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Calif.’s $356.5bil government-run health proposal continues moving forward – with one big hitch.

A bill seeking to create a new, single-payer health care system for California residents advanced out of the Assembly Appropriations Committee on Thursday, paving the way for an Assembly floor vote in the next week.

The bill, Assembly Bill 1400, would establish a new health care system, dubbed “CalCare.”

A fiscal analysis from the Assembly Appropriations Committee pegged the annual, on-going costs to maintain the proposed CalCare system at $356.5 billion, with projected healthcare spending for 2021 ranging $314 and $391 billion.

That figure translates to California taxpayers spending 4.5 times the amount budgeted on its still-under-construction bullet train each year.

Funding the system would come via a proposed constitutional amendment, ACA-11, which spells out the various taxes assessed on Californians to pay for the hundreds of billions in annual costs, including:

  • Annual excise tax on businesses with $2 million income of 2.3%
  • Payroll tax for employers with 50 or more resident employees of 1.25%
  • For workers earning more than $49,000 a 1% payroll tax
  • Personal income tax for those earning $149,509 or over

Consideration of the proposal also comes as Gov. Gavin Newsom proposed expanding access to Medi-Cal to all low-income illegal immigrants regardless of age.

The approval on Thursday came in the face of an all-out blitz from business interests hoping to stem another tax on employers, rolling out a letter in opposition featuring an entire page of letterhead:

In advancing the AB1400 out of the Appropriations Committee and to the Assembly floor, an amendment was attached requiring its approval to be linked to the approval of ACA11, its funding mechanism.

The proposed tax hike-via-constitutional amendment must be approved by two-thirds of the legislature, a tall task even with a Democratic supermajority.

Assembly Republicans were quick to excoriate the proposal for its spiraling cost projections, including $163 billion in proposed new taxes.

“With so many unanswered questions remaining, this proposal remains fiscally irresponsible and poor public policy,” said Asm. Vince Fong (R–Bakersfield). “The jaw-dropping price tag of this singular program is more than the entire budget proposal of $286 billion proposed by the Governor.”

“The only way Sacramento Democrats attempt to pay for this government-run health system is with a $163 billion in new taxes on every Californian – an estimated $12,250 per household.”

Even ardent backers of single-payer health structures have argued that AB1400 may require additional work before being presented to voters for approval of its tax funding.

Sunday, Asm. Joaquin Arambula (D–Fresno), an emergency room physician, said that he believed the bill was worth discussing but required additional work to avoid key conflicts with pre-existing private insurance options.

“I think the discussion needs to be had,” he said. “But there’s much more work to be done to answer the tough, thorny questions about financing and what occurs to people who already have health insurance and have been paying their premiums.”

As a two-year bill proposed in 2021, AB1400 (and, by extension, ACA11) must be approved by the Assembly by the end January to maintain consideration in the Legislature for this session.

Reid Stone is a contributing reporter for The San Joaquin Valley Sun.