In the days since California Assembly Speaker Anthony Rendon shelved for the year SB562, which intends to establish a state single-payer health care system, he’s been subject to mass protests and even death threats. The bill’s chief backers, including the California Nurses Association and the Bernie Sanders-affiliated Our Revolution, angrily point to Rendon as the main roadblock to truly universal health care.
They’re completely wrong. What’s more, they know they’re wrong. They’re perfectly aware that SB562 is a shell bill that cannot become law without a ballot measure approved by voters. Rather than committing to raising the millions of dollars that would be needed to overcome special interests and pass that initiative, they would, apparently, rather deceive their supporters, hiding the realities of California’s woeful political structure in favor of a morality play designed to advance careers and aggrandize power.
That may sound harsh. It’s gentle.
Amid an uncertain future for U.S. healthcare, California’s overhaul attempt has galvanized the left and received national attention. But the peculiarities of state law and process remain a mystery, allowing advocates to create a serious gap between the expectations of supporters and the very real obstacles in the way.
There’s a reason that every California single-payer bill in the last 25 years — and there have been at least seven, two of which passed the legislature and were vetoed, so we in the Golden State have seen this movie before — never includes a funding mechanism. It’s not necessarily because of fear of voting for higher taxes, or even the two-thirds threshold to increase a tax in the legislature.
It’s because you can’t do the funding without help from the voters, because of California’s fatal addiction to its perverse form of direct democracy. The blame, in other words, lies with ourselves.
To figure this out, you need only turn to the actual legislative analysis of the Senate bill, which passed in early June. It states very clearly what Rendon alluded to in his announcement shelving SB562: “There are several provisions of the state constitution that would prevent the Legislature from creating the single-payer system envisioned in the bill without voter approval.”
To cut through the clutter, let’s focus on the biggest constitutional hurdle, known as Proposition 98. Passed in 1988, Prop 98 requires that roughly 40 percent of all general fund revenues — money the state receives in taxes — must go to K-12 education. If you include community college spending, it must exceed 50 percent.
Prop 98 was itself a reaction to the notorious Prop 13, which sharply limited state property taxes. It was intended to ensure that education received its fair share of funding. But it also created a budgetary straitjacket that affects virtually anything that costs California money.
The actual Prop 98 budget formula is so byzantine, it is said that only the initiative’s author John Mockler truly understood it, and he died two years ago. And a review of Prop 98 from the Legislative Analyst’s Office this January found that it doesn’t even succeed in its intended purpose of increasing funding for schools. But we know this: if you double the state general fund by putting a single-payer system on budget, at least 40-50 percent of those new revenues have to go to education.
As the Senate legislative analysis states, “Any taxes raised to support this bill would be … subject to the requirements of Proposition 98.” That means that, in order to raise enough money to fund single payer in California, under current law you would have to raise twice as much to satisfy the Prop 98 formula.
Substituting a centralized state program for the skyrocketing premiums people pay today would actually be relatively affordable. But if half the money has to be siphoned off to education, that rationale becomes harder to sell.
Self-appointed experts have countered that the state can suspend Prop 98 with a two-thirds vote of the legislature. This has been done twice in the past, during downturns in the economy. But the suspension can last for only a single year; it would have to be renewed annually to keep single payer going. More important, as the California Budget and Policy Center explains, after any suspension, “the state must increase Prop 98 funding over time to the level that it would have reached absent the suspension.”
So legislators would have to vote year after year to suspend Prop 98, but add more money back to cover it in subsequent years. That backfill would grow with every budget, and over time lawmakers would need to vote for ever-increasing giant tax hikes. If this didn’t return Republicans to power in Sacramento within a few years, some enterprising lawyer would sue the legislature for violating the spirit of Prop 98. Suspension is not politically, legally, or financially sustainable.
There are other obstacles, like a long-dormant state spending cap (the Gann limit) that would only come into play with the massive sums single payer adds to the budget. And of course the state would have to get numerous waivers from the federal government to apply Medicaid and Obamacare subsidy funds to its system, which is, shall we say, unlikely under President Trump. There’s also no actual mechanism currently in law to shift Medicare to the states, and self-insured plans from big employers, which would shift to the state under SB562, by federal law can only be governed at the federal level. Congress would have to fix both of those hurdles.
But just to stick to one point, in order to fund single payer in California, you must loosen the Prop 98 budget straitjacket. There’s no secret decoder ring or safety valve around that. And the only way to truly get it done is with a ballot measure that either overhauls Prop 98 or exempts single payer from the formula.
Anybody with a day’s worth of experience in California government recognizes this. The Senate version of SB562 stated it in black and white. But every single denunciation of Speaker Rendon’s decision to delay the bill fails to mention this reality, that SB562 cannot become law without voter approval.
Sens. Ricardo Lara and Toni Atkins, co-sponsors of SB562, thundered: “California has the chance to lead our nation toward healthcare for all, and we will not turn our backs on this matter of life or death for families.” They never mentioned that their bill is an incomplete step. (They didn’t respond immediately to a request for comment; we will update if and when we hear back.)
The California Courage Campaign pleaded with Democrats in an email blast to “fight for single payer today, not next year.” But Democrats can’t pass single payer today or this year; under state law, ballot measures only occur during statewide elections in even-numbered years. [UPDATE: in a separate message to supporters, the Courage Campaign wrote “it’s certainly true that the Healthy California Act needs more work before it can achieve all our goals” and was more circumspect about the road ahead.] Even the chair of the state Democratic Party, Eric Bauman, insisted that “SB562 must be given the chance to succeed,” even though it, um, can’t succeed.
The California Nurses Association, when not posting “stabbed in the back” imagery in reference to Rendon, called his decision “heartless,” “unconscionable,” and “disingenuous.” But there’s nothing more disingenuous in this debate than failing to level with people that SB562 cannot become law on its own.
Lara, incidentally — or more likely not incidentally — is running for Insurance Commissioner. Toni Atkins, a former Assembly Speaker, wants to become senate president when the current leader, Kevin de Leon, terms out next year. De Leon wants to run for … something; signs at the recent state Democratic Party convention read “Run Kevin Run” even though he hasn’t declared for any higher office. You don’t have to question their commitment to single payer to understand their motives to kick a shell bill without funding to the Assembly and bathe in the glory of the progressive faithful. Lara and Atkins claimed at one point SB562 would get a funding plan before becoming law, but they’ve continued to hide the reality of the necessary ballot measure.
As for outside groups, it’s clear that they have a strategy to make single payer a litmus test issue politically, while never acknowledging the process hurdles. With so many single-payer supporters in California and across the country unaware of the facts, playing this cat and mouse game is at best a sin of omission, at worst the kind of dishonesty that breeds cynicism in the public when it learns it was conned.
When asked straight-up about the obstacles, CNA Director of Public Policy Michael Lighty pointed to language in SB562 that would stall adoption of single payer unless adequate funding was available. He called it “a failsafe mechanism.”
Lighty is implicitly saying that SB562 can never create a single-payer system. The failsafe will always be triggered unless the state constitution gets changed at the ballot, because there will never be enough money under the current iteration of Prop 98. Saying that out loud would depress enthusiasm and lessen CNA’s perceived power. So they hide the ball.
Speaker Rendon is clearly taking the bullet for an Assembly Democratic caucus that is far more moderate than the Senate, and doesn’t want the burden of cleaning up the Senate’s shell bill. On the same day Donald Trump pulled out of the Paris Climate Agreement, the Assembly blocked an extension of the state’s cap and trade bill, and recently rejected legislation popular with progressives to end money bail. Rendon knows his caucus won’t pass anything that looks like single payer, and if they did, Jerry Brown would be likely to veto it anyway.
But those who villainize Rendon without telling the truth to their supporters are not blameless either. The entire debate is one big game of passing the buck, with single payer’s loudest champions earning plaudits from the liberal base but doing nothing to advance universal health care.
If there was real interest in getting single payer done, supporters wouldn’t focus on a shell bill, but would start raising the gobs of money you’d need for the ballot measure, which will come under massive assault from every industry affected by shifting away from for-profit health care (especially because messing with Prop 98 will allow providers to dishonestly claim that single payer “takes money from our kid’s schools”). Just last year, the pharmaceutical industry put over $100 million into stopping an initiative that simply would have limited state spending on prescription drugs to the price paid by the Veterans Administration. Hospitals, doctors associations and insurance companies could spend twice as much to stop single payer. That doesn’t mean it couldn’t win, but advocates don’t seem to want to talk about the fight.
Rendon actually delivered the perfect set piece to shift the conversation to the ballot. Single-payer backers could have said, “If we can’t go through the legislature, we’ll go around them to the people.” But the movement for universal health care has instead devolved into political theater, with no strategy for success. For those who support single payer — and that includes me — it’s not only frustrating, the deceit is an insult to our intelligence.
Michael Lighty, the director of public policy at CNA, responds to Dayen:
If David Dayen had spoken with California Nurses Association, who are the sponsors of SB562, he would know that many of his assumptions about the California single-payer healthcare bill are wrong, his attack on single-payer supporters in California misguided, and his “one true path” analysis false. His outrage is misplaced. The only ones insulted here are the readers of The Intercept, who must wade through opinion masquerading as political intelligence.
First, the assumption that California Assembly Speaker Anthony Rendon will engage on the substance of SB562: Simply put, there is no good faith on Rendon’s part. He knew CNA had developed amendments when he stalled the bill, and his own staff had told us to focus on policy rather than financing, which we were doing with the bill’s co-authors. The Speaker talks of sending the bill back to the Senate but, under the rules, he knows it can only be amended in the Assembly now.
Having submitted extensive, detailed policy amendments in advance of the Assembly Health Committee, we expected to follow the legislative process. We prepared to address financing following policy committee approval. We were working to address all outstanding issues through the regular legislative process. Rendon halted that process, so it is disingenuous to claim the bill is incomplete; the process to complete it was stopped.
The accusation that SB562 is a “shell bill” reveals ignorance of the bill’s polices, status, and the legislative process. Like other significant legislation, including SB32’s cap-and-trade program, which was a 12-page bill, it’s appropriate to delegate some significant decisions to the governing board. For example, Dayen questions the SB562’s non-mandate of Electronic Health Records (EHR). Yet, EHR seems well-suited to regulatory delegation — particularly since an EHR for single payer would not be designed to maximize reimbursements, as they all are now, and so would likely be very different from the current tools.
Dayen’s assertion that the bill cannot become law without a ballot measure approved by voters is an assumption, not a fact. There are ways in the bill to address the constitutional issues posed by both Prop 98 and the Gann limit. Through consultations with the primary sponsor and constitutional legal experts, we are developing these legislative approaches. Those consultations would bear fruit in the legislation if Rendon ends his subversion of the democratic process.
Moreover, Dayen insists, “But we know this: if you double the state general fund by putting a single-payer system on budget, at least 40-50 percent of those new revenues have to go to education.”
No, we don’t know that. We can address those constitutional issues in the bill, and his cost estimate is exaggerated. A reading of the a study from the University of Massachusetts, Amherst, on SB562 would have corrected this mistake. Because of savings for individuals and businesses achieved by eliminating the insurance company premiums, deductibles, and co-pays, and because of slashed expenses in the system as whole by ending the waste, profit, and inefficiencies of the current healthcare industry, the cost is $37 billion less per year than what we spend now — while covering everybody with more comprehensive benefits.
Regarding waivers, there is authority under the Social Security Act for states to administer Medicare, and for the Healthy California plan to become a Part B provider, and provide subsidies under Part D. The Affordable Healthcare Act waivers enable states to improve upon Medicaid coverage and, yes, the Employee Retirement Income Security Act applies to employer-provided health benefits but does not impact programs that raise taxes from employers to fund universal healthcare. In fact, under ERISA states can regulate third-party administrators, which many self-insured employers use. Waiver authority under the ACA is also available to California, and exists in part to enable state single-payer. Congress, then, doesn’t have to do anything else.
In a cruel twist of words, Dayen wrote, “Lighty is implicitly saying that SB562 can never create a single-payer system” — when the reality is the reverse. Californians must receive the federal monies for healthcare for which they are eligible, and utilizing the existing waiver authority, as well as raising the necessary funds — financing options for which are contained in the University of Massachusetts study of SB562, among others — single payer can be implemented in California.
Tell thousands of committed Californians that supporters are doing nothing to advance universal health care when they have turned out to town halls and rallies in Sacramento and around the state, and are knocking on their neighbors’ doors every weekend. Or tell that to the hundreds of organizations including businesses that support SB562. Advocates have held dozens of meetings with legislative staff (including with the Health Committee and Speaker’s staff who knew we were addressing all his concerns before he pulled the plug), utilized the extensive study done by the University of Massachusetts on how to finance SB562, and explored how to obtain the necessary waivers. Despite Dayen’s certainty, Governor Jerry Brown has not taken a position on the bill. The only Democrats Rendon is protecting are those funded by the health insurance companies.
The 100,000 members of the California Nurses Association, part of National Nurses United, see the only inaction here coming from the legislature. As patient advocates committed to Medicare For All, they will not give up until all their patients have the healthcare we need, guaranteed.
Dayen responds to CNA:
To be clear, I assume no good faith on the part of Anthony Rendon. The long history of state Democrats making promises to its progressive base that they subsequently fail to keep has been a hobbyhorse of mine for 11 years. It continues with Rendon covering for corporate Democrats in his caucus, as noted in the original piece. It not only deserves to be called out, I’m usually the one doing it. Here I am writing about Sheila Kuehl’s single payer bill and the importance of moving forward over legislator objections back in 2007.
However, in order to succeed on a goal so long in coming, at a time when the ground really has shifted and opportunities really do exist, you have to be passionate, smart, and clear-minded about the road ahead.
Denying that the political endgame will ultimately involve a ballot measure doesn’t set the movement up well for success. The office of SB562 co-author Sen. Ricardo Lara confirmed to me they recognize the constitutional issues that force a ballot option, joining Phillip Kim, at-large officer in the state Progressive Caucus, and Christine Pelosi, who drafted the single-payer plank of the party platform. Pelosi tweeted specifically, “We have discussed #sb562 for months in the context of needing to pass the bill AND a BALLOT measure to waive Prop98 funding.”
But Michael Lighty calls this an assumption, not a fact. (Though, in an email exchange, he said, “We’ve always acknowledged” that an initiative could prove necessary, and that they’ve done polling and secured verbal fundraising commitments, while maintaining that “the legislature can and should do this.”) Lighty alludes to “ways to address the constitutional issues” and “consultations with legal experts,” but avoids any specifics. This is an important question. It’s a $200 million question, in fact. If you can address Prop 98 and other issues within the bill, you should tell people how. Presumably Rendon didn’t ban the right to talk about single payer within California’s borders. Lighty and his colleagues keep claiming they have all these amendments ready to go to solve every problem raised but won’t show them to anyone. Why?
When I asked Lighty about this, he said, “We’re focused on moving the bill now so (we) haven’t considered steps beyond July 21,” the date of the legislative recess. If anything, that lets Rendon off the hook. Showing that there’s an engaged and committed (and public) process to amend the bill would put the lie to Rendon’s “woefully incomplete” charge. It would pressure Rendon to allow a vote.
So would a bill that came to the Assembly looking like actual policy. Lighty alludes to California’s cap-and-trade program being a 12-page bill, but here’s a better comparison: the aforementioned SB840, last decade’s single payer bill, written by then-Sen. Sheila Kuehl. Here’s the bill text of SB840, compared to the text of SB562. It’s no contest.
While Kuehl envisioned a similar framework of a commission charged with administrating the health care program, she included measures for cost control, patient advocacy, regional planning, quality of care, global budgeting, delivery system improvements, build-out of service networks, incentive payments to recruit health personnel, transition costs, statewide databasing, dispute resolution, fraud prevention, a formulary for prescription drugs, and a lot more. It was a serious bill that set real guidelines for the regulatory board to follow. It thought of almost everything.
SB562 kicks nearly all of these questions to its unelected board. It actually gives the more conservative Assembly first crack at modifying the policy, rather than putting something fully realized forward. SB840 imagined an integrated system; SB562 is a statement of principles that would result in worse policy if enacted.
CNA was the main sponsor of SB840. What changed over the past decade? Why was a legitimate bill substituted for something so vague?
One of the few places where SB562 is specific involves eliminating the Obama-era mandate for electronic health records. CNA and its parent organization National Nurses United have a long history of questioning EHRs, and nurses I’ve contacted agree it can be too overbearing and focused on billing. But there are dozens of state and federal health mandates; why does CNA focus only on this one? Lighty’s response that EHRs need to look different in a single payer world doesn’t scan; You could accomplish that under the existing mandate. Removing the EHR requirement potentially moves the state backwards to pen-and-paper medical record keeping. SB840 actually mandated electronic claims, payments, and records; why the change? And why put something so parochial into a single payer bill? Who benefits from that?
Rendon is politically daft for not allowing the bill to move forward. But CNA has every ability to move forward on their own. Show us the amendments. Fill in the policy. Excise irrelevancies. Be specific about the path forward. Don’t give Democrats an excuse to delay. Under state law, a ballot measure cannot go before voters until November 2018 anyway. There’s time to force Rendon’s hand by making the full, considered case. And you need that time, not only to get buy-in from the legislature, but to build a coalition with a chance of winning.
There’s one area where I will concede to Lighty’s criticism: I should have more sharply made a distinction between hardworking supporters on the ground — the ones making phone calls, knocking on doors, protesting in the streets for health care for all — and the bill sponsors. That’s because I want all that activist work to be in service to something meaningful, not a political litmus test or legislation standing on shaky constitutional ground. This process must not discredit the movement for health care for all. It has to be perfect. There’s time to get there. I hope it does.