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Here Comes the Spending Spree!
Steven Greenhut
by

Sacramento

The California Legislature gets its share of national attention for some of the wackadoodle bills that it routinely signs into law. It’s 2019, which means that it’s now illegal for full-service restaurants to provide straws with sodas unless a customer specifically asks for one. Furthermore, water and unflavored milk must now be the default option on kids’ meals at fast-food restaurants. But at least first responders are finally allowed to provide mouth-to-mouth resuscitation to distressed pets — something that previously was limited to licensed veterinarians.

I put most of this weird stuff in the “mild annoyance” category. Life goes on without straws, and the marketplace will no doubt come up with alternatives to plastic ones. (Hemp anyone?) These are win-win laws, actually. Progressive lawmakers can pretend that they are saving the planet or protecting kids’ health. Conservative commentators from outside California can use them as a reminder of what happens when the Republican Party no longer really exists. Everyone else shrugs and adopts some simple workarounds.

But there already are warning signs about what might be coming down the pike now that Gov. Jerry Brown, who would at least veto some of the most hare-brained ideas from his fellow party members, is heading off for his ranch in Colusa County. We’re already seeing signs that former San Francisco Mayor Gavin Newsom, who becomes governor next week, will pursue a far more aggressive spending agenda than Brown ever had.

“Newsom might not be able to accomplish his ambitious campaign goal of bringing government-funded universal health care to California, but his first hires suggest he’s planning something big,” according to a report Wednesday in the Sacramento Bee. The newspaper noted that his top appointees have “spent years advocating to make health care more affordable and expand immigrants’ access to insurance.”

Elections have consequences — and Newsom didn’t hide his support for some type of universal system even though he didn’t embrace the particular plan that Democratic senators approved in 2017. Newsom has strong Democratic supermajorities in the Legislature, where single-payer has become something that every good progressive must support at least in principle. The Bee headline captures it well, noting that his first hires suggest Newsom “has big health care plans.”

It’s worth quickly reviewing that 2017 single-payer proposal. Here was a plan that would dramatically reshape the health-care system in the nation’s most populous state, yet it was short on details and long on posturing. The Senate Appropriations Committee’s own consultants came to this conclusion:

The fiscal estimates below are subject to enormous uncertainty. Completely rebuilding the California health care system from a multi-payer system into a single payer, fee-for-service system would be an unprecedented change in a large health care market. There are numerous uncertainties about how enrollees, providers, employers, and the state would adapt to such a system.

The analysis also predicted “total annual costs of about $400 billion per year, including all covered health care services and administrative costs, at full enrollment.” That’s around three times the amount of the state’s entire general-fund budget.

The Senate committee analysts found that existing government funding would cover about half of that and predicted reductions in health-care spending by employers and employees. Nevertheless, it predicted that “About $200 billion in additional tax revenues would be needed to pay for the remainder of the total program cost. Assuming that this cost was raised through a new payroll tax (with no cap on wages subject to the tax), the additional payroll tax rate would be about 15 percent of earned income.”

It’s hard to put too fine of a point on this: The full Senate approved, on a 23-14 vote, a measure that would have swamped the entire state budget, thrown the health-care system into turmoil, and would have required a tax increase the likes of which Californians have never seen before. Fortunately, Democratic Assembly Speaker Anthony Rendon of Los Angeles, himself a universal-care advocate, termed Senate Bill 562 “woefully incomplete” and rightly complained that it lacked “financing, delivery of care, cost controls, or the realities of needed action by the Trump administration and voters to make SB 562 a genuine piece of legislation.”

Rendon killed the bill and took the guff of Bernie Sanders and others on the left. My theory is the Senate passed the legislation knowing full well that Gov. Brown, who was publicly skeptical of the measure, would veto it. It was a chance at free posturing, but remains an act of supreme legislative irresponsibility. But Newsom will soon be in charge with even stronger majorities. He has an eye on national office, which could mean that he won’t risk his career on something so far-reaching — but it’s clear he wants some kind of universal coverage as a model for a possible presidential campaign. And S.B. 562’s sponsors might bring that same bill back.

Did I mention that the 2017 legislation would have provided “free” health care to anyone who happened to be a “resident” of the state? It’s easy to become a resident, which means that if someone needs some costly surgery they just need to get themselves to California. Then again, as with all socialized medical-care systems, it’s going to be a lot quicker to become a Californian than it is to actually get that procedure that you need. I imagine we’ll have some wild wait times, with wealthy people heading the other direction — to Arizona, Nevada, and even private clinics in Mexico to get treatment.

But it’s likely that the new Democratic administration will try something big. And it already is proposing large social-spending programs. As the Los Angeles Times reported this week, Newsom “will propose spending some $1.8 billion on an array of programs designed to boost California’s enrollment in early education and child-care programs.”

The latest data shows California’s population growth slowing, with a tripling of its net out-migration of mostly middle-class and wealthy people to other states. Those of us who live here put up with a lot in the way of taxes and regulations, but we do put up with it for the state’s many benefits and amenities. But there are limits — and messing up a health-care system that works reasonably well for most people is a clear bright line. Will Newsom try something so far reaching and devastating? It remains to be seen, but the early signals are not encouraging.

Steven Greenhut is Western region director for the R Street Institute. Write to him atsgreenhut@rstreet.org. Follow him on Twitter: @StevenGreenhut.

 

Steven Greenhut
Steven Greenhut
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Steven Greenhut is a senior fellow and Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
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