Free Stuff Don’t Come Cheap

California has a tough financial future. Their employee pension program is underfunded by tens of billions. Their business environment has gotten increasingly poor. They have one of the highest ratios of inequality in the country. So what to do?

Triple the budget, apparently:

The latest stop on this magical mystery tour of progressive health care plans is California, where U.S. Sen. Bernie Sanders (I-Vermont) has been campaigning on behalf of a proposed state-run single-payer system. On Monday, state lawmakers in Sacramento got their first look at the price tag for the proposal, which rings in at a whopping $400 billion annually.

The Sacramento Bee notes that, even after accounting for an estimated $200 billion that could be saved by replacing current state-run health programs with the single-payer program, the state would still need to come up with $200 billion annually.

This year’s state budget in California, by the way, is about $180 billion. That means that implementing a single-payer health care system would require doubling (at least) the state’s current tax burden. The analysis of the health care proposal presented to lawmakers on Monday suggests a 15 percent increase to the state’s payroll tax to provide the necessary revenue.

Even accounting for the money employers would “save” by not having to buy insurance, they would still have to come up with $50-100 billion more.

California’s system would be beyond what even the most socialized countries on Earth do. Most “single-payer” systems have some out-of-pocket expenses or private co-insurance. This has a way of keeping costs down. California’s proposed system would pay everything for everyone including illegal aliens. Considering how the costs on … well everything … have been beyond expectations, I would put the cost at more $500-600 billion.

Colorado and Vermont voters overwhelmingly rejected single-payer schemes because of the cost. This one is being put out by California’s state legislature, which is controlled almost entirely by Democrats. So it has a chance of passing. Which means California has a chance of being bankrupt even sooner than expected.

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  1. grady

    This is actually a good example of why we need to leave this sort of thing to the states.  We watch California really screw this up and figure out to not do that in our own state.  If they do pull this off, then other states can copy it.

    Bernie stumping in California?  Didn’t they figure out in the federal election that he could not add?

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  2. AlexInCT

    If they do pull this off, then other states can copy it.

    Careful how you set the conditions for adoption of these insane policies there Grady. They will pull it off, when the feds, which wants to own this chunk of power, bails them out in the short term. By the time others catch on this doesn’t work, we will be stuck with it.

    Don’t take my word for it: look at the laws on the books over the last 5 or 6 decades. How many failures, many of the abject ones, have you seen rolled back? If anything, they doubled down on more of the same stupid, because as Krugman likes to say; they should have pissed away even more money trying to prop up a system that can’t work, because that miraculously would fix it…

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