I live in New York, and as a result I get to have friends and acquaintances tell me, more or less on a daily basis, that they firmly believe that "healthcare" is a "human right." Or, make that a "basic human right." Mind you, these are very nice and sincere people, and generally quite intelligent as well. They care, deeply -- or at least, they believe that they care deeply -- about the plight of the poor generally, and in particular about the plight of those with health issues who have inadequate "healthcare." (Note that the word "healthcare" for these purposes has very little or nothing to do with whether the subjects in question receive care for their afflictions, and almost entirely relates only to the question of whether the subjects have the unrestricted ability to call upon third parties to pay for that care.) My New York friends find it difficult to comprehend how any person with a minimum level of morality could disagree on this subject. When they learn that the winner of the Ms. USA pageant -- a black woman, no less! -- expressed the opinion that healthcare was a "privilege" rather than a "right," they are horrified, if not outraged.
And God forbid that I should try to engage one of these people by presenting arguments for a different point of view. As you might have gathered from reading this site, I'm not one to acquiesce or remain silent in the face of poorly-reasoned groupthink. Plenty of people have raised their voice at me, or just walked away in a huff. Another friend lost!
But in my case it has never gotten to the level that it reached over the weekend at the convention of the California Democratic Party. That's where, as I reported just yesterday, the crowd raised its middle fingers for a chant of "F**k Donald Trump!", and then proceeded to shout down the likes of U.S. House Minority Leader Nancy Pelosi and California State Assembly Speaker Anthony Rendon for daring to suggest that the state might want to consider a "public option" healthcare law before going all the way to the holy grail of fully-socialized medicine, known as "single payer." Simultaneously, a bill (known as Senate Bill 562) to impose the "single payer" system has been advancing in the California legislature, and declared socialist Bernie Sanders has been criss-crossing California whipping up his fans to support the proposed "single payer" system.
Then, even as I was writing yesterday's post, the Appropriations Committee of the California State Senate went and released a financial analysis of SB 562. The Sacramento Bee has the story here:
The price tag is in: It would cost $400 billion to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday. California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations Committee found. The estimate assumes the state would retain the existing $200 billion in local, state and federal funding it currently receives to offset the total $400 billion price tag.
How does this level of cost compare to the entire existing annual budget of the State of California? The answer is, it is well more. The entire current annual budget is about $180 billion. Thus, implementing the "single payer" system of SB 562 would require more than doubling of all state taxes in California, which, as I am sure you already know, are already among the very highest in the country. Don't worry, there's a proposal to raise the money: impose a 15% payroll tax on everybody in the state. (As I understand it, a "payroll tax" is like an income tax, except without the features that low income people are exempted and high income people pay a higher progressive rate.) For comparison, the current top California income tax rate is only about 13%, and only applies to incomes well above $1 million per year.
Are you surprised that just this one new program could possibly cost so much? Then you haven't been following the issue. For example, as I reported as recently as Saturday, New York also has a "single payer" bill working its way through the state legislature, and the incremental cost of that bill has also been estimated as well more than the entire amount raised by all state taxes currently in existence. (In the case of New York, the estimated incremental cost of the "single payer" bill is $91 billion per year starting in 2019, while the entire take from all existing state taxes as of 2019 is estimated as $82 billion.)
Can anybody do this more cheaply? Well, we can look to see if any other states have had a single-payer healthcare system that got far enough in the legislative process to get costed out. And there are two more such states. Vermont, under Democratic Governor Pete Shumlin, made a run at enacting a single-payer system in 2014 -- indeed, bringing "single-payer" to Vermont was Shumlin's signature issue. As reported by Avik Roy in Forbes here, in late 2014 two consultancies put cost figures on the Vermont proposal, known as Green Mountain Care:
The Shumlin administration, in its white-flag briefing last week, dropped a bombshell. In 2017, under pre-existing law, the state of Vermont expects to collect $1.7 billion in tax revenue. Green Mountain Care would have required an additional $2.6 billion in tax revenue: a 151 percent increase in state taxes. Fiscally, that’s a train wreck. Even a skeptical report from Avalere health had previously assumed that the plan would “only” cost $1.9 to $2.2 billion extra in 2017. In 2019, Costa estimated that Green Mountain Care would have required $2.9 billion in tax revenue vs. $1.8 billion under pre-existing law: a 160 percent increase in revenue.
So Green Mountain Care also was estimated to cost well more than the entire existing take of all state taxes -- about 120% according to one estimate, and about 160% according to the other. Once these numbers came out, Shumlin raised the "white flag" (as Roy puts it) and the proposal went away.
On the cost end, are you starting to notice a pattern here? The cost of these single-payer healthcare proposals seems always to turn out to be something well in excess of the entire existing state tax revenue.
Colorado was no different. Colorado's single-payer plan was called Amendment 69, and it was put to the voters in a referendum that was on the ballot at the same time as the 2016 presidential election. From Megan McArdle at Bloomberg last August:
Building this new entitlement would cost more than 140 percent of the total current state budget. Since there are no plans that I’m aware of for the Colorado state government to stop doing all its other functions, that means that everyone in Colorado would have to take whatever check they are currently sending to their state government, tear it up, multiply the total by 2.4, and write a new check.
In other words, pretty much the exact same story. Meanwhile, while the proposal seemed to be leading in early polls, once the costs were known, it sank rapidly. It ended up losing in a huge landslide, about 80-20. Meanwhile, Hillary Clinton carried the state by about 5 points.
My expectation is that even California is going to come to its senses on this one, angry activist demonstrators or no. But the progressive fantasy will never go away, with the federal government as the ultimate target. After all, the federal government is not subject to normal budget constraints, and has an infinite pile of free money to be used to create perfect justice and fairness in the world. Right? Of course, there are lots of other causes lined up for the infinite money -- curing poverty, ending income inequality, "climate justice" payments, reparations for slavery, etc., etc.