SACRAMENTO — What could be the nation’s first universal healthcare system found new life after California Democrats proposed steep tax hikes to pay for it on Jan. 6, prompting strong opposition from insurers, doctors, and Republicans at the start of an election year.
Progressives in California’s Democratic-dominated state Legislature have long called for a universal healthcare system to replace the one that mostly relies on private insurance companies. But their plans have often stalled over questions about how to pay for it in a state with nearly 40 million residents.
Assemblyman Ash Kalra (D-San Jose) proposed an amendment to the state Constitution that would impose an annual tax of 2.3% on businesses that have at least $2 million in annual revenue, plus a 1.25% tax on payroll for companies with at least 50 employees and a 1% tax for those employers who pay employees at least $49,900.
The plan also includes a series of tax hikes on wealthier people, starting with a 0.5% levy on the income of people who make at least $149,509 per year and ending at a 2.5% income tax for people who make more than $2.48 million per year. The California Taxpayers Association, which opposes the bill, says the plan would increase tax collections by $163 billion per year.
Tax Increase Requires Voter Approval
The tax increases have a long way to go before they could become law. First, at least two-thirds of the state Legislature would have to approve them. Then voters would have to OK them in a statewide referendum, possibly this November.
But introducing the tax increases cleared the way for state lawmakers to begin moving a separate bill that would create a universal health care system and set its rules. Democratic leaders scheduled a hearing on that bill next week. And Assemblyman Jim Wood, the influential chair of the Assembly Health Committee, announced he would vote for it — a good sign the bill will make it to the Assembly floor. He is a Democrat from Santa Rosa.
Kalra said California, where Democrats dominate state government, “can show the rest of the country how to take care of one another.”
“Will it be easy? Of course not. There is a reason this has been tried and failed many times before,” Kalra said. ”The status quo is powerful and those who benefit from it are extraordinarily wealthy and influential. But we are not here to represent the upholders of the status quo. We are here to represent those who are suffering.”
Democrats hold all statewide offices in California and have a supermajority in the state Legislature, meaning they can pass anything they want without Republican votes. But to pay for this universal health care system, Democrats will have to convince voters to approve the tax increases. Republicans argued that won’t be easy given the state’s existing problems.
Would You Trust Healthcare to State Bureaucrats?
“It’s a shame that somebody’s bad political calculus could force 40 million Californians into a healthcare system run by the same bureaucrats who can’t figure out how to schedule appointments at the DMV or get unemployment checks issued,” said GOP Assemblyman Jordan Cunningham of San Luis Obispo County.
The bill that would create the universal health care system faces a tight deadline. It must pass the state Assembly by Jan. 31 to have a chance at passing this year. The deadline for the other bill — the one that would pay for everything — is months away.
Universal health care has been debated for decades in the United States, most recently during the 2020 Democratic presidential primary during the campaign of U.S. Sen. Bernie Sanders. But it has never come close to passing in Congress. State lawmakers in Vermont have tried and failed to implement their own universal health care system. And the New York state Legislature has considered a similar plan.
Healthcare, Business, Tax Groups Oppose Proposal
The plan already faces fierce opposition from some of the biggest lobbying groups in the state. The California Chamber of Commerce, the California Hospital Association, the California Medical Association and the California Taxpayers Association all condemned the plan and urged lawmakers to reject it.
“This measure would add to the cost of living in California and lead to job losses, without any guarantee that the $163 billion in new taxes would benefit anyone,” said Robert Gutierrez, president of the California Taxpayers Association.
Protect California Health Care, a coalition that includes the California Medical Association, which represents doctors, and the California Hospital Association, warned the plan would remove “any choice for anyone who might want to select private coverage or opt out.”
“The cost to Californians is unfathomable,” spokesman Ned Wigglesworth said.
Kalra said he knows insurers, some health providers and business groups will focus on the tax increase to try and defeat the plan. But he said “what those groups don’t want to tell you is how much they are charging you right now for health care.”
Kalra: Universal Healthcare Saves Money
Kalra said the average employer pays 9.9% of payroll for healthcare, a figure he said would fall to 1.25% under his plan. He said the average worker making $75,000 per year pays 2.5% of their paycheck to health care, or about $1,875. His plan, he said, would drop that to $250 per year with no deductibles or copays.
“I think that is a hell of a bargain for employers and an even bigger bargain for the workers,” he said.
Wood, the Democratic chair of the Assembly Health Committee, said he still has concerns about the plan.
He said it won’t solve all of the state’s problems. But in announcing he would vote for the bill, he said he echoed the growing frustration of his constituents he said are angry at insurance companies that “tell people what they can and cannot have” and “physicians (that) do not want their decisions or fees questioned by anyone.”
“We have a plethora of health care industry players that I have worked with over the years and, at times, we have made progress with their collaboration and support,” Wood said. “But my experience is that when they push to maintain the status quo, they have lost their way in supporting Californians who depend on them to keep them healthy.”
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