California lawmakers can’t get their talking points straight when it comes to government-funded healthcare programs. They want to expand them — and there’s always some ongoing effort to convert the entire state to a single-payer system — but whenever more people sign up for existing public programs, they get agitated. The latest example involves Assembly Bill 2729, which would penalize large companies if their employees participate in Medi-Cal, which is the state’s version of the federal Medicaid system for low-income families, seniors, and the disabled.

As the Assembly Committee on Health’s AB 2729 bill analysis explains, “Approximately 14.5 million Californians rely on Medi-Cal as their primary source of care, making it a cornerstone of our state’s healthcare system and a lifeline for working families, children, seniors and people with disabilities.” But it complains that “an estimated 2.5 million Californians remain uninsured, and many more are underinsured or struggle to access the care they need.”

So, if I’m following, the legislature is proud that the state offers such coverage — and wants to find ways to expand coverage to those 2.5-million uncovered Californians. But the bill’s author and supporters also seem concerned that “3.6 million California workers ages 19-64 are enrolled in Medi-Cal, excluding 900,000 self-employed workers.”

One of the bill’s top supporters, SEIU California, argues “that Medi-Cal is intended as a public safety net program, yet many employers evade their responsibilities and shift the cost of job-based health coverage onto taxpayers and the public.” So it’s a great system that provides desperately needed healthcare for Californians, but wouldn’t it be great if so many Californians didn’t rely on it? Or something like that.

Basically, this legislation is a money grab — an attempt to create the Employer Responsibility for Medi-Cal Trust Fund to prop up the system by imposing new taxes and financial penalties on employers. The California Chamber of Commerce understandably opposes the bill. It acknowledges that federal policy has reduced funding for state healthcare programs, but says these taxes will undermine the legislature’s stated goal of lowering costs. Bingo.

California Democrats have pushed an “affordability agenda” to counter the Trump administration’s policies, many of which are indeed inflationary — yet they keep pushing policies that are also inflationary and harmful to working families. And don’t get me started on California policies that drive up the cost of gasoline, utilities, and housing.

“With affordability at the top of the Legislature’s policy agenda, implementing new punishments on employers will disproportionately impact medium-sized businesses that already operate on narrow margins and have limited flexibility to absorb new costs,” the chamber argued. “Faced with additional financial burdens, employers may be forced into hiring freezes, reassess employee hours, or limit company growth — outcomes that could ultimately undermine the economic stability of the very workers the bill seeks to support.”

Trying to force employers to offer healthcare plans would obviously drive up consumer prices. Employees for the large retailers this bill targets often are part-time and seasonal workers, so imposing costly healthcare requirements would be more likely to dry up job opportunities than to create expanded coverage. The legislature tried this approach in 2013 and 2019, but both times the legislature shelved the measures. AB 2729 is still active and under consideration by the Assembly Appropriations Committee, so we’ll see what transpires this year.

Another major healthcare measure has received even more media attention, as it focuses on federal vs. state political battles. A new federal law caps Medicaid provider taxes, which will reduce California’s funding by $8 billion. That’s a serious hit, so last week the full Senate passed Senate Bill 125, which would impose a tax on managed-care organizations to make up the shortfall. Essentially, the legislature is raising taxes on private providers to account for the mandated reduction in taxes for public ones.

A CalMatters report quotes industry experts who suggest the tax could raise premiums by $100 per person per year. And it pointed to the conclusions from the Legislative Analyst’s Office: “This proposal comes with a key trade-off of creating higher costs on health plans, which likely will try to recover … some of this cost by raising premiums on their consumers. … If health plans shift all of the tax onto consumers, the $8.85 per member, per month would reflect around a 1.5 percent increase in average costs for consumers.”

A number of quoted legislators and industry groups are concerned about the bill’s impact on affordability. And, of course, higher healthcare premiums could push more Californians onto the Medi-Cal system, which, as noted above, will provide even more impetus to pass penalties on businesses. Rinse and repeat. As the headline from a recent Los Angeles Times column puts it, “California is teetering on a healthcare cliff, but few are paying attention.” These funding challenges are yet another reminder that there ain’t no such thing as a free lunch.

It might be better if, say, the legislature followed the California Chamber of Commerce’s advice and worked collaboratively with employers to keep prices down rather than listening to public-sector unions and progressive lawmakers who rarely see a tax hike or public program they don’t support. At the very least, California Democrats might want to stop pushing the idea of a single-payer system until they can figure out how to fund the public healthcare systems that already exist.

READ MORE from Steven Greenhut:

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Steven Greenhut is Western region director for the R Street Institute. Write to him at [email protected].

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