Action Needed: Stop Costly, State-Run Health Care

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The California Chamber of Commerce is urging members to speak out against a costly job killer proposal to establish a government-run, single-payer health care system in California.

SB 562 (Lara; D-Bell Gardens/Atkins; D-San Diego) will cost employers and taxpayers billions of dollars and result in significant loss of jobs in the state.

The financing mechanism for the bill remains unspecified, but is certain to penalize responsible employers and individuals and result in significant new taxes on all Californians and California businesses.

View testimony by CalChamber Policy Advocate Karen Sarkissian detailing the huge financial burden SB 562 will create.

Unsustainable Costs

The nonpartisan Legislative Analyst’s Office estimated in 2008 that a government-run, single-payer health care system would cost more than $210 billion in the first year alone and up to $250 billion annually in subsequent years.

Even with the 12% tax on employers and employees under that proposal, the LAO predicted a net shortfall of $42 billion in the first year the system was implemented and even higher thereafter.

The LAO estimated that just to cover the shortfall would require a tax of 16% on employers and employees—a multibillion-dollar tax increase.

Employer Disincentive

A payroll tax increase such as the one needed to finance SB 562 will have a detrimental impact on businesses in California and discourage companies from locating and establishing business here.

A large payroll tax would penalize responsible California employers and be a deterrent and disincentive to new employers. In addition, payroll tax increases would likely lead to job layoffs as existing businesses and employers would be forced to cut costs to sustain the added new tax burden.

Reduced Service, Access

Although SB 562’s goal of providing health coverage for all Californians is laudable, establishing a single-payer statewide bureaucracy is the wrong approach.

It will lead to significant budget shortfalls year after year that ultimately will require drastic cuts in services, reducing the level and quality of health care and benefits currently enjoyed by millions of Californians.

Government-controlled single-payer systems in Canada and the United Kingdom have led to long wait times to see a physician and fewer choices in doctors and coverage. The same is likely to occur with SB 562.

Under current law, consumers who wish to buy more, less or different coverage than others often can make those choices, just as those who have other priorities can exercise them in the market. Under SB 562, one size fits all, no matter what the individual’s preference might be.

Action Needed

California has made significant progress in providing coverage to its residents. While CalChamber shares the concerns about further increasing access to and affordability of health care, a government-run single-payer health care system will not achieve these goals.

SB 562 will be considered next by the Senate Appropriations Committee; no hearing date has been set.

Contact your senator and members of Senate Appropriations and urge them to oppose SB 562 as a job killer.

Find an easy-to-edit sample letter at www.calchambervotes.com.

Staff Contact: Karen Sarkissian

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Karen Sarkissian
About Karen Sarkissian
Karen Sarkissian joined the CalChamber as a policy advocate for health care and education issues in July 2016. For more than 12 years, she was an attorney at the Sacramento firm of Poswall, White & Cutler, recognized nationally for its success in obtaining favorable outcomes for clients on a wide range of issues. She holds dual B.A.s in political science and rhetoric and communication from the University of California, Davis, and a J.D. from the McGeorge School of Law, University of the Pacific, where she was an author and editor of the McGeorge Law Review.