By: Dorothy Cociu, RHU, REBC, GBA, RPA
OCAHU Vice President, Communications & Public Affairs
President, Advanced Benefit Consulting & Insurance Services, Inc.
January, 2018
As reported in the November-December, 2017 issue of the COIN, an urgent notice was published regarding the California Attorney General’s proposed measure to establish a fund for healthcare exempt revenue restrictions, which gave the green light for the state legislature to begin gathering signatures for a single payer health plan.
Attorney General Xavier Becerra (D) issued a formal Title and Summary to Proposed Initiative 17-0019 on October 24, 2017, originally titled The California Healthcare Roadblock Removal Act, now titled “Establishes a Fund for Healthcare in California Exempt from Revenue Restrictions.”
So what does all of this mean?
The California Healthcare Roadblock Removal Act seeks to amend the California Constitution to establish a fund that is exempt from revenue restrictions, and basically would allow the state to enact a measure to impose $400 billion in new and redirected taxes with only a simple majority vote. What would this accomplish? The bottom line is, this is a blatant political move. It is an effort by a lesser known progressive group to eliminate “roadblocks” to future enactment of a single payer system in our great state of California. Without the roadblocks, it paves the way for a possible single payer health plan in California.
The proposed initiative has many purposes. To summarize, the initiative:
- Establishes the “Healthy California Trust Fund”, a health care trust fund independent of the state General Fund.
- Prohibits the use of any funds in the “Healthy California Trust Fund” to be disbursed or loaned for any other purpose other than health care.
- Permits the state to transfer any funds, including federal funds, into the “Healthy California Trust Fund”.
- Amends the California Constitution to circumvent and disregard past voter-approved initiatives, including the requirement of a 2/3 vote of both houses of the legislature to pass tax increases (Prop.13, 1978), the Gann Spending Limit which limits spending from tax revenue (Prop. 4, 1979), the minimum guarantee of state General Fund revenue to education (Prop. 98, 1988) and the state requirement to set aside revenues to pay debts and save for a rainy day (Prop. 2, 2014).
As stated in the update in the last (November/December, 2017) issue, this constitutional amendment would make it easier to increase state tax revenues dedicated to healthcare spending. This measure would have absolutely no limits or oversight. According to Dave Fear, Jr., CAHU President-Elect, this “ is an attempt to remove the reason many elected officials give to single payer zealots when asked if they will support single payer. The answer by many Senators, Assemblymembers and state leaders is: ‘I support single payer, but I don’t think it is fiscally feasible.’ This is one group’s attempt to solve the many problems in trying to enact single payer in California.”
“This is one of the more concerning aspects of the proposed initiative,” stated Jim Morrison, CAHU V.P. of Legislation. “They are so focused on passing Single Payer that they are willing to throw out all checks and balances related to the budgeting process and how new taxes are implemented.”
As you’ll recall from my article in the July/August, 2017 (“The SB-562 Storm Continues to Build… Can We Stop It?”) issue of the COIN, Single Payer in Sacramento is political. I’ll quote some of my comments from that article, below.
“It’s not that the Democrats in our Capitol think SB-562 is a good bill. From everything the California Association of Health Underwriters (CAHU) and others can see, they aren’t all that convinced it’s a good bill… So much so that they didn’t bother to add any financing to the bill in its current form… but that doesn’t seem to matter. They need it, they want it, and they plan to get it… An all-encompassing single payer bill that rolls all health products and services, as well as work comp, into one big government mess. And they have the majority in the legislature to do it.
It’s a world like no other. It’s a world of egos, a world of politics, a world where the majority of the legislators are in their first terms and they want to make a statement. And they don’t care who they take down in the process.
No one wants to go against the party. They all have something to prove, and they teamed up with the Nurses Association, whose union has political motivations, it seems, to go out and try to prove it, at literally any cost. And wow, what a cost. Multiple studies now offer a cool $400 Billion (yes billion with a “B”) price tag, which is more than twice that of the entire current California state budget. Oh, and another important fact, it passed the California Senate in May and was sent to committees in the Assembly, where we have had some brief and temporary relief on, with Senate Speaker Anthony Rendon (D-Lakewood) announcing on June 23rd that he would hold it in committee for now, pending Senate work on the bill and a funding mechanism, but he also stated that he is a true supporter of Single Payer and expects this bill to be on the November, 2018 ballot. So this is far from over….”
And now, with this California Healthcare Roadblock Removal Act initiative, they have a funding mechanism. An initiative that would allow for a way to collect taxes for Single Payer legislation in California.
Yes, some at CAHU are skeptical and feel that this initiative won’t pass, but honestly, I truly feel that with the political environment in Sacramento right now, if this one doesn’t pass, say, for example, because no one knows of this organization or how they will fund the signature gathering, etc., I fear that they will just keep trying, until they find a way to do this!
It’s important to note that the supporters of this measure, and single payer, are mobilizing. Get ready for a big fight the first quarter of 2018! They have opened offices in every county, and some multiple offices in a county, so pay attention, and be ready to respond when we ask you to!
The bottom line is, “this would throw out all the California statutes, constitutional amendments and elections by going around everything that has happened in the state of California since its inception 167 years ago and saying basically, we shouldn’t have to follow those rules because we want to enact single payer,” continued David Fear, Jr. “I agree with David’s points on this,” stated Jim Morrison. “ This group is trying to amend the state Constitution so they can increase the likelihood of getting a Single Payer bill passed.”
This is alarming to CAHU because it makes it easier to enact Single Payer in California and, in a nut-shell, ends the entire health insurance industry! Oh and yes, Agents will be out of a job! If you want to see it in writing, simply read page 16 of the bill! But, don’t worry, agents, because there will be retraining and assistance with job transition! Yay! (And yes, that is complete sarcasm!).
This measure requires the proponents to gather nearly 600,000 signatures by early May. It sounds simple enough, but it may lead to some difficulties. The process of gathering signatures is time consuming and very expensive. Just think about the paid persons with clipboards outside of Target and Home Depot. It is actually difficult to do and most proposals do NOT qualify. The organization that filed the initiative is called “Universal Healthcare for CA, Inc.” a virtually unknown organization, and little is known about any funding that they have to obtain the nearly 600,000 signatures within the allotted 180 days. The CNA (which does have resources- man power and money) is not currently in support of this initiative. So, we could, I suppose, be thankful for that. However, we can’t assume that not knowing who they are or what they are about, or who is funding them or how, is a good thing for agents and the healthcare industry.
“It’s only easy to do if you have millions and millions of dollars to pay people to get those signatures,” stated David Fear, Jr.. “This group is an unknown and unless they partner with a large wealthy group quickly, they will have a tough time qualifying. However, I would not be surprised to see some “enlightened” progressive billionaire step in and help in the process.”
“In most cases,” continued Jim Morrison, “groups like this use professional signature collection firms. This costs money and we do not know what kind of resources this group has at this point.”
This constitutional amendment would make it easier to increase state tax revenues dedicated to healthcare spending. CAHU’s press release on this notified CAHU members that this measure would have no limits or oversight. Why is this lack of limits and oversight such a concern to CAHU? “All business groups, tax payer advocates and many other informed Californians that have nothing to do with the healthcare debate will weigh in on this issue and persuade even the least informed Californians that allowing a group to tax and spend without any control is not a good idea,” commented David Fear, Jr..
Remember, approximately $400 billion is estimated to start a single payer health plan in California. The current entire budget for the state of California, as you’ll recall, is less than $200billion. SB 562 itself contained no funding mechanism or revenue source. “The estimates [in cost] range from $337 to $400 billion for the first year,” commented Jim Morrison. “These are [as we stated] more than double the entire current state budget. In addition, there are major assumptions that the Federal Government will willingly provide all current and future funding for Medicare and Medi-Cal to meet roughly half of the budget. The remaining balance would come from a number of new taxes, including sales, gross revenue and payroll.”
The Senate Appropriations Committee estimated the cost of such system to be approximately $400 billion and estimated a 15% payroll tax increase to fund it. CNA commissioned a funding study which recommended a sales tax which would increase the already highest state sales tax in the country by another 2.3% and would be the biggest sales tax increase in the history of California. In addition to this massive sales tax, which would not alone be sufficient to fund this program, the study proposed a 2.3% gross receipts tax or a 6.6% payroll tax. So, Californians, don’t believe what you read about this being a “free system.” It’s certainly not free. It is in fact, the most expensive state initiative we have ever encountered.
The state Legislative Analyst (LAO – the California Legislature’s Nonpartisan Fiscal and Policy Advisor) is required to prepare a fiscal analysis of all proposed initiatives within 50 days of the Attorney General’s office receiving them. Its analysis of the Initiative indicates that the establishment of a health care fund, in and of itself, would have no notable fiscal effect on the state government. However, the LAO notes, within the first paragraph of its report, that the initiative “would amend the Constitution to allow and facilitate future, but unknown legislative actions that could substantially increase state healthcare spending and associated tax revenues.”
The Single Payer fight is far from over. We have a lot of work ahead of this. If this reaches the ballot, which it likely will, remember, regardless of the facts on our side, the emotions of California Consumers can and will get in the way. They hear “free health care” and they run with it. Consumers don’t check facts. They listen to sob-stories on the news and listen to celebrities, who can afford any health care they want and need, with or without insurance, preach to the masses about how bad our healthcare system is, and how we need single payer. We need to teach them that FACTS DO MATTER, and that we are the ones to bring them to the forefront. And when it comes to a fight, CAHU will not back down. CAHU will fight the fight, and be the grass-roots mechanism to defeat this and any other measure thrown at us.
“Single-payer initiatives have failed in every state. With the recent successful model that was just used to defeat a single payer ballot initiative in Colorado by nearly 80%, CAHU is fully prepared to engage in all related efforts, should this initiative qualify for next year’s ballots in California,” commented Stephanie Berger, CAHU President.
“A large number of items need to fall into place for this to even have a chance,” commented Jim Morrison. “The Federal Government would have to cooperate, several statutes would need to be amended, and a number of new taxes put into place. This faces some significant hurdles to even come close to being implemented. That being said, we must continue to educate and work with our legislators to improve the current system.”
How do we educate the public? Any way and anywhere we can, from Chamber of Commerce meetings to churches, from school functions to social media… We need to remind them that our healthcare system is NOT broken. It could use some improvements, and we know how to do that. We don’t have to trash the entire system and replace it with single payer. There are better options, within our control and within our industry, that can solve the problems.
“I think the best path is to continue to be a valued resource for your clients,” stated Jim Morrison. “Support CAHU to improve the system, and use the tools CAHU has prepared to do so to educate the public.”
Remind them that research has been done, and research shows that our healthcare system is still great, according to California residents. “In statewide polling commissioned by CAHU, results overwhelmingly confirm that Californians are happy with their current health care provided in a public private partnership,” commented Faith Lane, Legislative Advocate for CAHU. “Additionally, even among those who support single payer, 75% become less likely to support it knowing the cost to Californians in new taxes. We are standing on the higher ground should proponents choose to take single payer to the polls next November.”
So, where do we go from here, and how do CAHU members, non-member agents and other industry representatives help in this fight? First, join CAHU if you haven’t already. Check the website for resources to communicate the latest info and key messaging. The CAHU website is updated frequently. CAHU has, and will continue, to provide timely communication on updates, resources such as one page talking points and opportunities to engage members. But you need to be a member, and you need to be involved in this fight, because if you aren’t, we could fail, and we simply can’t afford that.
Author’s Note: I’d like to thank the Board of the California Association of Health Underwriters and California Advocates for their assistance with this article, background information and comments. I’d like to thank individually Stephanie Berger, President, Faith Lane, Legislative Advocate, Jim Morrison, VP Legislation, and David Fear, Jr., President-Elect. Without your assistance, this article could not have been written.
Editor’s Note: The opinions in this article are those of the author and those of the contributing experts. They are not necessarily the opinions of the Orange County Association of Health Underwriters, the California Association of Health Underwriters, or the National Association of Health Underwriters. ##
