California spends more than $300 billion in health care costs every year. For perspective, that’s more than Newsom’s entire proposed state budget of $286 billion for the next fiscal year. To cover those health costs, Kalra proposes a new payroll tax on businesses with 50 or more employees equal to 1.25% of total annual wages and a new excise tax on businesses of 2.3% of annual gross receipts in excess of $2 million. But Kalra’s plan relies on the federal government for 70% of the funding, roughly $210 billion annually. The legislation assumes that the federal government would agree every five years to grant waivers so California could tap Medicare and Medicaid money to fund the state’s single-payer system. That’s a huge gamble because California wouldn’t have the resources to make up the difference if leaders in Washington refused to go along.
Editorial: California single-payer bill shows state can’t go it alone | The Sacramento Bee
As this editorial suggests, the scope of the proposed CalCare single payer scheme is ambitious. Perhaps a bit too ambitious. It would be easier to get Medicaid waivers since Medicaid is jointly funded by the federal government and states, giving states the option to opt out. Not so with Medicare. In addition, traditional Medicare is itself designed as a national single payer system. Coverage is not dependent on states and is valid in all states for any provider that accepts Medicare reimbursement.
While the legislative proposal faces stiff opposition from commercial payers and providers — particularly because it would disrupt hospital finances and payment for services by basing them on Medicare reimbursement rates — it might be more practical if its scope was reduced to carve out Medicare.
3/23/2010 