By Julie Trager
Like Paul Revere, riding from Boston to warn the American militia that the Redcoats were coming, I am warning of another force that is attempting to protect its way of life. Now that SB 562, the bill for a single payer healthcare system, has passed the Senate, Big Pharma will likely roll out a massive disinformation campaign as it tries to stop it from passing through the California Assembly.
As Big Pharma has the distinction of being the largest lobbying industry, beating out major oil companies and the Koch brothers in their spending to influence legislation and government officials, it’s worth understanding what’s at stake and what they plan to do about it.
Until this week, a single-payer healthcare system in California still looked like a pipe dream. However, with the release of an independent financial analysis that outlines the impact it will have on the state, its residents and businesses, it will almost certainly create broad support.
The analysis, led by Dr. Robert Pollin, a professor with the Peri Institute, University of Massachusetts Amherst, showed an overall 18% savings for the state of California as well as large savings for businesses and many residents. So Big Pharma should be afraid, very afraid.
Let’s boil down the analysis. Our current healthcare system costs $368 billion – this is the money we are already spending on healthcare that leaves millions of Californians uninsured or underinsured, and is expensive for both residents and businesses. A single-payer system will cost approximately $400 billion. However, this number does not take into account any of the money that we already receive for healthcare spending.
California currently gets $225 billion from Medicare, Medical, and other public services which will be shifted to the single payer system. It also doesn’t consider the substantial savings that will occur when the administrative costs embedded in our traditional healthcare model are drastically reduced.
Savings will also come from many other sources: negotiated drug prices, less billing fraud, more integrated care, decreased emergency room visits and hospitalizations, less sick days for employees and better prevention for serious disease. Through these savings mechanisms, the state expects, very conservatively, to save another $40 billion. When the math is done, California will only need to find an extra $106 billion to deliver quality healthcare to every man, woman and child resident. This coverage includes medical, maternity, mental health, vision, dental, addiction, hospice, and prescriptions. It will also allow you to choose your own doctor, including specialists, and will let doctors guide treatment, rather than the insurance companies.
This extra $106 billion is easily covered through a 2% sales tax on nonessential goods (meaning things like housing, utilities, and food at home will not be taxed) and a 2% tax on businesses with gross receipts over $2 million. Low-income families will receive a 2% tax credit, meaning they won’t pay anything. No more co-pays, deductibles, and premiums (for medical, dental and vision) mean families saving anywhere from 5% to 9%, while businesses save anywhere from 5% for large corporations to 22% for small business. The ONLY people likely to spend more under a single-payer system are the wealthiest tier of income earners, who will pay 0.06% where today, most of them pay nothing through the miracle of tax credits.
Back to Big Pharma. The negotiating power that a single payer system gives California can’t be underestimated. The goal for SB 562 is to lower drug costs by 30%, about what the military has been able to accomplish with their buying power. The truth is, the pharmaceutical companies already know they can’t continue making huge profits while charging extraordinary prices, especially for specialty drugs (think drugs for cancer, hepatitis, and AIDS). Public outrage shifted the cost of epi pens, several states have introduced single payer legislation, and Bernie Sanders’ grass roots movement highlights the fact that citizens and states have a lot more power than we ever thought.
So if you hear that single payer healthcare will cost California $400 billion, know that the accurate number is $106 billion, which will easily be paid for through a small tax increase that costs much less than 95% of residents and businesses currently pay for healthcare. And when you hear people speak out against single payer healthcare, know who is talking and why. Big Pharma’s lobbying arms are PhRMA (Pharmaceutical Research and Manufacturers of America) and the Biotechnology Industry Organization. Insurance companies such as Blue Cross Blue Shield, United Health, Cigna and Humana will also be lobbying hard against the bill.
I would encourage you to read the results of the financial analysis, which can be found on the healthycalifornia.org website. If, after you’ve studied the issue, you want to support SB 562, I would also encourage you to contact your district assemblyman’s office to let them know how you want them to vote. This is surprisingly easy to do and goes a long way toward helping our lawmakers make decisions based on their constituents rather than the lobbyists. For something as important as this, it’s critical they know how you feel.
Big Pharma is coming, big Pharma is coming…don’t let them catch you unaware.
Julie Trager is a social worker, writer, and public speaker. After 15 years in the healthcare field, she has become an advocate of single-payer health care and its role as a catalyst for a more just and democratic society.
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