Economics
The Economics of Healthy CA

A significant side effect of Healthy CA is the positive impact it will have on California's economy. Healthy CA is based on two facets of endogenous economic theory: Technological innovation and Investment in Human Capital.  (For details on how Healthy CA will slow the rising costs, click here.)


1. Technological Innovation
Healthy CA embraces new technologies such as

• The Blockchain
• A Single Software Platform

One statewide healthcare software platform is the most critical aspect of the technological innovation. The greatest benefit of a single payer system is in the interoperability it allows between patients, providers, hospitals, labs and pharmacies.  Complete interoperability improves care, reduces waste, and facilitates the automation of administrative processes. 


2. Investment in Human Capital
By investing in the physical and mental well being of the workforce, Californians will be more productive. Healthy CA would:

• Reduce the amount of sick days.
• Improve quality and quantity of work performed.
• Turn recipients of social programs into tax payers.

In addition to improving the productivity of Californians, Healthy CA would also:

• Reduce Crime and Cost of Incarceration.
• Reduce the Number of Medical Bankruptcies.
• Augment Income Tax Revenues by Increasing # of Workers.

Investing in the health and wellness of California's workforce is both compassionate and fiscally sound. Consider that ineffective treatment for mental illness and addiction costs the US economy $729 billion per year.  These costs are primarily a combination of loss of productivity, higher demand for emergency healthcare services, and an increase in spending throughout the criminal justice system but also include increased demand for social services, compromised neighborhood safety and property values and other difficult-to-measure side effects.  These indirect expenses cost California approximately $101.8 billion dollars per year.
Slowing the Rising Costs of Healthcare

Healthy CA achieves this through a number of ways:

• Reducing Preventable Chronic Disease.
• Incentivizing Healthy Outcomes by Changing Provider Compensation Model
• Automating Administrative Processes
• Stopping the Price Gouging by Pharmaceutical Companies


1.  Reducing Preventable Chronic Disease

Better access to care, more consumer education, and financial incentives can curb the crisis of preventable chronic diseases including cardiovascular disease, smoking related diseases, obesity, and diabetes.  According to the Center for Disease Control, preventable chronic disease costs the US economy $486.5 billion per year. Additionally, it costs $747.7 billion to treat these preventable diseases.  The approximate cost to California for both care and the lost productivity is $207.1 billion per year for preventable.chronic diseases.

A 25% reduction in preventable chronic disease saves California approximately $51.8 billion per year.


2.  Incentivizing Healthy Outcomes by Changing Provider Compensation Model

• 12.7% overall cost reduction
• 30% fewer hospital admissions 

• 25% fewer inpatient days

• 80% of payers report improved quality of care.

A 5% reduction in costs saves California $18.4b per year.


3.  Automating Administrative Processes

• 25% -30% of Healthcare Costs Are Due to Administration.  

Automating 50% of administrative processes saves California $46 billion per year.


4.  Stop the Price Gouging by Pharmaceutical Companies

Statewide buying power provides the leverage needed to negotiate fair drug prices.

• In 2016, the U.S. spent $323 billion on prescription drugs after discounts and rebates.  California spent approximately $45.1 billion.   
• On average other countries pay 56% of what U.S. citizens pay for pharmaceuticals.
 
 A 20% reduction in pharmaceutical prices would save California approximately $9 billion per year.


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