By: Dorothy Cociu, RHU, REBC, GBA, RPA, LPRT, OCAHU V.P. Communications & Public Affairs
President, Advanced Benefit Consulting & Insurance Services
It’s a wild time in the world of health insurance in California. As you’ve probably heard, unless you’ve been hiding away in a cave or kept your head under your pillow or the past few months, the health insurance industry and health benefits agents and brokers (as well as ancillary and PC brokers) have been coming to terms with the reality of the world according to the California Legislature; a world that could forever change our careers, our industries, our income, and our futures. We’re faced with the very real, very detrimental, threat of a Single Payer health plan in California; one that doesn’t include any of us in the California broker community. And our clients, the Employers who sponsor health plans, the individuals that purchase it, the seniors that rely on Medicare, are seriously affected by it as well, but it just doesn’t seem to matter…. SB-562 is all about covering everyone, every resident (defined very loosely), with no co-pays, no deductibles, no coinsurance. So how many people do you think may pack up from neighboring states and move to California for free health care? Can the doctors, particularly the specialists, afford to accept the MediCal-like payments?
There would be virtually no more products to sell; no more medical insurance, dental insurance, vision insurance…not even workers’ compensation, as all are part of the bigger than life plan of the Democratic Party in California… A party that is all about the Anti-Trump phenomena, the “Feel the Bern” (Bernie Sanders) movement and the wielding of power in Sacramento.
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….
On Thursday, June 22, 2017, the Orange County Association of Health Underwriters hosted a special Consumer Education and Town Hall meeting in Anaheim on Senate Bill 562, the Single Payer bill, which I chaired. The meeting was an astounding success, selling out in less than 3 days, and when we were allowed by our hosting facility, JT Schmid’s in Anaheim, to add additional attendance in an overflow adjoining room, those seats were also filled in less than two hours! First, I want to thank my committee members, who helped me literally put this program together in one day. So MaryAnn Trutanich, Rob Semrow and Ryan Dorigan, thank you very much. I certainly couldn’t have done it without you. Nor would I have wanted to. It was an action and facts-packed 2-hour program with a whirlwind of information and government insight, like no other that OCAHU has seen. It was intended to be done in July, but on the morning of the Senate floor vote, Rob Semrow and I had a long telephone conversation which resulted in our decision to move this thing forward a month, and offer an “emergency” meeting for our members, the agent community, industry personnel, and our employer clients.
Individual brief presentations were given by speakers and panelists Faith Lane, Legislative Advocate for the California Association of Health Underwriters, Teresa Stark, Director of State Government Affairs for Kaiser Permanente, both who testified at the Senate hearings in April, and a bill overview by Rob Semrow, including a Pros and Cons segment, to set up for the later panel and audience Q&A. It was my honor and pleasure to act as the event Hostess and Panel Moderator.
So why do I say this is political? Don’t we have all the facts on our side? Isn’t the cost of this thing unimaginable, so shouldn’t we feel good about our ability to defeat it? Hardly… Again, the politics…. And oh, my word, you must pay attention here…. The politics…
“It’s a little bit like the twilight zone,” said Teresa Stark. “We have excellent arguments against this bill, nobody really thinks this is a good idea, there’s no financing mechanism, and yet the bill is in the second house. With the politics that are stake here, the bill has taken on a life of its own.”
Comparisons were made to this bill and how it has become symbolic of the resistance, the Anti-Trump movement. It doesn’t seem to matter about the $400 billion price-tag… The democratic party in Sacramento has started to organize around this bill and undoubtedly are using it as ammunition for the 2018 mid-term elections. All of that matters in Sacramento. Legislators are running for higher office. There were references to the Tea Party efforts earlier in this decade, where the Tea Party Republicans took over the party and created a lot of division within the party. Today’s Sacramento climate reminds us of that.
It is indeed about politics. With a political storm we are striving to battle through.
That power, that political motivation, is indeed driving all of this. Would this all be happening if the democrats didn’t hold a 2/3 majority? Of course not. But they do, and it is.
So how do they plan to finance it?
“SB 562 does not currently have a funding source identified within the bill,” stated Faith Lane. “Right now it is kind of a political wish-list that broadly specifies benefits that will be provided through a single payer system in California. However, there are a lot of unanswered questions, including critical components such as funding, administration and oversight.” It is our job, as insurance professionals, to get the answers to those questions, and to share that knowledge with others.
“One of the proposed funding sources was identified in the analysis done by the Senate Appropriations Committee,” continued Faith. “The analysis outlined that the estimated cost of SB 562 would be at least $400 billion per year. This amount is more than double California’s current state budget. This is the amount needed to cover every service the bill promises to provide, including vision, dental, all health care, including MediCal, Medicare, and employer sponsored health plans, and is supposed to go through this one system, run by an unpaid, government- appointed board. This new system is being called the Healthy California System, and it would prohibit any other insurance from existing outside of the single payer system.”
To date there have been a number of fiscal analyses on the bill. “It’s been analyzed so far, using a number of significant assumptions which include the prospect of federal funding. Even if we roll every federal, state and local dollar into this program, we are only half-way there. We still have another $200 billion that is needed. The remaining funding will need to be raised through taxes, because SB 562 promises no premiums, no co-pays, no deductibles, no cost-sharing.” Faith added that “in California, we are constitutionally limited. We cannot deficit-spend like the federal government does. The constraints that would be put on our state budget would be astronomical.”
The Senate Appropriations Committee also estimated that even if the new system absorbed all the money that California employers currently spend on benefits, estimated $50 to $100 billion, and every existing government dollar currently spent on healthcare, California would still be $50 to $100 billion short per year. The committee estimated that this shortfall would need to be raised through a 15% payroll tax with no cap.
The Chamber has deemed it a ‘job killer,’ and rightfully so. But again, these estimates are not contained within the bill itself. “This is a very difficult position to come from, because you’re asking legislators and stakeholders to have kind of theoretical conversation with you, but at the same time, it’s not nothing. Even with these projections, this bill has moved through one house of the legislature.” Faith continued, “this is moving because of the political drivers of the post-Bernie California, and some people think that… this is the only solution.” So we have to be sure that this is not the only solution. As an industry, we have to help educate them, as NAHU has been doing all along, and help them with alternate solutions. Like fixing the problems we have, not destroying the entire system.
Another estimate has come from the bill’s sponsor, The California Nurses Association, who commissioned their own study, using an economist that has been a former advisor to our current Governor Brown. Faith shared, “They are proposing a 2.3% increase in sales tax and a 2.3% gross receipts tax. An alternative payment model identified within their study is adding a payroll tax of 3.3% on both the employer and employee. However, there are some huge errors in their numbers. First of all, they have the population wrong by 3 million– one of many significantly fatal flaws in the study’s credibility.”
Do we want a government-appointed board, which would NOT include any experts in these matters, making decisions on our health care? We are Americans, and we generally like the fact that we can go anywhere for whatever type of care we want. Our insurance may or may not pay for it, but the reality is, if we want it, we can get it.
There’s a lot of talk about the other countries (yes countries, not states) that have single payer systems, but we all know that hasn’t always been the best scenario for the users. In Canada, according to the Frasier Institute’s 2016 report on wait times in Canada, the average wait time is 11.1 weeks for an MRI, a 4 week wait for an ultrasound, 10.6 weeks to see a specialist, and the wait time to go from a general practitioner to a neurosurgeon for neurosurgery was 46.9 weeks! If someone needed brain surgery, a patient could die before the surgery! Is that what we want in California?
The reality is that many of those current single payer systems are now offering or preparing to offer supplemental insurance coverages, so that the users of those systems can come to places like the USA to receive the care they want, when they want it. So why would we want it?
Rob Semrow, VP of Legislation for OCAHU, said “We cannot insure the world. We cannot provide health care for the world. This bill says everyone that lives in the state of California. Words matter in how bills are crafted… Hear what the sponsors say, because they do have a powerful message… In this bill, there is no cost control. The other countries that have single payer have cost controls. This has none.” But still, this is what the Senate is proposing, again with a $400 billion price-tag, and no funding in the bill.
“If you’re going to give everything away for free,” continued Rob, “ I guess those bronze plans you purchased a couple of years ago don’t look so great…[This bill covers] all residents. If I’m sick, why would I go anywhere else than California, who is going to take care of me? Open up the flood gates…”
And we need to think about all of the people, all of the Californians, that would be seriously hurt by this bill. What about those currently enrolled in, or soon to enroll in, Medicare? Not to mention their agents who have helped them to prepare and sell them proper coverages in their retirement years.
“[Agents] would be in the same boat as all of your cohorts. Your business as it is today would cease to exist,” stated Ryan Dorigan, President-Elect of OCAHU, a sales executive of AGA, and a senior care expert. “The state of California is assuming that half of the money will be federal moneys that will be available to the state… The largest program is the Medicare program. The state assumes we’ll get our money back to fund our Medicare programs… There is nothing that will give Donald Trump more pleasure or create a bigger tweet storm than to tell the state of California ‘you want off the Medicare program, you don’t get the Medicare dollars’. That money is not coming back to this state. For us to assume that half the money is coming through those federal moneys, well that is not happening,” continued Ryan. “As Faith said this morning, there is a huge divide right now between the state of California and the federal government. … this is my opinion… not that of AGAs. But this is what I think is the truth.”
“The other key thing is, we’re looking at 13,000 people per day turning 65, and one out of 6 of those lives here In California,” said Ryan, “and they’ve been paying into Medicare through taxes their entire lives, and now that they are finally eligible, you don’t get it… Instead you get an additional $9,200 tax liability to pay for health Insurance for everybody in the State of California. We appreciate your paying into Medicare your entire life, but now that you’re 65, sorry, you’re not going to get that money.” That, indeed, is a bitter pill to swallow for the senior market.
“There seems to be an idea that this is ‘Medicare for all’, and it couldn’t be further from the truth,” Ryan continued. “ It’s not a single payer system. There are co-pays, deductibles, and there is skin in the game…those co-pays are part of the funding mechanism for that federal program. That’s what keeps our waiting lines down at the urgent cares and hospitals…. When folks have copays, deductibles, out-of-pocket expenses, they have skin in the game, and that’s what helps manage the overall cost of the program. We need to look at a system that will help manage those costs. You can’t give things away for free. They will over-abuse the system.”
Over-abuse, lots of people running into our state from neighboring states for free coverage, doctors leaving to practice in other states where they are paid fairly for their professional services…The dismantling of Kaiser Permanente and other prominent organizations… This is more than a whirlwind. This is a tornado; one so large and so powerful that we can’t keep our feet on the ground or our assets in check. This is what our democratic legislature in California is proposing.
Yes, we have a reprieve for a short time due to the Assembly Speaker’s announcement last week (see the CAHU press release and his full statement in this issue of the COIN), but this is not over. We can’t get complacent. We must continue to educate, to fight for our clients and our industry. We have to be prepared for the likelihood of a ballot measure in November, 2018. Oh, and if you want to now go back into that cave or under that pillow, you may want to rethink that and instead, help us do something to prevent the catastrophe… ##
Author’s Note: The views expressed in this article are mine; they do not necessarily represent the views of the Orange County Association of Health Underwriters or California Association of Health Underwriters. So if you want to be mad at someone, you can be mad at me! Better yet, be mad at everyone in Sacramento!
Editor’s Note: Stay tuned to OCAHU and CAHU for more information as it becomes available. If you want to hear more about this bill and single payer, attend OCAHU’s Town Hall Meeting on Thursday, July 27 in Laguna Niguel. It’s free of charge. You may pre-register to guarantee your seat. Information can be found in this issue of the COIN, and at www.ocahu.org.
Originally published in The County of Orange Insurance News (The COIN), July-August, 2017, Published by the Orange County Association of Health Underwriters. Subsequent reprints after with various health underwriter publications.
