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Think Tank

What’s the Best Strategy for Funding Health Care Efforts in California?

California voters in May rejected new sales tax proposals but chose to retain two specific tax streams directed to health care programs. Propositions 1D and 1E sought to divert money away from early childhood health and mental health programs and into the general fund and were soundly defeated by voters.

Both the First 5 program for young children and the mental health program exist because voters in earlier elections approved specific taxes to fund them — a tobacco tax for First 5 and a higher income tax for Californians with an annual income of at least $1 million for the mental health program.

One interpretation of election results might be that voters don’t want to raise taxes for the general fund but are willing to approve new taxes if money is directed to specific uses.

The state’s major health programs rely on money from the state general fund (and federal matching funds) and are not protected by voter initiatives, like education funding. Consequently, health and social services programs without their own dedicated funding source are always at risk.

How should legislators and policymakers interpret voters’ will? Do Californians want to create a funding source to protect health funding for programs such as Medi-Cal and Healthy Families?

Should health care have its own dedicated revenue source? Can the Legislature do this without a 2/3 vote or would it have to be accomplished by voter initiative?

California Healthline sought responses from several legislators and policymakers, some of whom planned to contribute but found they were unable during the budget crunch. Two who did respond:

Universal Care Is Best Long-Term Solution

Sen. Mark Leno (D-San Francisco)
Chair, Senate Budget & Fiscal Review Health and Human Services Subcommittee

When they rejected Propositions 1A through 1E on the May 19 ballot, California voters sent a clear message that they want the current budget crisis solved through the legislative process, not the ballot box. In previous elections voters have also made it clear that they value important social services, including health care for children and families and mental health programs. They are willing to pay for them, too, as long as they know how their tax dollars are spent.

However, dedicated revenue streams will not adequately stabilize funding for public health care programs. The real problem is that health care costs are growing four times faster than wages every year. The state’s revenue sources are directly connected to wages and the economy, so whether program funding is dedicated or comes from the General Fund is irrelevant. Health care costs are guaranteed to grow many times faster than revenues. With nearly one-third of our state budget dedicated to health and human services, and with escalating health insurance premiums for all of our residents, it is easy to understand how the rising cost of health care is only going to contribute to our state’s fiscal crisis in the future.

The governor has responded to this crisis by calling for the elimination of services that voters have repeatedly supported, such as health care for nearly one million children, mental health programs and critical services to the poor, elderly and disabled.

Instead of giving up on our state, Californians want their leaders to find solutions that save these essential programs. Clearly we need to move forward on long-term solutions, but in the short term we must find a balance between deep cuts and new revenue sources that allows us to preserve core social services.

This year I introduced SB 810, the California Universal Health Care Act. SB 810 provides comprehensive and affordable health care to all Californians, controls health cost inflation and allows consumers to choose their own doctors. The plan stabilizes spending and reduces waste by consolidating the functions of insurance companies into one comprehensive insurance plan.

Multiple studies have shown that this plan would save billions of dollars in the first year and that it would save employers, schools, cities, counties and the state millions of dollars in employee benefit costs.

In California there is a large and fast-growing movement supporting universal, single-payer health care.

Nationally, universal health care is also on the horizon, and there is proposed legislation that would allow states like California to implement a plan like SB 810 with federal assistance. In addition, polls show that a strong majority of voters support a universal health care plan like SB 810. It is the only model of health reform that has been tested and proven to contain growing health care costs, while simultaneously guaranteeing Californians excellent health coverage and the ability to choose their doctors and hospitals. The budget crisis and the health care crisis are inseparable, and SB 810 moves California toward long-term solutions for both.

Budget Reform Can Protect Funding

Assembly member Nathan Fletcher (R-San Diego)
Vice chair, Assembly Committee on Health

I would not read the results of the May 19 election to be a support of taxes — of any type. California voters rejected the initiatives and I suspect much of that was a rejection of the high-profile initiative on the ballot — Proposition 1A — and its tax extension. It was also a firm rejection of the Legislature and a resounding call for a balanced budget without higher taxes and gimmicks.

However, I would agree that mental health and children’s health are pressing needs in a growing state. Voters have approved specific funding sources for these programs in the past, making it clear that Californians view these services as priorities that the Legislature should take seriously. But we can prioritize without having our hands tied through ballot box budgeting.

The tendency to lock in streams of funding has contributed to many of the problems we currently face in trying to balance the budget. When we have to confront difficult budget years in down economic times, our hands are often tied with few areas available to cut or reform. This makes California’s other responsibilities, those not guaranteed full funding by initiative, pay a steep price that could be more broadly shared in tough times.

The best way to protect constant and stable funding for mental health and health care, more broadly, is to demand budget reform from Sacramento. If we end the boom and bust budget cycles by either reforming our volatile revenue sources or requiring a rainy day or reserve fund in good years, we can protect and stabilize funding for health programs.

More than a half-million children are born in California each year. The early treatment, immunization, and health of these children will save money in the future. As a combat veteran, I understand the importance of mental health. Navy Admiral Mike Mullen recently said that mental health service for our veterans is “a priority that can’t be allowed to fall by the wayside.” I agree, and also hold the view that children’s preventive medicine and mental health programs are crucial for healthy and thriving communities.

Mental health and children’s health don’t have to be left with ballot propositions as their only line of defense. Sacramento can prioritize according to what Californians want and can afford. This is the work of a functional legislature and will protect the safety and integrity of our health care from being collateral damage in yearly budget cycles.