The Plan to Save Californians $117 Billion a Year by Switching to Single-Payer

The Plan to Save Californians $117 Billion a Year by Switching to Single-Payer

The Plan to Save Californians $117 Billion a Year by Switching to Single-Payer

Why is universal health care seen as prohibitively expensive when the status quo costs far more?


In the public debate over Medicare for All, the first casualty is always the truth about costs, savings, and taxes. And the recent struggle in California over a proposed statewide single-payer health care bill, the California Guaranteed Health Care for All Act, has been no exception. Scouring the media coverage of the bill, also known as AB 1400, you would find a multitude of statistics and figures, but nowhere would you find this simple fact: Under the current system, health care in California will cost an estimated $517 billion in 2022. Many articles have quoted the California Republican party’s objection that AB 1400 would cost $400 billion annually. Given the alternative, that sounds like a deal!

Perhaps supporters of the current system should be asked how they are going to afford that $517 billion cost. How could they possibly justify spending $117 billion more for health care while failing to guarantee health care to every Californian?

Reports from the Healthy California for All Commission, a single-payer health care task force appointed by the state government, estimate that the present system, characterized by huge inequities, coverage gaps, restrictions on access to care, and administrative complexity, will cost an estimated $323–$496 billion more in 2031 than would a single-payer system covering everybody. That means every Californian adult and child would pay $8,000–$12,000 more for health care than we should.

We see the same dynamic in debates over Medicare for All at the national level. In 2020, economists at the University of California–San Francisco reviewed 22 national health care financing studies, and found that 20 of them demonstrated savings through a single-payer model. The nonpartisan Congressional Budget Office, meanwhile, determined that federally Medicare for All would generate $650 billion in savings.

But what about taxes, the favorite scare tactic of those who profit from the current dysfunctional system? According to a study from the Healthy California for All Commission, it turns out that the current cost of health care is the biggest “tax” paid by the middle class—ranging from 25 to 40 percent of a household’s income. Single-payer financing eliminates that burden. Replacing the cost of premiums, co-payments and deductibles with modest public tax increases on businesses and high-income individuals seems like a very good deal. (Under California’s AB 1400, households making less than $600,000 per year would see no more than a 1 percent tax increase.)

And costs are rising at an alarming rate. Under the present system, the average premium for family coverage has increased 22 percent over the past five years and 47 percent over the past 10 years.

Businesses’ health care expenses are going up, as well. It is easy to forget, but businesses pay the largest share of the costs for commercial health insurance. Single-payer is a good deal for them, too: Under California’s AB 1400, businesses of all sizes would see significant savings on health care, even taking the tax increases into account. And small businesses would be exempted from tax increases altogether.

If readers are surprised to hear about the savings from single-payer, chalk it up to the influence of the health care industry, which has been repeating the lie that we cannot afford universal health care since 1993. Because the industry can literally charge whatever it wants now, single-payer represents a direct challenge to its profits and power.

Consider the industry’s ability to set the health policy agenda. Counting lobbying expenditures and campaign contributions, the health care sector spends more on influencing lawmakers than any other industry. A study published in The Journal of the American Medical Association found that between 1999 and 2018 “the pharmaceutical and health product industry spent $4.7 billion, an average of $233 million per year, on lobbying the US federal government; $414 million on contributions to presidential and congressional electoral candidates, national party committees, and outside spending groups; and $877 million on contributions to state candidates and committees.”

Where does all this money come from? It comes from us. It comes from the premiums that workers pay—and the premiums that businesses pay (a common reason cited for withholding wage increases). It comes from the out-of-pocket expenses we pay for prescription drugs, hospitals, and doctors. Our own money goes toward preventing the negotiation of prescription drug prices, or opposing any effort to limit what hospitals, insurance companies, and doctors can charge us.

Our money also goes toward high executive salaries, mergers and acquisitions, and shareholder income. So much so that in the past few years, Wall Street investors have vastly expanded their ownership of health care corporations.

The profits of the biggest health care corporations are obscene: Kaiser Permanente had a net income of $8.1 billion in 2021, a record. The same year, HCA, the largest for-profit hospital corporation, booked $7 billion in profits, while United Health, the largest commercial insurer, reported profits of $17.3 billion. Perhaps because of reporting on the Covid-19 pandemic, the greed of the prescription drug companies is better known: Pfizer and Moderna’s combined sales revenues from Covid vaccines are projected to be $60 billion for 2021 and 2022. Lily, a big diabetes drug supplier, had profits of $22.776 billion in 2021, an increase of 14.6 percent over the previous year. Meanwhile, patients die for lack of insulin, and Congress has so far failed to limit the price of this decades-old drug (as it has failed to limit the price of any prescription drug, which single-payer will do).

Sifting through the scare tactics, misrepresentations, and influence buying of the health care industry reveals a pattern of profiting from human suffering and protecting financial interests at the expense of our health. California, like the rest of the United States, can both save money and address our health inequities by adopting a single-payer system. Yes, we can afford to provide the health care that we need and deserve. In fact, we can’t afford not to.

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