The Assembly Appropriations Committee voted 11-3 on January 20 to approve AB 1400 (Kalra), proposing a government-run healthcare program that would cost taxpayers an estimated $365.5 billion per year.
The CalTax-opposed bill now moves to the Assembly floor. Because the bill was introduced last year, it has a January 31 deadline for an Assembly vote to advance to the Senate. AB 1400 requires a simple majority vote for passage. A funding measure linked to the bill requires a two-thirds vote but does not face the end-of-the-month deadline.
The committee chair announced that amendments will be made to the bill to make enactment of the single-payer system contingent on passage of a funding mechanism and to require a fiscal report and “further approval by the Legislature.” The amendments were not described in detail, but are expected to be in print soon for public review.
Although the bill proposes to create the largest and most expensive tax increase and government expansion in California history, Assembly Member Ash Kalra waived his opportunity for a public hearing.
According to the committee’s analysis, the “single-payer” program would cost an estimated $356.5 billion per year, based on an economic analysis of prior legislation (SB 562, Lara, of 2017), adjusted for inflation. By comparison, Governor Gavin Newsom’s proposed budget for 2022-23 – for K-12 schools, state universities, healthcare, transportation, corrections, the courts, and every other state program – totals $286.4 billion.
Proponents claim the overall cost would be less than what Californians now pay to private insurers and existing government health programs. Opponents counter that this claim is based on flawed assumptions, and doesn’t account for such things as cost overruns that are common in government programs.
Kalra recently introduced ACA 11 as the funding mechanism for AB 1400, but even under the proponents’ fiscal assumptions, the tax increases in the measure would leave nearly $200 billion in costs uncovered.
The taxes included in ACA 11: a gross receipts tax on California businesses at a rate of 2.3 percent of gross receipts above $2 million for all qualified businesses in the state; a payroll tax on employers and employees (employers with 50 or more employees would pay a 1.25 percent payroll tax rate on wages and other compensation of their employees, and employees earning more than $49,900 in wages or compensation per year would pay a 1 percent payroll tax; a personal income tax increase on income over $149,509 (0.5 percent on income of $149,509 to $299,508; 1 percent on income of $299,509 to $599,012; 1.5 percent on income of $599,013 to $1,299,499; 1.75 percent on income of 0$1,299,500 to $2,484,120; and 2.5 percent on income above $2,484,1221).
ACA 11 also would amend the constitution to allow the Legislature to approve taxes with a majority vote if lawmakers determined the healthcare trust fund needs more money. Additionally, the measure would exclude the billions in new revenue from being considered when calculating the voter-approved minimum school funding guarantee and state spending limit.
ACA 11, which requires two-thirds approval of the Assembly and Senate to be placed before the voters in a statewide election, has not been scheduled for a committee hearing.
Governor Gavin Newsom’s budget for 2022-23 proposes using existing state funds to expand the Medi-Cal program to provide “universal coverage” to more California residents.