At a time of inflation, California should take a bold step to tame rising health care costs

The word of the year for 2022 could be “inflation”. Air travel prices rose about 40% from a year ago. Food, housing, energy and other prices are also rising. And again, the cost of health care, which accounts for nearly a fifth of our economy, is rising sharply.

Most health insurers in the individual market expect premium increases between 5% and 14% this year, according to Axios, and out-of-pocket costs for family health care are up 10%.

But health care is different from other elements of the consumer price index. There is a way to control health care inflation by providing everyone with quality coverage.

Universal public health care financing—often called single-payer coverage or “Medicare for all”—can cure what ails us both medically and financially.

Single-payer coverage would control health care inflation by eliminating excessive profits and fees, exorbitant drug prices, and the red tape inherent in our current private health insurance system.

Want proof? we have it.

The single-payer advocacy coalition Healthy California Now and the National Health Care Workers Union recently developed a family health care cost calculator for use by individuals and families living in California. It is designed to compare the costs associated with a single-payer program to actual health care costs.

So far, 4,000 families have tried it. Users enter their premium payments for the previous year, employer premium contributions, out-of-pocket expenses and annual income. The calculator then compares their costs under the current system with the projected taxes for a single payer at their income level.

Eighty-seven percent of those who used the calculator found average annual savings of more than $6,000 per household. Medicare beneficiaries were more likely to achieve net savings at a slightly lower average of $5,150 per household. The 13% of households that would not enjoy net savings generally had very low current premium and out-of-pocket costs due to extremely generous health plans or annual incomes exceeding $350,000.

Take five minutes and try this exercise for yourself on the Healthy California Now website.

The results are consistent with economic studies of single-payer health care systems. Most people save with single payer for two reasons. First, single payer lowers total costs by improving coverage by drastically reducing claims and paperwork costs. Second, a single-payer insurance program is financed by a tax plan where everyone contributes, so the burden increases with higher incomes and on corporations who pay their share.

While the divided government in Washington, DC, won’t stop single payer from taking the national stage anytime soon, California is a different story. Our leaders in Sacramento already have the initial steps out of the way, and they have the power to make the single-payer state a reality.

The Healthy California Commission for All, formed by Gov. Gavin Newsom and the Legislature last year, laid out a “unified funding” plan that provides universal coverage and comprehensive benefits for all. Under this plan, out-of-pocket costs and cost-sharing will be eliminated. Instead of payments to private insurers, funding would come from a progressive tax that could easily generate the necessary funds.

The tax plan used in the calculator includes a 2% sales tax on non-essential items plus a payroll tax that starts at incomes of at least $75,000 and a personal income tax that starts at $300,000 a year. Additional taxes will be levied on the state’s wealthiest individuals and corporate profits.

It’s true that some well-paid professionals would be at risk of paying more for single-payer coverage, and the super-wealthy would have to share some of the burden. But in return, all Californians would get a system that guarantees excellent coverage, including long-term care, and a health plan that efficiently and equitably covers health care costs for everyone.

We can fight health care inflation by providing quality care for all, and California can lead the way. The words on everyone’s lips this year should be “Medicare for all.”

©2023 The Sacramento Bee. Visit sacbee.com. Distributed by Tribune Content Agency, LLC.