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Report Claims 'Unified Financing' Could Save CA $500B Over 10 Years

 |  By John Commins  
   May 03, 2022

The projected savings work under the assumption that state and federal funding would be the same as under the current fragmented financing system.

A final report from California Gov. Gavin Newsom's Healthy California for All Commission claims that that the Golden State could save 40,000 lives and more than $500 billion over the next decade if it adopts single-payer.

"The commission found that, absent a shift to unified financing, California will spend $158 billion more annually on healthcare in 2031, approximately 30% more than baseline spending," the report said. "By contrast, residents, businesses, and government agencies would save money within the first year of the new system — and those benefits would increase over time."

The projected savings work under the assumption that state and federal funding would be the same as under the current fragmented financing system, and that that savings would funnel down to employers and families. The commission suggested that a portion of the projected $500 billion in savings generated by single-payer could be used to fund long-term care services for every resident of California.

Under the commission's framework a "unified financing system" would:

  • Provide universal entitlements for all Californians for a standard package of healthcare services that could include long-term care support and services, which would relieve the growing burdens on millions of families;
     
  • Allow no variance for entitlements based on age, employment status, disability status, income, immigration status, or other characteristics; and
     
  • Eliminate distinctions among Medicare, Medi-Cal, employer-sponsored insurance, and individual market coverage.

The report said the next big step for single-payer would be to engage the federal government to set the parameters for funding and undertake steps for legislative approval in California. However, the most-recent attempt to advance a single-payer bill in the California Assembly stalled in January after the bill's sponsor -- Assemblymember Ash Kalra (D-San Jose) -- conceded he didn’t have the votes.  

As for the fate of commercial health plans, the report offers no firm recommendations, but suggests that huge savings would be generated by the reduction in administrative costs if payers are still around after the transition to single-payer, they could be relegated to administrative roles.

“The commission found that, absent a shift to unified financing, California will spend $158 billion more annually on healthcare in 2031, approximately 30% more than baseline spending. By contrast, residents, businesses, and government agencies would save money within the first year of the new system — and those benefits would increase over time.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The commission suggested that a portion of the projected $500 billion in savings generated by single-payer could be used to fund long-term care services for every resident of California.

The report said the next big step for single-payer would be to engage the federal government to set the parameters for funding and undertake steps for legislative approval in California.

However, the most-recent attempt to advance a single-payer bill in the California Assembly stalled in January after the bill's sponsor conceded he didn’t have the votes.  

The report suggests that huge savings would be generated by the reduction in administrative costs.

If commercial payers are still around after the transition to single-payer, the commission suggested that they be relegated to administrative roles.


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