Senator Sheila Kuehl's single-payer health plan (SB 840), which she and the California Nurses Association are touting as superior to the governor's plan, would result in a $42 billion shortfall in its first full year of implementation, according to a review by the legislative analyst.
In a letter to Senator Dick Ackerman, the analyst says: "Subject to the assumptions and uncertainties described further below, we estimate that the SPP (single-payer plan) would result in state costs of $109 billion for six months of coverage beginning January 1, 2011, and $210 billion in 2011-12, the system's first full year of operations. The SPP would also result in revenues of $80 billion in 2010-11, also beginning January 1, 2011, and $167 billion in 2011-12. Therefore, we project that expenditures would exceed revenues by $29 billion in 2010-11 and $42 billion in 2011-12.
"We also estimated the potential fiscal effects under the SPP based on two alternate sets of assumptions. Under one alternate set, a 'better case scenario,' we assumed significantly lower administrative costs, somewhat lower utilization of health services, and a slower health inflation growth rate. Under the second alternate set, a 'worse case scenario,' we assumed higher administrative costs, utilization of services, and health cost growth. In both of these scenarios, we regard these assumptions as possible but less likely than those used in developing the estimates (cited above). Under both scenarios, expenditures exceed revenues. In the better case scenario, the shortfall in 2011-12 was about $23 billion smaller than the estimate (of $42 billion). Under the worse case scenario, the shortfall was about $23 billion larger in 2011-12."
Click here for the full text of the report.
SB 840 passed the Senate by a 23-15 vote on June 6, 2007, and was approved by the Assembly Health Committee on July 9, 2007. It is now in the Assembly Appropriations Committee.
Cal-Taxletter June 20, 2008
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