Rising Costs and Universal Health Care in California

[courtesy of California Progress Report]

[Editor’s note: These are the remarks Senator Sheila Kuehl delivered to the California Assembly Appropriations Committee on Wednesday on SB 840, her universal health care bill that is making progress towards the Governor’s desk. Kuehl is Chair of the Senate Health Committee.]

As you know, since most of you are co-authors of this bill, SB 840 is California’s plan to establish a functional, modern, universal health care system for the 21st Century.

This bill covers every California resident with comprehensive, affordable health benefits, contains the growth in health care spending while improving quality.

And most importantly it guarantees every patient with total choice of their doctors and hospitals.

Each year health care costs grow 2-3 times faster than wages. The Journal of Health Affairs recently reported that health care spending will nearly double over the next decade. This means that, in 10 years, healthcare will cost 20 cents of every dollar our nation produces.

With that kind of cost inflation, discussions about covering the uninsured are pointless. Our failure to address this problem is close to gross negligence.

In the real world, 50% of bankruptcies are due to medical costs, employers are eliminating benefits if they can, and if not, like so many school districts and other public employers, they may face bankruptcy.

Our own budget crisis is greatly affected by the rising health care costs. The state budget buys a lot of healthcare - directly through public programs and as employers.

If costs grow 2 to 3 times faster than wages, but the taxes that pay for the health care are a function of wages, then we are basically stuck in quicksand - each year sinking deeper and deeper.

In response to exploding health care costs, we are dismantling our system. Not one of us in this room has the level of health care benefits we had 10 years ago – and we’re paying a lot more for what we still have.

The US is now in a state of severe health care rationing. Doctors’ reimbursements are frozen. Coverage for the insured is very fragile and unreliable due to rescission, improper denials, gutted benefits, and growing deductibles. Patients experience shockingly long wait times, shorter hospital stays, fewer specialist visits, limited drug formularies, and rushed doctor visits. And yet…costs keep rising.

In 2005, the Lewin Group completed a financial analysis of the bill which found that the bill would be fully funded in 2006 with a combined payroll tax of about 12%. The report additionally found that the bill would produce savings of about $29 billion in the first year alone, most of which will be spent on insuring the uninsured and improving the health care benefits for all of us.