New York Times: Single-Payer Health Care in California: Here’s What It Would Take
By Patricia Cohen and Reed Abelson
New York Times
May 25, 2018
All the leading Democratic contenders in the June 5 primary have pledged support for a single-payer system run by the state. The front-runner, Lt. Gov. Gavin Newsom, the former mayor of San Francisco, has made it the centerpiece of his campaign.
“There’s no reason to wait around on universal health care and single-payer in California,” he has declared.
Even beyond California, many Democrats are hoping to energize supporters by taking a cue from Bernie Sanders’s 2016 presidential campaign, which embraced a single-payer system, “Medicare for All.” But the idea primarily functions as a rallying cry.
“Voters are thinking about the fundamental values associated with single-payer,” said Kelly Hall, an independent health consultant who works with the Service Employees International Union-United Healthcare Workers in California, which has endorsed Mr. Newsom. “Almost zero voters have thought about the policy implications.”
In this case, “implications” could be another word for booby traps. Even a state as big, wealthy and liberal as California — with the world’s fifth-largest economy and nearly 40 million people — would find itself hamstrung by money, a legal and regulatory thicket, and highly motivated opposition.
“You’re talking 20 percent of California’s economy,” said Dana Goldman, the director of the Schaeffer Center for Health Policy and Economics at the University of Southern California. “The savings you’re going to get are going to come out of someone’s pockets.”
Even Mr. Newsom sounded a cautious note recently, conceding it could take years to erect such a system: “It is not an act that would occur by the signature of the next governor.”
Visionary thinking is needed to create an independent, state-run system that’s responsible for every resident’s health care and prescription drugs — but so is getting the authority, financing and political support.
Lt. Gov. Gavin Newsom has enthusiastically endorsed the idea of a single-payer system in California. But he has acknowledged that it couldn’t be accomplished with just “the signature of the next governor.”CreditDenis Poroy/Associated Press
Any state trying a go-it-alone strategy will face challenges possibly more vexing than the ones Congress would confront in passing a nationwide law.
California cannot simply decide to divert health care money spent in the state to a single-payer insurance plan of its own. Federal rules govern nearly all health-insurance coverage.
Medi-Cal — the state’s version of Medicaid, the health insurance program for low-income Americans — covers about a third of the population. Here, the state has lots of leeway to experiment, and the federal government has tended to let that happen.
But almost everyone else gets coverage through an employer, Medicare or the individual marketplace. And in these arenas, the state has less authority.
To redirect Medicare funds, California would require a federal waiver — something unlikely to be granted by any administration.
Medicare is popular, and federal officials are unlikely to allow a state to engineer a wholesale Medicare takeover. Californians might not be too happy, either. Once California — and not the federal government — were to be the single payer, then the current Medicare program would no longer be an option. If would be replaced by a new California version.
A bigger stumbling block comes from employer plans, which cover roughly 43 percent of Californians. Federal law, in effect, prohibits states and localities from dictating how private employers that self-insure should structure their plans. So employers unwilling to take part in a California-run insurance system wouldn’t have to.
Officials could try to persuade them by offering cheaper coverage and fewer administrative headaches. But if, say, Google and Disney want to stick with the coverage they have, they can. Changing that law would require an act of Congress.
The phrase ‘higher taxes’ is less popular than ‘single payer.’
Let’s, for the moment, magically eliminate the legal and regulatory roadblocks: Poof! California transfers its share of Medicaid and Medicare money to its own single-payer system, and it convinces every private employer to drop its existing coverage and join.
Where is the rest of the money to cover the uninsured going to come from? The state could look to cut costs: eliminate intermediaries, including insurance companies; reduce administrative costs; negotiate lower prices for drugs; and pay hospitals and doctors Medicare rates rather than higher private-plan prices.
A proposed bill that would offer free health care to every resident of California including undocumented immigrants earned the support of the California Nurses Association.CreditJenna Schoenefeld for The New York Times
Broader health coverage could also help reduce pricey emergency-room visits and improve preventive care, which could head off more serious illnesses and higher costs down the road.
Still, expanding coverage costs more for a reason: When people have it, they use it. The total price tag would depend on what’s covered, but eliminating deductibles and co-payments, as a recent California bill proposed, further raises costs. A legislative analysis of that bill, which offered free medical care for every resident including undocumented immigrants, estimated the final tally would be about $400 billion a year — more than double the state’s budget.
About half that sum could come from existing Medicare and Medicaid dollars, according to the analysis. What employees and employers currently spend would cover another $100 billion to $150 billion. But the remaining $50 billion to $100 billion would require new taxes — such as a 15 percent payroll tax on earned income.
A separate analysis put the bill’s cost at $331 billion, accounting for savings achieved through efficiencies and preventive care, among other things. Whatever the figure, even supporters concede that it would require a higher sales tax and increased taxes on large businesses.
Ardent proponents, like the California Nurses Association, are undeterred. “It really is about the political will,” said Catherine Kennedy, a longtime nurse who lives in Carmichael, outside of Sacramento. “We can find the money.”
‘Single-payer’ has no single definition.
Democrats overwhelmingly favor single-payer plans in polls, but the phrase means different things to different people. To some, “single-payer” is just a way of saying coverage for everyone. To others, it means eliminating the profit motive from health care. Or it represents simplicity — an end to paperwork, deductibles, co-payments and preapprovals.
“I do support a single-payer system,” said Steven Cohen, a retired engineer, who lives with his wife, Terri, a retired schoolteacher, in Valencia. Even though he is on Medicare, Mr. Cohen, 71, said a recent switch in his medication for rheumatoid arthritis caused his out-of-pocket drug costs to rise sharply. The insurance and pharmaceutical industries now have too much clout, he said.
When asked if he would still support single-payer if it meant higher taxes, however, Mr. Cohen said no: “Raising taxes to offset the cost of health insurance is not the best approach.” And he is unwilling to trade his Medicare coverage for a state-based version, “unless it changes for the better.”
A nationwide Kaiser Family Foundation survey last September found similar sentiments. A majority favored the idea of a single-payer national health plan. But when those surveyed were told that the role of employers in health care would be ended, that governmental control would grow, or that people would have to trade in their existing coverage, support fell below 40 percent.
Consider what happened in Colorado. In 2016, surveys showed wide support for a single-payer plan, but when an initiative was put on the ballot, it got just 21 percent of the vote.
Of course, changing the message — and the details — can similarly drum up support, or flop those who previously flipped, but the variability shows how quickly voters can turn.
Correction: May 25, 2018
An earlier version of this article misstated the name of the organization that conducted a survey on public attitudes toward a single-payer national health plan. It was the Kaiser Family Foundation, not Kaiser Permanente. The earlier version also misstated an estimate of the cost of a proposed California bill that would offer free medical care for every resident. It was $331 billion, not $331 million.