Tag Archives: California

California Dreaming…

Yesterday’s post, and a number of the comments that followed, acknowledged the importance of health insurance to the social safety net, and lamented the resistance of Congressional Republicans to maintenance–let alone extension– of current coverage.

Fortunately, Washington isn’t the only game in town.

With the collapse of anything remotely resembling governance coming from Washington, D.C., California has become the de facto adult in the room. Those of us appalled at Trump’s retreat from environmental protections, for example, take comfort in the fact that California, with its huge and important markets, is insisting upon fuel-efficient cars and other environmentally-sensitive measures.

In healthcare, apparently, California is also proposing to go where Congress won’t.

In the face of the GOP assault on the Affordable Care Act and Medicaid, California is preparing to vote on a statewide single-payer plan. Californians currently spend about $370 billion annually in a typical, insurance-dominated system that leaves 40 percent of the state’s  population uninsured or underinsured. The single-payer measure is working its way through the legislature, and a fiscal analysis was presented to lawmakers and the public last week by the bill’s sponsor and the California Nurses Association.

The analysis was done by a team led by Robert Pollin, the co-director of the Political Economy Research Institute at the University of Massachusetts and a former UC Riverside faculty member. At a Sacramento press conference, he explained how a single-payer system would enable all Californians to be completely covered. That includes 3.7 million currently uninsured residents and another 12 million who are underinsured, meaning they cannot afford their policy’s co-pays and deductibles.

The universal coverage would be paid for by combining all government healthcare subsidies, which accounts for about 70 percent of California’s current spending, and by two proposed tax increases: a 2.3 percent gross receipt taxes on businesses (which kicks in after the first $2 million in earnings and which exempts small businesses); and a 2.3 percent increase in the sales tax, with exemptions for necessities such as food, housing, utilities, and other services.

Those combined revenue streams would raise an estimated $400 billion annually to pay for universal coverage under a single-payer system.

Assuming the law passes, California will actually spend less than it currently does on healthcare, and the average middle-class family will see out-of-pocket costs fall by 9 percent.

Most businesses will also save money, Pollin explained, because they will no longer be paying for their employees’ health care. Even with the proposed gross receipts tax exempting the first $2 million, typical California businesses employing 10 to 19 people would see costs fall by 13.8 percent, he said. Businesses employing 20 to 99 people would see costs fall by 6.8 percent, he said. Businesses employing up to 500 would see costs fall by 5.7 percent, and the 500-plus businesses would see costs fall by 0.6 percent.

The law would establish a system paying hospitals and providers what they are currently paid under the federal Medicare program. That’s about 22 percent less than what private insurers pay. The new system would also negotiate bulk purchases of drugs, and it would achieve the same sort of administrative efficiencies of scale that Medicare has achieved. Medicare’s overhead, as I’ve indicated previously, runs around 3%, while overhead for private insurers (who must market their policies and pay their top management competitive private sector salaries) runs between 22-25%.

As I write this, the measure is not a “done deal.” But a similar bill passed a few years ago, only to be vetoed by then-Governor Schwarzenegger. Assuming passage of the pending measure, it is likely that Governor Jerry Brown will sign it.

California has a bit over 12% of the U.S. population. If it passes single-payer, it will be a game-changer. (Already, New York’s legislature has begun discussing a similar approach.)

This could get very interesting. I’m gaining a new appreciation for federalism.

Socializing Risk, Privatizing Profits: Big Pharma Edition

My friend Fran Quigley has an important article in Truthout about the skyrocketing prices of lifesaving drugs. The current outrage over a steep hike in Epipen prices makes it particularly timely.

As Fran notes, We the Taxpayers provide research dollars to support drug development (socializing the risk that any particular line of research will hit a dead-end). Big Pharma spends more on marketing than on R and D, charges what the market will bear and then some for the drugs it does develop–and pockets the profits.

It is hard to overstate the level of dysfunction in the US medicines system. The headline-producing greed of “pharma bro” Martin Shkreli was just the most dramatic example of a pharmaceutical industry whose patent monopolies grant it immunity from market forces while its political clout shields it from government regulation. Taking full advantage of taxpayer-funded research, drug corporations make record profits, even by Fortune 500 standards, and pay their CEOs as much as $180 million a year. Those corporations spend far more on incessant marketing to consumers and physicians than they do on research — part of the reason they have largely failed to develop new medicines that address the most deadly illnesses and diseases.

The United States is alone among western democracies in not negotiating drug prices. Medicare and Medicaid represent huge portions of pharmaceutical company customers, but Congress has consistently defeated measures that would allow government to use its leverage to bargain on prices. As a result, as Fran points out, “One in every five US cancer patients can’t afford to fill their prescriptions, and many seniors on Medicare are forced to cut their pills in half to stretch their supply.”

Congressional reluctance to push back against inflated prices and unwarranted price hikes can be attributed to politicians’ disinclination to kill the goose that lays the golden egg: each year, Big Pharma ranks among the biggest spenders on both lobbying and campaign contributions.

A ballot initiative in California–the Drug Price Relief Act– is taking aim at this status quo.

The initiative, recently certified by the California Secretary of State as Proposition 61, calls for state agencies to be blocked from paying more for a prescription drug than the price paid by the US Department of Veterans Affairs. Unlike the Medicare program, the VA is free to negotiate the price it pays for drugs and as a result, pays as much as 42 percent less than Medicare and usually significantly lower than state Medicaid programs. The primary force behind the ballot measure, the AIDS Healthcare Foundation, says the law could save Californians hundreds of millions of dollars a year in lower government costs and lower individual co-payments. The California Legislative Analyst Office says it cannot provide an accurate estimate of the savings, concluding that it is impossible to predict how pharmaceutical companies would react to this first-ever restriction on state drug spending…A July 2016 poll conducted by the initiative campaign, Californians for Lower Drug Prices, showed over two-thirds of voters supporting the ballot measure.

Predictably, the measure is being opposed by the pharmaceutical industry, which is pouring big bucks into a campaign against it. It will be very interesting to see what happens–both in other states and nationally–if the ballot measure succeeds.

There’s an old saying that pigs get fed, but hogs get slaughtered. California voters will decide which category best fits Big Pharma.

Stay tuned….


It Isn’t Whether–It’s How

Extremists on the Right constantly complain that religion has been banished from public school classrooms. This, of course, is inaccurate: what the Establishment Clause prohibits is proselytizing–imposing religious beliefs or observances on the “captive audience” that is the public school classroom.

The courts have been careful to distinguish between official endorsement or sponsorship of religion, which is unconstitutional, and instruction about religion, which is not only constitutional, but entirely appropriate. (Try teaching history, or art history, without reference to the immense influence of religious beliefs.)

One of the problems caused by low levels of civic and constitutional knowledge is that some schools have become skittish, avoiding even the appropriate study of religion for fear of lawsuits, while at the other end of the spectrum, schools have simply ignored the line between proper and improper instruction.

But some schools have gotten it right. Modesto, California is one of them.

The course’s inclusive curriculum ensures that it meets constitutional standards. It’s obvious from the design of the course and from emerging evidence that it succeeds in providing a thorough and objective education in world religions. For that reason, it’s a useful example of how religion ought to be taught in schools, if it’s going to be taught at all. And it’s sharply distinct from the Religious Right’s various attempts to insert sectarianism in public classrooms.

Modesto’s course and curricular proposals stand in sharp contrast to the Bible class designed by Hobby Lobby’s owners that has been proposed for use in Mustang, Okla., public schools. Steve Green, the corporation’s current president, called the class “the fourth leg of my personal ministry” and stated that it’s intended to complement his planned Bible museum in Washington, D.C. Legal objections from groups like Americans United have put the class on hold for now, but it could still be implemented in Mustang’s high schools.

If the goal is to have kids know about religion, there are perfectly legal ways to do that. The problems arise when your goal is really to impose your particular beliefs on others.


California–Yes, California!– Shows Us That Government Can Function

Something very strange is wafting in from the Left Coast. I think it is called sanity.

Long derided as the “land of fruits and nuts” and the poster child for official disfunction, California has turned itself into a model for diminished partisanship and adult legislative behavior.

The state has turned a gigantic deficit into a surplus and renounced the toxic partisanship that had regularly led to budgetary gridlock–not to mention the recall of a governor not so many years ago. As the New York Times recently noted,

 But in the past month, California has been the stage for a series of celebrations of unlikely legislative success — a parade of bill signings that offered a contrast between the shutdown in Washington and an acrimony-free California Legislature that enacted laws dealing with subjects including school financing, immigration, gun control and abortion.

The turnaround from just 10 years ago — striking in tone, productivity and, at least on fiscal issues, moderation — is certainly a lesson in the power of one-party rule. Democrats hold an overwhelming majority in the Assembly and Senate and the governor, Jerry Brown, is a Democrat. The Republican Party, which just three years ago held the governor’s seat and a feisty minority in both houses, has diminished to the point of near irrelevance.

Political scientists in the state credit several recent reforms for the turnaround–especially the abandonment of gerrymandering in favor of nonpartisan redistricting. As a result, Representatives are no longer beholden to rabid base voters in deep red or deep blue districts, and thus fearful of “getting primaried.”

Unlike candidates in carefully drawn partisan districts, Republicans running for office in California are no longer  insulated from demographic shifts. That’s particularly important in states like California, where growing Latino and Asian populations tend to vote for progressives. One Republican quoted in the Times article acknowledged that the redistricting–along with changes to a nonpartisan primary system– were “freeing lawmakers from obedience to their party bases.”

Majority rule should reflect the will of real majorities. Gerrymandering has given minority factions a veto over majority preferences–it has enabled a sort of legislative “ju jitsu,” the results of which we have recently seen all too clearly.

Here in Indiana, we can choose to be Texas or we can choose to be California.

We should emulate California, but the signs aren’t auspicious.