan. 31 to meet legislative deadlines. The bill is likely to face pushback from opponents to the funding proposal, a few of which voiced opposition shortly after the measure was announced Thursday.

“The Legislature’s majority party just voted to move a radical single-payer bill forward without an independent cost analysis,” Assemblyman Jordan Cunningham, R-Paso Robles, vice chair of the Assembly Rules Committee, said Thursday. “This reckless move puts our state’s entire budget at stake, including education funding, and puts millions of seniors’ Medicare at risk.”

During his remarks at the Capitol on Thursday, Kalra recalled Gov. Gavin Newsom’s previous support for universal healthcare when he campaigned for governor in 2018. Newsom has not publicly supported any single-payer bills during his time in office, however, and has yet to comment on any of Kalra’s single-payer bills.

During Thursday’s news conference, Kalra said the passage of AB 1400 would set California as an example to “show the rest of the country how to take care of one another and create a healthcare system that focuses on patients over profits.”

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