California

Gavin Newsom Calls for California To Provide Universal Health Care

The plan will rely on giant tax hikes on businesses and Californians.

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California should become the first state in the nation to guarantee universal health care, Gov. Gavin Newsom said Monday as he outlined plans for a $286 billion budget.

The program would be open to all residents of the state, regardless of immigration status. If the legislature goes along with Newsom's plans—some progressive California lawmakers have already introduced a bill to enact the idea—the system would take effect in 2024. Newsom says it will cost about $2.2 billion annually.

Undocumented immigrants account for a large percentage of California residents lacking health coverage. Last year a Berkeley study found that about 3.2 million Californians don't have health insurance, including about 1.2 million who cannot access various state programs because of their immigration status. Most of the rest are eligible for coverage under the state's generous Medicaid program (Medi-Cal) or are able to receive subsidies to purchase insurance through the state-level exchange set up as part of the Affordable Care Act.

Newsom's proposal would do away with the restrictions in Medi-Cal that block undocumented immigrants from the program. The aim is to break down the barriers between various programs that already exist in the state's budget, state Rep. Ash Kalra (D–San Jose) told The Los Angeles Times. "What we're trying to do is get rid of these dozens of buckets of funding—whether it's private insurance, whether it's employer, whether it's Medi-Cal—put it into one bucket," Kalra told the paper.

That will be one expensive bucket. Though Newsom did not touch on how he intends to pay for the program in his speech Monday, the Times reports that the legislative plan would rely on a new 2.3 percent gross receipts tax on businesses earning more than $2 million annually. The plan would also create a new payroll tax that charges workers 1.25 percent of their annual wages. All Californians earning more than $149,000 annually would be hit with an income tax increase, and any resident of the state earning more than $2.5 million would face an additional wealth surcharge of 2.5 percent.

Still, give California progressives some credit for being open about what it will take to pay for such a system. In the past, support for state-level universal health care proposals has collapsed when the cost of the promised benefits became clear. Vermont's attempt to implement a single-payer health care system fell apart in 2014 because the costs were too high. Colorado voters rejected a proposed single-payer system in 2016 when faced with the prospect of increasing payroll taxes by 10 percent to meet the estimated $25 billion annual price tag.

There's no such thing as "free" health care, after all.

One thing Newsom has going for him is a $31 billion budget surplus, which would help defray the program's initial costs. That surplus exists, in part, because of the federal dollars poured into state coffers in the name of pandemic relief—even though most states did not need the help.

It would be a stretch to claim that those federal COVID relief funds were intended to offset the cost of setting up state-level universal health care programs. But politicians are generally good at finding new ways to spend extra cash. (Newsom's budget calls for about $10 billion in new spending next year, according to the Times.)

In California, that means Newsom will get a chance to deliver on one of his major campaign promises from 2018 just before he has to run for re-election later this year. He should thank the pandemic, federal taxpayers, and the nonstop printing press at the Federal Reserve for the opportunity.