Guest Opinion: A business case for single-payer health


San Francisco Business Times

June 29, 2017

By Dan Geiger and Eric Leenson

What is Warren Buffett’s biggest worry about American competitiveness? The cost of health care. As he put it: “Our businesses [pay] far more for health care — a tax by another name — than those in other countries.” His partner Charlie Munger said, “The whole system is cockamamie ... I think we should have single-payer medicine eventually.” Buffett agrees.

A staggering 18 percent of U.S. GDP is spent on health care. Per capita health care costs are almost double that of the next highest country. American companies spend on average 15 percent of payroll for health benefits. Cockamamie indeed!

The Healthy California Act, SB 562, passed in the Senate but stalled in the Assembly. It is likely to be reintroduced next session.

SB 562 would fix the mess by establishing a “Medicare-for-all”-type financing program that would save residents and businesses billions, while guaranteeing health care for all state residents.

SB 562 would bring down costs by aggregating buying power, simplifying the system, cutting out the middle men and establishing prices that reflect the laws of supply and demand rather than the laws of monopoly power we live under now.

Delivery of care would remain private. The confusion of thousands of insurance policies, manuals, and uncertainties about coverage will end. Everyone would be covered for medically necessary services. Patients would regain choice of doctor and hospital, and doctors would regain autonomy over patient care.

What will it cost, you say? The real question is “how much will it save”?

Don’t be misled by recent headlines about a $400 billion price tag. This claim is based on an incomplete study that left out the “benefit” part of a cost/benefit analysis. A far more comprehensive economic analysis of SB 562 by the University of Massachusetts Amherst found that SB 562 could actually save 18 percent on our health care bill — that’s $73 billion a year. Savings come from lower administrative costs, negotiated drug and provider payments, reducing unnecessary services and fraud and improving efficiency and preventive care.

The plan calls for shifting $225 billion in public funds currently spent on health care (Medicare, Medicaid and tax subsidies), and for generating $106 billion from a 2.3 percent gross business revenue receipts tax (exempting the first $2 million), and a 2.3 percent sales tax that exempts housing, utilities, groceries, while keeping other current exemptions.

All personal and business payments for health insurance and delivery will cease (exhale). According to the study, the benefits are dramatic: No out-of-pocket medical costs means a 9 percent raise on current income for California workers. Small businesses could see a savings of up to 22 percent. Medium sized businesses could save 13 percent, while large ones save 1 percent to 5 percent.

And employers would no longer need to worry about rising insurance premiums, risk management, and administering health benefits. What business executive wouldn’t like that?

Can we afford the Healthy California Act? The real question is: Can we afford NOT to rein in our runaway health care costs and provide health care for ALL Californians?

Dan Geiger