Would state health care work better than EDD?

The best argument against California's taking over management of health care for every Californian may be the Employment Development Department's abysmal record of mismanaging the delivery of unemployment insurance and disability insurance benefits to those unable to work.

When you think about it, there's a remarkable similarity between what EDD does — or more correctly, what it's supposed to do — and the single-payer, centrally directed health care system that those on the political left so fervently desire.

EDD, like the proposed CalCare system, collects billions of dollars in taxes each year and parcels out benefits to those deemed to be eligible. However, its bureaucratic apparatus is obviously and perhaps irretrievably broken, as its sorry performance during the pandemic-induced recession painfully demonstrated.

EDD handed out tens of billions of dollars in unemployment benefits to fraudsters while proving itself incapable of efficiently serving those who deserved them.

As the state auditor reported a year ago, "EDD did not take substantive action to bolster its fraud detection efforts for its (unemployment insurance) program until months into the pandemic, resulting in payments of about $10.4 billion for claims that it has since determined may be fraudulent because it cannot verify the claimants' identities.

"Specifically, EDD waited about four months to automate a key anti-fraud measure, took incomplete action against claims filed from suspicious addresses, and removed a key safeguard against improper payments without fully understanding the significance of the safeguard."

It was just one of numerous criticisms of EDD by the auditor, state legislators and other authorities over the years, to little avail.

Recently, EDD froze 345,000 claims for disability insurance it suspected of being fraudulent and declared that 98% of the 27,000 medical providers named on the claims were bogus. The announcement more or less coincided with the departure of EDD director Rita Saenz and Gov. Gavin Newsom's announcement that Nancy Farias, EDD's chief deputy director of external affairs, legislation and policy since 2020, would replace her.

"The EDD has tried so hard to downplay their most recent failure at preventing fraud within their disability programs," said Assemblyman Jim Patterson, a Fresno Republican who has been one of the department's sharpest critics. "The governor needs to put someone in charge of the EDD with the guts to make the necessary changes."

To be fair, EDD's managerial shortcomings did not begin with Newsom or the COVID-19 pandemic. They were evident during the previous recession more than a decade earlier, but Newsom's predecessors did virtually nothing to correct them.

Even though the CalCare bill stalled in the Assembly Monday, the question remains: Why should we assume that a new state medical care bureaucracywould be any more efficient and reliable than EDD? Or the Department of Motor Vehicles? Or the woebegone bullet train project? Or the Bay Bridge project that took 25 years to complete and was many billions of dollars over budget? Or any of the very expensive but faltering digital information projects that the state has undertaken on the promise of delivering services more responsively and efficiently?

Their shortcomings are annoying to those they are supposed to serve, and in the case of EDD have needlessly caused financial hardship to employees whose jobs vanished due to economic shutdowns ordered to deal with COVID-19.

On paper, one can make an argument for single-payer health care as being more efficient and more equitable than the current system, which is bewilderingly complex and expensive. But paper isn't the real world. EDD is.

Were a new health care bureaucracy to make the kinds of mistakes that EDD made, it would be more than annoying. It could cost lives.

CalMatters is a public interest journalism venture committed to explaining how California's state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.