Newsom’s Big Choice: Single Payer Or His Insurance Donors?

On the 2018 campaign trail to become California’s Democratic governor, Gavin Newsom signaled his support for a statewide single-payer health care system.

“I’m tired of politicians saying they support single-payer but that it’s too soon, too expensive or someone else’s problem,” Newsom said in a statement helping secure him the crucial support of the state’s powerful nurses union during a contentious gubernatorial primary.

Now, as California lawmakers once again get close to establishing such a program, all eyes are on Newsom to see how he will come down on the issue — and whether the millions he and his party received from health insurance industry donors will convince him to abandon the cause he previously touted.

A new bill would move to replace the state’s private insurance market with a public system in which the government is the single-payer for health care services. Due to the rules of the state’s legislature, the bill must pass the state’s full assembly by the end of the day Monday, or it’s dead for another year.

As the Democratic governor, Newsom has significant influence over what the Democratic legislature sends to his desk — but he has remained publicly aloof about the bill, implying he may block it as his industry donors mount an opposition campaign.

“Governor Newsom has no choice but to sign a bill and put it on the ballot, as he’s promised he wants to,” says Jamie Court, president of the consumer and taxpayer advocacy group Consumer Watchdog. “I don’t think he can get out of that promise.”

A Long Battle

The current legislation, AB 1400, would establish a new agency called CalCare that would pay for basic medical services in the state. If it passes, Californians would then vote on whether to approve a tax increase to fund the program — a vote that might not happen until 2024.

The legislation is opposed by a variety of business interests, including the California Chamber of Commerce, the National Federation of Independent Business, and health insurers.

“I have not had the opportunity to review that plan, and no one has presented it to me,” Newsom recently said of the legislation. “I think that the ideal system is a single-payer system. I’ve been consistent with that for well over a decade… The difference here is when you are in a position of responsibility, you’ve gotta apply, you’ve gotta manifest, the ideal. This is hard work. It’s one thing to say, it’s another to do.”

California already has near-universal health insurance coverage, thanks to incremental extensions of coverage for undocumented immigrants through the state’s Medicaid program, Medi-Cal, and subsidies from the Affordable Care Act. In January, Newsom announced that his new budget, which would extend Medi-Cal coverage to undocumented immigrants of any age, would make California the first state to achieve universal coverage.

“I campaigned on universal health care,” Newsom declared the day after announcing his plan. “We’re delivering that.”

In achieving near-universal coverage through private markets, however, the governor appears to be pivoting away from single-payer.

The state has been down this road many times before going as far back as 1918, when voters rejected an effort to create a state health care program for the poor. Single-payer legislation finally made it out of committee in 1992, after Gov. Jerry Brown (D) endorsed it during a Democratic presidential primary debate that year — but the effort ultimately failed in the state senate. Then, in 1994, the California Nurses’ Union pushed Prop. 186 to establish single-payer in the state, but the measure was overwhelmingly defeated following a campaign by a coalition of business groups, insurance companies, and hospitals.

While state lawmakers succeeded in passing single-payer legislation in 2006, Gov. Arnold Schwarzenegger (R) vetoed the bill when it arrived at his desk — and vetoed an amended version of the legislation two years later.

In 2017, when single-payer came up again in California, it appeared more likely to pass. The state had already dramatically expanded health care coverage in response to the Affordable Care Act, Democrats held supermajorities in both chambers of the state legislature, and Brown had once again been elected governor. At the same time, polling showed most Californians supported the creation of a taxpayer-funded universal health care system.

The tide seemed to be turning nationally as well. The presidential campaign of Sen. Bernie Sanders (Ind.-Vt.) had exposed mainstream America to the concept of Medicare For All, and 27 members of California’s congressional delegation had signed onto a federal Medicare For All bill. Newsom, the lieutenant governor at the time, even made single-payer health care a plank of his campaign.

Yet, once again, the reform efforts were stymied when Assembly Speaker Anthony Rendon (D) refused to hold a vote on the bill for the duration of the year, even though it had already passed the senate. According to Rendon, he did so because “there are potentially fatal flaws in the bill including the fact it does not address many serious issues, such as financing, delivery of care, cost controls, or the realities of needed action by the Trump administration and voters need to make [it] a genuine piece of legislation.”

But there was likely another reason the bill died: big business had stepped in to quash it. As International Business Times reported at the time, since 2012, business groups and health care companies on record opposing the measure had donated more than $1.2 million to the California Democratic Party. Those same groups had also donated more than $1.5 million to Democratic assembly members, including $82,000 directly to Rendon.

Rendon had also received more than $101,000 from pharmaceutical companies and $50,000 from health insurers. These same groups donated more than $2.2 million to the state Democratic party.

A $1 Million Check From Blue Shield

The current push for single-payer may be doomed to the same fate as its predecessors. Even if the bill manages to pass the assembly before the end of the day Monday and passes the state senate, there is no guarantee Newsom will sign it into law. Despite his campaign promise, the California governor has long been allied with insurance companies opposing the reform.

Blue Shield of California has been a huge donor to Newsom and state Democrats, as well as the governor’s pet causes. Blue Shield has donated at least $99,000 to Newsom's campaigns since 2010, and $2.7 million to the California Democratic Party since 2006, according to data from the National Institute on Money in Politics. That includes a $1 million contribution to the state party last summer, as Newsom was working to fend off a recall effort.

State records show Blue Shield donated $100,000 to Newsom's inaugural fund in 2019, and has made several other sizable contributions on Newsom’s behalf. The largest was a $20 million donation in 2020 to Enterprise Community Partners, Inc. to support Project Homekey, the governor's COVID-19 homeless housing initiative.

In 2020, Blue Shield gave $300,000 in 2020 to a nonprofit supporting the Commission on the Future of Work, which Newsom had created by executive order. The donations were reported as behested payments — the term for when California politicians raise money from corporations or other groups and contribute the money to a nonprofit.

Amid the COVID epidemic, Newsom awarded Blue Shield a $15 million no-bid vaccination contract and recruited the insurer’s CEO to help shape the state’s COVID-19 testing strategy.

The insurer Anthem and its affiliates have donated $78,000 to Newsom’s campaigns since 2013, on top of $770,000 to the California Democratic Party since 2002. Anthem also gave $25,000 to Newsom's 2019 inaugural fund.

Blue Shield and Anthem are both part of a coalition lobbying against the legislation, claiming it “would create a new and exorbitantly expensive government bureaucracy” and cause “significant job loss to California.”

UnitedHealth Group, the nation’s largest health insurer, is also opposing the single-payer bill, and has been pressing its employees to lobby California lawmakers against passing the legislation.

The insurance giant has contributed $130,000 to Newsom's campaigns since 2011, and $513,000 to the state Democratic party since 2007. In 2019, UnitedHealth Group and one of its subsidiaries donated $100,000 to Newsom's inaugural fund.

Now, whether Newsom’s relationship with Blue Shield, Anthem, and UnitedHealth will impact his decision-making on CalCare is an open question, says Court at Consumer Watchdog.

“I’ve seen him do it and I’ve seen him not do it, let’s put it that way,” he said of the governor’s ability to stand up to donors. “I’ve seen him go against the unions that represent oil companies by putting a limit on setbacks [and] banning fracking. I don’t know, for some [issues], like single-payer, I’ve got to believe he’s ideologically there.”

As the deadline for action on the bill approaches, Newsom is under increasing pressure to step in and move the bill forward. The Sacramento Bee editorial board published an editorial on January 21, urging the governor to defy his industry allies and back the legislation.

“California’s top elected official can help foster the statewide discussion he owes to 40 million residents enduring a once-in-a-lifetime pandemic along with the depredations of a profit-driven private health care sector,” argued the editorial, which noted that an estimated 3.2 million Californians lacked health insurance and “many more face the crushing rigors of a private system that over-complicates essential medical care and excessively charges patients for lifesaving procedures and prescriptions.”

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