Why progressives’ single-payer health care dream would bankrupt California

California progressives’ single-payer health care fever dream is back. This time, the cost could hit half a trillion dollars a year. 

Single-payer means the government pays, for everything. Several candidates for governor are promising just such a government takeover of the state’s health insurance system.

Billionaire Tom Steyer says, “Bernie Sanders was right. We need single-payer health care.” His campaign ads place a single-payer system at the center of his agenda. Betty Yee, Xavier Becerra, and Tony Thurmond are on board, too.

Meanwhile, California State Assemblyman Ash Kalra, D-San Jose, has reintroduced legislation to create “CalCare” — a bid to bulldoze private health insurance and replace it with a state-run health insurance monopoly.

These are bold plans. They’re also complete fantasy.

The California Legislative Analyst’s Office previously pegged the annual cost of CalCare at up to $552 billion — more than the entire state budget. Even the sunnier projections run into the hundreds of billions of dollars.

Even if California could afford a program that size, it’s not clear the state could run it.

Look at the debacle that is Medi-Cal, the state’s version of Medicaid, the public health plan for low-income people. Enrollment has ballooned to roughly 15 million people, including about 1.6 million illegal immigrants. That expansion has coincided with tens of billions of dollars in multiyear budget deficits.

And Medi-Cal doesn’t exactly pay top dollar. Its rates are roughly two-thirds of what Medicare pays. And Medicare itself pays far less than private insurance.

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Doctors can do math. The program’s reimbursement often fails to cover their overhead. That is why many of them limit how many Medi-Cal beneficiaries they’ll see. 

Expanding that formula to every other patient in the state would be a disaster.

Supporters of single-payer insist “modest” tax hikes will cover the bill, such as personal income-tax surcharges of up to 2.5%.

But California has been losing residents and business to lower-tax states like Texas, Nevada, and Florida for years. CalCare would prod more to leave — and would eventually deprive its cheerleaders of the productive people they’re counting on to fund their experiment in socialized medicine.

Even if Sacramento could raise the revenue needed to fund CalCare without kneecapping the economy, a second problem looms: physician supply.

Under single-payer, the state dictates reimbursement rates. If CalCare resembles Medi-Cal’s system, many doctors will face steep pay cuts. Some will respond by seeing fewer patients. Others will retire early. Still others will pack up and practice elsewhere. 

California already has more than 7 million residents living in areas facing a shortage of primary, dental, or mental health care. It can’t afford to thin its physician workforce further.

There’s also history to consider. Vermont tried to install single-payer a little over a decade ago. Its Democratic governor pulled the plug in 2014 after concluding that the required taxes were politically and economically untenable. 

If a small, deep-blue state can’t make the math work, what makes California think it can?

Finally, consider the human cost of single-payer. Canadian patients waited a median of 28.6 weeks in 2025 for treatment from a specialist following referral by a general practitioner, according to the Vancouver-based Fraser Institute. More than 7 million people are currently on waiting lists for hospital treatment from Britain’s National Health Service. 

When government sets the budget, rationing is a feature, not a bug. Patients wait. And wait. And wait. Care delayed is money saved.

Sacramento struggles to run Medi-Cal. How will it manage a $500 billion takeover of the entire health system?

The progressives who support single-payer don’t have a good answer to that question — because there isn’t one.

Sally C. Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.