Uniquely Golden: Single-Payer May Work in California

By Glen Martin

The abject failure of Republicans to repeal and replace the Affordable Care Act gave Democrats the opportunity, rare of late, for some gloating. It also got them thinking in grandiose terms about the future. With public support on their side—a recent Gallup Poll shows support for Obamacare at a record 55 percent, a Quinnipiac Poll posting an abysmal 17 percent rating for Trumpcare, and a recent Pew Research Center survey indicates that  60 percent of Americans believe government is obliged to provide health care access for all—Dems have dusted off their perennial health care policy favorite: single-payer.

Of course, single-payer, the proposition that the government covers health care for all citizens, with payments covered by taxes, is unlikely to go anywhere in Washington, given that Republicans are in control of all three branches of the federal sector.

But what about the state level? Yeah, that sounds pretty unlikely, given that most states don’t have a sufficiently large tax base to support single-payer plans. But California might be the exception. It has, after all, nearly 40 million people, many of them quite wealthy. If it were a country, it’d have the sixth largest economy in the world. Surely, it could drum up enough ducats to provide every resident with basic health coverage.

A couple of state legislators and Lt. Gov. Gavin Newsom think so, at least. In February, state Senators Ricardo Lara and Toni Atkins introduced a bill that would authorize California to institute a single-payer scheme. And last month, Newsom—who has declared his candidacy for governor in next year’s election—announced he was fashioning a single-payer plan with health care authorities.

Perhaps tellingly, the bill introduced by Lara and Atkins didn’t include any details on how California would pay for such a plan, and Newsom hasn’t directly addressed costs. Governor Jerry Brown, who supports Obamacare, disparages the idea of a state-sponsored single-payer plan, maintaining it would result in onerous taxes.

“Universal health care is a familiar concept here, one with wide citizen and political acceptance, so it’s perhaps not surprising that Covered California was set up well and it functions well.”

But single-payer means different things to different healthcare experts, and concepts continue to evolve even as the debate sharpens between supporters and opponents. We all may think we know what the term means—the government pays for everything from hang nails to chemotherapy for fulminating tumors—but the countries that actually have single-payer healthcare (most of the world’s developed nations, as it turns out) differ widely in their systems, observes Jonathan Kolstad, an assistant professor at the UC Berkeley Haas Business School who specializes in health economics.

“The United Kingdom has what’s generally regarded as the standard model, where medical care is paid for by taxes and the government manages everything, including delivery of services and administration of payments,” says Kolstad. “Canada generally provides hospital and outpatient coverage that is financed by taxes, and then provides budgets for individuals who receive care at privately-managed hospitals and clinics, though the details differ among provinces. In Switzerland and the Netherlands, there are mandates for individual coverage, and heavily managed exchanges provide regulated insurance products that basically cover everybody.”

Single-payer true believers tend to champion the British version. But Kolstad observes that approach, the Classic Coke among single-payer models, has been losing some of its luster, including in Britain.

“The British are trying to introduce some competition in the system to bring down costs and improve care delivery,” says Kolstad.  “And despite the size of California’s economy, having anything like a UK system here would be extremely challenging, given the state’s financing constraints [i.e., California doesn’t raise enough revenue to fund a single-payer plan].”

There’s a certain irony in the support for a hard-core, Brit-style single payer system among California residents, given that the state has perhaps the best managed health care exchange in the nation.

“The sentiment for universal coverage in California is high,” Kolstad says. “We have a history of effective managed care, through organizations like Kaiser Permanente and the Pacific Business Group on Health. Universal health care is a familiar concept here, one with wide citizen and political acceptance, so it’s perhaps not surprising that Covered California was set up well and it functions well. It provides pretty good plans at reasonable premiums, and there’s been a huge Medicaid expansion under the ACA. It comes fairly close to accomplishing the goals of a true single-payer system. So when you have something that basically ain’t broke, instituting any major change would be difficult.”

So that’s as things stand. But what if the Republicans do get their act together, and Trump, the Freedom Caucus and the Tuesday Group, the informal House of Representatives caucus comprised of moderate Republicans, somehow kiss and make up and repeal Obamacare?

“Well, if that happens, it would change everything,” Kolstad allows. “Providing broad-based health care would be very tough if the ACA were removed.”

In other words, that may be the time to push aggressively for a true single-payer system: when millions of people, including Californians, are severed from coverage. They’d have nothing more to lose.

Filed under: Science + Health
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The single payer plan should: 1. Specifically exclude insurance companies. 2. Consolidate MediCal under centralized state, not county, administration to eliminate duplication of expenses. 3. Be funded through payroll and self-employment taxes, not employer based. 4. Rely on stiff penalties, including revocation of medical licenses and imprisonment to discourage abuse, rather than an army of clerks to review requests for medical procedures or fulfillment of prescription medications. Use fines to pay for legal costs of enforcement. Elimination of health insurance company profits and administration costs, savings by using a statewide administration vs. individual county administration, etc. should be calculated. Also, projections of savings from preventive care should be studied. Gov. Brown is wrong to say that taxes would be excessive. He should be required to prove his claim.
Single payer advocates have not discussed some parts of the plan they know will be problematic. First, it will cover all residents of CA including illegal aliens. That means that all illegal aliens who move to CA will be covered. The problem is illegal aliens do not pay income tax so they are a taker group, not a payer group. Second, there will be one plan (they say) for all Californians. No more employer insurance. No Medicare. No retirement plans. Just one plan. CMS will have to grant a waiver for the state to administer Medicare Parts A and B, which is highly unlikely. Third, back of the envelope calculations are that for the first year alone every Californian will cost an extra $9,500 in income taxes to make the system work. Fourth, an unelected panel selected by the State Legislature will determine, on an annual basis, the benefits and re-imbursement amounts for “the plan”. This is also known as rationing. The potential for fraud and abuse is at least the same as in the other government-run health care plans, Medicare, Medicaid and the VA. The state will watch higher income healthy earners flee the state and low income sick people move into the state.
The whole West Coast should start a shared Medicare for All plan. That is how universal healthcare started in Canada.

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