Assembly Constitutional Amendment 11 was introduced last week in the California Legislature to enact significant tax increases to fund universal single-payer health care coverage in California, the Globe reported.
Single payer is a universal state-run healthcare system financed by taxpayers, that covers the costs of healthcare for all residents by a single public system.
Also last week, Assembly Bill 1400, the “Guaranteed Health Care for All” state-run healthcare bill, which has been kicking around the Assembly for several years now, was heard and passed in the Assembly Rules Committee, but not without some strong debate and some would say, rule breaking, or at least blurred lines enough to be a highly dubious passage.
The Tax Foundation reports “this will increase taxes by $12,250 per household, roughly doubling the state’s already high tax collections, to fund a first-in-the-nation single-payer health-care system.”
Previous statewide single payer healthcare proposals elicited estimates of more than $400 billion to implement. The entire 2022-23 state budget proposal is $286 billion.
“The top marginal rate on wage income would soar to 18.05 percent—nationally, the median top marginal rate is 5.3 percent—and the state would adopt a new 2.3 percent gross receipts tax (GRT), at a rate more than three times that of the country’s highest current pure GRT,” the Tax Foundation reported.
“All told, the new tax package is intended to raise an additional $163 billion per year, which is more than California raised in total tax revenue any year prior to the pandemic.”
They explain the new taxes would take three forms:
- Surtaxes atop the current individual income tax structure beginning at $149,509 in income;
- A graduated-rate payroll tax system with the top rate kicking in for employees with more than $49,990 in annual income; and
- A gross receipts tax of 2.3 percent, excluding the first $2 million of business income.
Gov. Newsom has been pushing for single-payer for several years
The Globe reported in July 2019:
California’s largest cities are reporting growing numbers of homeless, drug addicted and mentally-ill transients living on the streets, while Gov. Gavin Newsom is pushing his plan for single-payer “health care for all.” And, with approval from the governor, the California Legislature voted recently to tax California citizens who do not buy health insurance. This penalty revenue will be used to fund health insurance subsidies to encourage more people to purchase health insurance, and to provide health care to illegal immigrants.
Has anything really changed in two-and-a-half years other than more spending?
Gov. Gavin Newsom signed a bill in 2019 allowing illegal immigrants between the ages of 19 and 25 coverage under Medi-Cal, California’s health insurance program for the poor, disabled, and now for those living in the country and state illegally. State officials estimated about 90,000 additional people would quality at a cost of $98 million per year.
Also in late 2019, a three-judge panel with the Fifth Circuit Court of Appeals struck down the federal Affordable Care Act (ACA)’s individual mandate. Immediately, Gov. Newsom issued a statement expressing his disagreement, and then drilled down announcing the launch of the Healthy California for All Commission to develop a plan for creating a Single Payer system in California.
Newsom mocked the reaction over the controversy the Medi-Cal expansion to illegal aliens generated: “To my friends at Fox News, I know we’re keeping you in business,” he said. He promised to continue expanding health coverage to more undocumented people in future years. “Universal health care is a right regardless of immigration status,” Newsom said. “I’m going to get the rest of that done, mark my words, and make progress next year and the year after that.”
As for the latest single payer healthcare system proposal creating the largest bureaucracy in state history, the Tax Foundation said, “And while 16 states either implemented or enacted individual or corporate income tax cuts in 2021, and more are looking to join them in 2022, California policymakers want voters to approve five new surtaxes, with a top rate of 2.5 percent atop the current 13.3 percent top marginal income tax rate and the proposed new 2.25 percent payroll tax, for a combined top marginal rate of 18.05 percent. This is more than 7 percentage points higher than the next-highest rates in Hawaii (11 percent), New York (10.9 percent), and New Jersey and the District of Columbia (both at 10.75 percent).”
The Globe spoke with Assemblyman Health Flora (R-Ripon) after passage of the “Guaranteed Health Care for All” state-run healthcare bill. “That means we are going to charge every taxpaying Californian making over $49,000,” he said. “ACA 11 is the funding source to AB 1400. When they realize they don’t have enough money to pay for this, they can raise taxes on everyone on a simple majority vote. They wrote that right into the bill. But anything fiscal has to be a 2/3 majority vote.”
Read the whole report from the Tax Foundation.
|Sources: ACA 11 (2022); Tax Foundation calculations.|