LAO Releases Cost Analysis of Single-Payer Health Care Proposal

This week, the Legislative Analyst’s Office (LAO) made public its fiscal analysis on AB 1400 by Assembly Member Ash Kalra. Recall, the measure would have created a single-payer health care delivery system known as “CalCare.” A companion measure, ACA 11, would establish a financing mechanism for CalCare by imposing a excise tax, payroll tax, and personal income tax.

The Assembly Rules Committee requested the LAO to analyze financing and other considerations associated with CalCare, including a review of barriers relevant to the implementation, feasibility, and sustainability of CalCare. Of note, the LAO tags the CalCare proposal with a cost of $494 billion to $552 billion with cost growths around $20 billion to $30 billion annually.

Compared to statewide health care expenditures under the current and existing system, the LAO estimates that CalCare could reflect an increased cost of $9 billion (2 percent) to $67 billion (14 percent). Nearly all private health care expenditures would no longer be present under CalCare and generally be replaced with public expenditures on health care.

Of note, AB 1400 failed earlier this year after Assembly Member Kalra opted not to bring up the bill for a vote on the final day of Legislature’s two-year bill deadline. As such, the measure will not move forward for the remainder of the legislative session.

The full LAO analysis is available here.