This post was originally published on The Intercept.
In the days since California Assembly Speaker Anthony Rendon shelved for the year SB562, which intends to establish a state single payer health care system, he’s been subject to mass protests and even death threats. The bill’s chief backers, including the California Nurses Association and the Bernie Sanders-affiliated Our Revolution, angrily point to Rendon as the main roadblock to truly universal health care.
They’re completely wrong. What’s more, they know they’re wrong. They’re perfectly aware that SB562 is a shell bill that cannot become law without a ballot measure approved by voters. Rather than committing to raising the millions of dollars that would be needed to overcome special interests and pass that initiative, they would, apparently, rather deceive their supporters, hiding the realities of California’s woeful political structure in favor of a morality play designed to advance careers and aggrandize power.
That may sound harsh. It’s gentle.
Amid an uncertain future for U.S. healthcare, California’s overhaul attempt has galvanized the left and received national attention. But the peculiarities of state law and process remain a mystery, allowing advocates to create a serious gap between the expectations of supporters and the very real obstacles in the way.
There’s a reason that every California single payer bill in the last 25 years — and there have been at least seven, two of which passed the legislature and were vetoed, so we in the Golden State have seen this movie before — never includes a funding mechanism. It’s not necessarily because of fear of voting for higher taxes, or even the two-thirds threshold to increase a tax in the legislature.
It’s because you can’t do the funding without help from the voters, because of California’s fatal addiction to its perverse form of direct democracy. The blame, in other words, lies with ourselves.
To figure this out, you need only turn to the actual legislative analysis of the Senate bill, which passed in early June. It states very clearly what Rendon alluded to in his announcement shelving SB562: “There are several provisions of the state constitution that would prevent the Legislature from creating the single-payer system envisioned in the bill without voter approval.”
To cut through the clutter, let’s focus on the biggest constitutional hurdle, known as Proposition 98. Passed in 1988, Prop 98 requires that roughly 40 percent of all General Fund revenues – money the state receives in taxes – must go to K-12 education. If you include community college spending, it must exceed 50 percent.
Prop 98 was itself a reaction to the notorious Prop 13, which sharply limited state property taxes. It was intended to ensure that education received its fair share of funding. But it also created a budgetary straitjacket that affects virtually anything that costs California money.
The actual Prop 98 budget formula is so byzantine, it is said that only the initiative’s author John Mockler truly understood it, and he died two years ago. And a review of Prop 98 from the Legislative Analyst’s Office this January found that it doesn’t even succeed in its intended purpose of increasing funding for schools. But we know this: if you double the state General Fund by putting a single payer system on budget, at least 40-50 percent of those new revenues have to go to education.
As the Senate legislative analysis states, “Any taxes raised to support this bill would be… subject to the requirements of Proposition 98.” That means that, in order to raise enough money to fund single payer in California, under current law you would have to raise twice as much to satisfy the Prop 98 formula.
Substituting a centralized state program for the skyrocketing premiums people pay today would actually be relatively affordable. But if half the money has to be siphoned off to education, that rationale becomes harder to sell.
Self-appointed experts have countered that the state can suspend Prop 98 with a two-thirds vote of the legislature. This has been done twice in the past, during downturns in the economy. But the suspension can last for only a single year; it would have to be renewed annually to keep single payer going. More important, as the California Budget and Policy Center explains, after any suspension, “the state must increase Prop 98 funding over time to the level that it would have reached absent the suspension.”
So legislators would have to vote year after year to suspend Prop 98, but add more money back to cover it in subsequent years. That backfill would grow with every budget, and over time lawmakers would need to vote for ever-increasing giant tax hikes. If this didn’t return Republicans to power in Sacramento within a few years, some enterprising lawyer would sue the legislature for violating the spirit of Prop 98. Suspension is not politically, legally, or financially sustainable.
There are other obstacles, like a long-dormant state spending cap (the Gann limit) that would only come into play with the massive sums single payer adds to the budget. And of course the state would have to get numerous waivers from the federal government to apply Medicaid and Obamacare subsidy funds to its system, which is, shall we say, unlikely under President Trump. There’s also no actual mechanism currently in law to shift Medicare to the states, and self-insured plans from big employers, which would shift to the state under SB562, by federal law can only be governed at the state level. Congress would have to fix both of those hurdles.
But just to stick to one point, in order to fund single payer in California, you must loosen the Prop 98 budget straitjacket. There’s no secret decoder ring or safety valve around that. And the only way to truly get it done is with a ballot measure that either overhauls Prop 98 or exempts single payer from the formula.
Anybody with a day’s worth of experience in California government recognizes this. The Senate version of SB562 stated it in black and white. But every single denunciation of Speaker Rendon’s decision to delay the bill fails to mention this reality, that SB562 cannot become law without voter approval.
Senators Ricardo Lara and Toni Atkins, co-sponsors of SB562, thundered: “California has the chance to lead our nation toward healthcare for all, and we will not turn our backs on this matter of life or death for families.” They never mentioned that their bill is an incomplete step. (They didn’t respond immediately to a request for comment; we will update if and when we hear back.)
The California Courage Campaign pleaded with Democrats in an email blast to “fight for single payer today, not next year.” But Democrats can’t pass single payer today or this year; under state law, ballot measures only occur during statewide elections in even-numbered years. Even the chair of the state Democratic Party, Eric Bauman, insisted that “SB562 must be given the chance to succeed,” even though it, um, can’t succeed.
The California Nurses Association, when not posting “stabbed in the back” imagery in reference to Rendon, called his decision “heartless,” “unconscionable,” and “disingenuous.” But there’s nothing more disingenuous in this debate than failing to level with people that SB562 cannot become law on its own.
Lara, incidentally — or more likely not incidentally — is running for Insurance Commissioner. Toni Atkins, a former Assembly Speaker, wants to become Senate President when the current leader, Kevin de Leon, terms out next year. De Leon wants to run for… something; signs at the recent state Democratic Party convention read “Run Kevin Run” even though he hasn’t declared for any higher office. You don’t have to question their commitment to single payer to understand their motives to kick a shell bill without funding to the Assembly and bathe in the glory of the progressive faithful. Lara and Atkins claimed at one point SB562 would get a funding plan before becoming law, but they’ve continued to hide the reality of the necessary ballot measure.
As for outside groups, it’s clear that they have a strategy to make single payer a litmus test issue politically, while never acknowledging the process hurdles. With so many single-payer supporters in California and across the country unaware of the facts, playing this cat and mouse game is at best a sin of omission, at worst the kind of dishonesty that breeds cynicism in the public when it learns it was conned.
When asked straight-up about the obstacles, CNA Director of Public Policy Michael Lighty pointed to language in SB562 that would stall adoption of single payer unless adequate funding was available. He called it “a failsafe mechanism.”
Lighty is implicitly saying that SB562 can never create a single payer system. The failsafe will always be triggered unless the state constitution gets changed at the ballot, because there will never be enough money under the current iteration of Prop 98. Saying that out loud would depress enthusiasm and lessen CNA’s perceived power. So they hide the ball.
Speaker Rendon is clearly taking the bullet for an Assembly Democratic caucus that is far more moderate than the Senate, and doesn’t want the burden of cleaning up the Senate’s shell bill. On the same day Donald Trump pulled out of the Paris Climate Agreement, the Assembly blocked an extension of the state’s cap and trade bill, and recently rejected legislation popular with progressives to end money bail. Rendon knows his caucus won’t pass anything that looks like single payer, and if they did, Jerry Brown would be likely to veto it anyway.
But those who villainize Rendon without telling the truth to their supporters are not blameless either. The entire debate is one big game of passing the buck, with single payer’s loudest champions earning plaudits from the liberal base but doing nothing to advance universal health care.
If there was real interest in getting single payer done, supporters wouldn’t focus on a shell bill, but would start raising the gobs of money you’d need for the ballot measure, which will come under massive assault from every industry affected by shifting away from for-profit health care (especially because messing with Prop 98 will allow providers to dishonestly claim that single payer “takes money from our kid’s schools”). Just last year, the pharmaceutical industry put over $100 million into stopping an initiative that simply would have limited state spending on prescription drugs to the price paid by the Veterans Administration. Hospitals, doctors associations and insurance companies could spend twice as much to stop single payer. That doesn’t mean it couldn’t win, but advocates don’t seem to want to talk about the fight.
Rendon actually delivered the perfect set piece to shift the conversation to the ballot. Single payer backers could have said, “If we can’t go through the legislature, we’ll go around them to the people.” But the movement for universal health care has instead devolved into political theater, with no strategy for success. For those who support single payer — and that includes me — it’s not only frustrating, the deceit is an insult to our intelligence.
This post was originally published on The Intercept.