Executive Summary
Last year, State Senator Sheila Kuehl (D-Los Angeles) introduced SB-840, the California HealthInsurance Reliability Act, which the State Senate has passed and now awaits debate in the Assembly,
having passed the Assembly Health Committee in summer 2005. SB-840 imposes a Canadianstyle
government healthcare monopoly in California. This briefing paper demonstrates the negative
consequences of such a system, and advances consumer-directed health care as an alternative.
SB-840 is supported analytically by a report from the Lewin Group, a consulting firm in Virginia.
The Lewin Group’s report claims that SB-840 will result in monetary savings, but avoids other
costs that government monopoly imposes on health care. Remarkably, less than five years ago,
the same Lewin Group wrote a critical analysis of single payer health care in Canada that warns
Americans against adopting such a system, because “the cost savings could be associated with a
decline in quality of care and an upsurge in negative public opinion.”
Californians will pay too great a price to realize the small monetary benefits of SB-840 – about 4
percent of current health spending. In June 2005, the Canadian Supreme Court recognized that
government monopoly health care is a violation of basic human rights, based on the fact that it is
harmful to patients’ health. If California had already implemented a government monopoly, Californians
would be suffering the following consequences:
• The number of physicians would be about 23,000 less than it is today, dropping from
approximately 94,000 to 71,000.
• Californians would suffer lengthy waiting times for medical treatment – time worth about $1
billion annually.
• About $9 billion dollars of “free” health care would have been wasted by people who did not
need it.
If SB-840 is imposed by the government, the long-run consequences will be dire:
• There will be a decline in the availability of medical technology.
• Hospital stays for senior citizens will lengthen from an average of four or five days (depending
on the procedure) to about 14 days – about three times what they are now.
• The number of middle-aged women receiving mammograms at least once every two or three
years will drop by about 330,000 in 2010, and more in subsequent years.
• Life spans will shorten by about two months if the government imposes restrictions on the
prescription medicines available, as the Department of Veterans Affairs has.
• The number of heart attack victims prescribed Beta-blockers, a standard treatment to avoid a
second heart attack, will drop by just under 20,000 in 2010, and more in subsequent years.
• The number of cardiovascular patients receiving angioplasty or coronary artery bypass grafts
will drop by about 60,000 in 2010, and more in subsequent years. But Californians at risk
of coronary artery bypass operations will need them four years earlier than they do now: 64
versus 68.
There will also be more general economic consequences:
• Hundreds of thousands of jobs, especially in small businesses, will be lost due to increased
taxes.
• Large businesses which can self-insure for health will migrate out of the state.
• California’s biomedical and medical device industries, both world leaders, will risk collapse.
Nor does SB-840 save very much money: the monetary savings are less than half what the state
could enjoy by implementing a system of consumer-directed health care and reducing the regulatory
burden on private health insurance.
Though harshly critical of SB-840, this briefing paper does
not
