Tax hikes for universal health care in California?

Dr. Shura Alexis Moreno sees a patient on Sept. 14, 2021. Jessica Pons for CalMatters

To implement single-payer health care, or not to implement single-payer health care?

That’s the question facing state lawmakers after a group of Democratic legislators on Thursday unveiled a package of bills to create a universal health care program called CalCare. The proposal has already earned better reception than it did last year, when it was tabled without a hearing after lawmakers raised concerns about its lack of a funding source.

Democratic Assemblymember Jim Wood of Santa Rosa said Thursday that he will vote to move the bill forward next week when it’s scheduled to be considered by the Assembly Health Committee, which he leads.

  • Wood: “I continue to feel the frustration, desperation, and quite frankly, the anger that many Californians experience in their efforts to access quality and affordable health care. … Something’s got to give, so next Tuesday, I’ll be voting for change.”

But the funding source — taxes — proposed in a separate bill will likely face an uphill battle. Tax hikes must be approved by two-thirds of lawmakers in both the state Assembly and Senate — a tall order, especially in an election year — and a majority of voters to go into effect. And the doctors’ lobby, insurance industry and business groups are already mobilizing against the bill.

  • Rob Lapsley, president of the California Business Roundtable: This “middle-class tax increase will drive more families into poverty, force more small businesses to close and compel more employers — and jobs — to leave this state.”

Here’s a closer look at how state lawmakers are proposing to pay for universal health care, which state analysts in 2017 estimated could cost about $400 billion annually:

  • A 2.3% excise tax on businesses after their first $2 million in income.
  • A 1.25% payroll tax on employers with 50-plus workers.
  • An additional 1% payroll tax on wages for resident employees earning more than $49,900.
  • A progressive income tax starting at 0.5% for Californians earning more than $149,500, up to 2.5% for people making about $2.5 million annually. (Those rates would also be adjusted for inflation.)

The bills present a conundrum for Gov. Gavin Newsom, who vowed to implement single-payer health care when campaigning for the governorship in 2018. That earned him the backing of powerful groups like the California Nurses Association and progressive activists — and now they want him to make good on his promise, especially after they mobilized to help him defeat the recall last September. An estimated 3.2 million Californians remain uninsured.

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