Health

If California goes single-payer, what happens to insurance workers?

UCSF is laying off some of its IT staff and sending their jobs to a contractor headquartered in India.
UCSF is laying off some of its IT staff and sending their jobs to a contractor headquartered in India.
Luciano Lozano/Getty Images/Ikon Images

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The bill to create a state-run health care system in California would do away with most health insurance, so many of those employed in that industry would need new jobs. But no one seems to know how many people might be affected.

"It’s not a small part of the legislation," says Dr. Nadereh Pourat, director of research at the UCLA Center for Health Policy Research. "This is an impactful part of the legislation and it should be studied, so we actually know exactly what’s going to happen." 

The California Employment Development Department counts more than 31,000 people in the state who work for medical insurance carriers. That tally doesn’t include others in the field, such as insurance brokers and people handling billing at hospitals and medical practices. 

Michael Lighty, director of public policy for National Nurses United, the bill’s sponsor, says the union has commissioned a study to pin down exactly how many jobs could be affected. 

"We think that there is certainly some administrative employment in the new system, though fewer jobs," he says. "Then there’s the retaining that we can do for folks from administrative to clinical jobs. Then there’s the process of retirement from that industry."

The bill, SB 562, would create retraining opportunities for people who lose their jobs in the insurance industry. 

The legislation has passed the state Senate and is now headed to the Assembly.

Insurance broker Bruce Benton says he would lose business in a single-payer system, but he would likely recoup it by selling more of other types of insurance. He says others wouldn't be as lucky.

"Dental insurance companies, third party administrators, COBRA administrators, compliance services, benefits administration system services: It is a massive amount of people who are not going to have something to fall back on," says Benton, who is also a spokesman for the California Association of Health Underwriters.

The insurance industry strongly opposes SB 562; the Association of Health Underwriters estimates more than a half-million California jobs could be affected, although that number is strongly disputed.

Even with a plan to retrain and transition displaced employees, opponents question whether the new jobs would offer the pay insurance workers receive in their current positions.

"While there of course will be some government jobs created, the chances are on a wage-to-wage basis they’re not going to be a replacement level," says Charles Bacchi, president and CEO of the California Association of Health Plans.