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A bill that would have created a first-of-its-kind, universal health care system died in the California state legislature on Monday after progressive Democrats failed to secure the necessary support for the legislation.
Democratic Assemblyman Ash Kalra, the sponsor of Assembly Bill 1400, said he shelved the proposal to establish a government-funded, single-payer health care system after realizing he lacked the 41 votes needed for the bill to advance out of the Assembly– a defeat that comes after moderate Democrats sounded the alarm over the hefty $391 billion-a-year price tag.
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“It became clear that we did not have the votes necessary for passage, and I decided the best course of action is to not put AB 1400 for a vote today,” Kalra said in a press release. “Although the bill did not pass the Assembly by today’s deadline, this is only a pause for the single-payer movement.”
If the bill passed, California would have become the first state in the country to have a universal, single-payer health care system.
California Gov. Gavin Newsom leaves a news conference after unveiling his proposed $286 billion 2022-2023 state budget during a news conference in Sacramento, Calif., Monday, Jan. 10, 2022. (AP Photo/Rich Pedroncelli / AP Newsroom)
One of the biggest obstacles is cost: A study of a 2017 proposal to establish single-payer health care in California found that it would cost about $331 billion, roughly $356 billion today when adjusted for inflation. California’s entire budget this year, by comparison, is $263 billion.
Still, the state is already on track to spend $517 billion for health care expenditures this year, according to a separate analysis from the University of California Berkeley Labor Center, including $222 billion in household and employer costs.
In order to fund the measure, lawmakers planned to pair the bill with a separate measure that would dramatically raise taxes on wealthy Californians and well-off corporations in the state.
A recent analysis from the Tax Foundation, a non-partisan group that generally advocates for lower taxes, found that the proposed constitutional amendment would increase taxes by roughly $12,250 per household in order to fund the government-funded health care system. In all, the tax increases were designed to raise an additional $163 billion per year, which is more than California raised in total tax revenue any year before the pandemic.
The release of 2 million to 4 million gallons of untreated sewage into the Dominguez Channel has forced the closures of some beaches on Friday, Dec. 31, in Los Angeles County Carson, CA. ((Photo by Brittany Murray/MediaNews Group/Long Beach Press-Telegram via Getty Images) / Getty Images)
The proposal included three main revenue raisers, according to Jared Walczak, a fellow at the Tax Foundation: Higher income taxes on wealthy Americans, a payroll tax on certain employees’ wages for large companies, and a new gross receipts tax.
The taxes would have funded government-run health care for all Californians, which supporters say would offset the costs of higher taxes and would save money in the long run.
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Walczak noted the proposed tax increases come as California grapples with a high number of residents who are leaving for red states with lower tax burdens. A separate Tax Foundation analysis based on Census Bureau data shows that California’s population actually declined 0.8% in 2021, even as states with lower taxes saw their populations increase.
“Practically doubling state taxes—even if the burden is partially offset through state-provided health coverage—could send taxpayers racing for the exits,” Walczak wrote.
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