Should California Create Its Own Single-Payer Health System?

YES: Single-payer is best path forward for Calif., maybe others

By Matt Lesenyie

Tribune News Service (TNS)

SANTA CLARA, Calif. - Everywhere you look it seems another state has a single-payer health insurance proposal.

New York, Maryland, Nevada and Alaska have all put universal health care on the agenda. And now California, home to one of the lowest rates of people without health insurance in the nation, is seeking to take that rate to zero.

A slate of legislation from California's State Assembly - 14 bills in total - seek to provide coverage to the 1 in 14 Californians currently uninsured. This week several bills passed to the Senate for consideration.

These bills are a means to insure all residents, while reining in health care spending.

Critics point to the high cost of "overhauling" the health care system as we know it, the threat of rationing and the loss of employer sponsored plans. These boogiemen are a distraction from the fact that health care markets operate like cartels: Their lack of competition reduces accessibility while maintaining high prices.

In California's case, the benefits of the bills making their way through legislature are apparent - potentially cutting government expenditures on uninsured by half; insurance rebate incentives to increase plan participation; extension of Medi-Cal and the federal Covered California eligibility to individuals making 400 percent of the poverty level; and including all qualified individuals irrespective of immigration status.

This is hardly a wild, experimental "overhaul" of health care that critics fear: The bills would expand existing programs to cover the remaining Californians who are not eligible for other affordable insurance options.

Even if California's bills resulted in state or federal government picking up all premium and out-of-pocket costs for those populations, that's still half the $200 billion that the state and federal government currently pay each year for uninsured or underinsured Californians.

The hard truth is that market failures in our health care system exist, causing mass subsidization of the system that serves profiteers over patients.

Despite their capitalistic creativity, insurers have not found a way to profit and compete for all consumers. The reality is that, relative to insured consumers, uninsured Californians underutilize lower-cost primary care and preventative health services while overusing high-cost emergency interventions.

At the same time, swollen insurance billing bureaucracies and pharmaceutical advertising budgets of insurance companies trying to increase market share create myriad waste and inefficiencies unrelated to health outcomes.

Defenders of privatized health care routinely fail to address the poor relationship between care costs and outcomes in America.

A new system is needed. We have a collective nostalgia for the health and retirement promises that firms made to their employees in the 20th century.

That nostalgia is misplaced. Union membership is at all-time lows. Employment gains in the service economy fail to provide full-time hours and benefits. Even industries that provide full-time work are continuously renegotiating benefits packages.

These dynamics suggest that health plans tied to our workplace will continue to erode as costs increase. Nostalgia plus benefit erosion is why consumers pay cartel prices for care.

And while California is on sound legal and constitutional footing to give single-payer care a try, legislators who support it will need to fight hard to surmount significant political hurdles.

While California's state Constitution allows for single-payer system programming, current proposals create no new programs and focus largely on expanding eligibility for existing programs like Covered California.

However, current constitutional spending guarantees would prohibit new tax revenues being used solely for health costs. Meaning that even if the state had the money to buy health care for all, any revenues deposited in the general fund would have to be used for other programs.

A vital step to making single-payer a reality, then, would be a successful ballot proposition designating a "health care only" revenue fund.

Until then, the current package of bills is a good step in the direction of insurance for all.

Matt Lesenyie is a post-doctoral fellow at Santa Clara University teaching California politics. His extensive government experience includes working for former Gov. Arnold Schwarzenegger. Readers may write him at 500 El Camino Real, Santa Clara, CA 95053.

NO: Single-payer won't pass muster in Calif. or other states

By Merrill Matthews

Tribune News Service (TNS)

DALLAS - Not so long ago Democrats would run for cover whenever a colleague proposed a government-run, single-payer health care system. Today, they scramble to out-single-payer other Democrats, even at the state level.

Under a single-payer system, the government pays most if not all health care bills for virtually every resident and taxpayers pay higher taxes to finance it.

While most of the single-payer legislative efforts have been at the federal level - such as Sen. Bernie Sanders' "Medicare for All" proposal - some left-leaning states are jumping on the bandwagon.

Vermont became the first state to pass such legislation in 2011. Gov. Peter Shumlin proudly boasted at the time that it would cover all 620,000 Vermonters. But the governor abandoned the effort claiming that the needed tax increases were too large.

And then there's California.

California Healthline reports that donations are pouring into the governor's race, where both Gavin Newsom, California's Democratic lieutenant governor, and John Chiang, the state treasurer, support the concept of single-payer, which would offer universal coverage to Californians, likely at a significant cost to the state."

"Likely"?

The Los Angeles Times pointed out last year that "Single-payer has a long, troubled history in California. Bills made it through the Legislature in 2006 and 2008 only to be vetoed by then-Gov. Arnold Schwarzenegger."

And with good reason.

A 2008 report from California's Legislative Analyst's Office found that even with a tax of 4 percent on employees and 7 percent on business payrolls the state would still have come up about $40 billion short the first full year.

This from the same state that in 2009, only one year later, handed out nearly 29,000 IOUs worth $53.3 million because of a $26 billion budget deficit.

But state-based universal coverage isn't just financially impractical, it's virtually impossible - because federal law trumps (pun intended) state law.

There are nearly 57 million Americans on Medicare, which is a federal program. States have no say in it.

So a state might offer government-run coverage to its seniors and disabled, but it can't change or take away their Medicare. And any politician who tried would likely be unemployed after the next election.

About 73 million Americans are on Medicaid, the federal-state health insurance program for the poor. While states have some say over Medicaid, the feds set the parameters and provide most of the money.

A state might petition the federal government for a block grant of its Medicaid funding to help subsidize its single-payer system, but don't count on them getting it.

Republicans have been pushing the Medicaid block-grant idea for years, and Democrats have consistently blocked it.

And then there's employer-based coverage. About half of the 160 million workers with employer coverage are in "self-insured plans" - where the company pays their employees' claims rather than health insurers. Those plans are governed by federal law.

States have some ability to micromanage employer plans that depend on health insurers to pay the claims, but not self-insured plans.

States certainly could tax employers and individuals to pay for a single-payer system, as the last California plan did. And they could allow - or force - individuals with employer coverage to join the government-run plan.

But how many employees of major California-based companies such as Apple, Google, eBay and Hewlett Packard would be willing to trade their excellent employer-based insurance for under-funded coverage managed by politicians?

And why would any politician even try to make the switcheroo, since neither employer-provided coverage nor Medicare cost the state a dime?

Thus the good news is that state-level Democrats can rattle the single-payer saber in the hope of attracting progressive voters, but they can't do much about it. The bad news is that Democrats in Washington can.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas. He received a doctorate in Humanities from The University of Texas. Readers may write him at IPI, 1320 Greenway Drive, Suite 820, Irving, TX 75038