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Single Payer Healthcare in California: Here’s What It Will Take

In any single payer universal healthcare scenario, there will be roadblocks between status quo and the goal. Some of these roadblocks every state will run into. Others, are uniquely Californian. In order to properly address every roadblock, we must take every roadblock head on. Pretending they don’t exist, or can simply be driven around, will end up with our healthcare car not going anywhere at best, and off a cliff at worst.

The most important and often overlooked roadblock, is California’s constitution itself. Article XIIIb puts a limit on taxes, exempting at-cost fees & bonds, calculated this year as $12 billion in room. Anything above that limit would be rebated to taxpayers. Article XVI Section 8 guarantees that 40% of all taxes get sent to K-14 education. Simply put, if California were to redirect all healthcare premiums to a state pool to fund a single payer universal healthcare system (estimated $100-200 billion), then education would automatically take 40%, and all but a few billion would be automatically rebated to the taxpayers. The California Budget & Policy Center has an excellent analysis, as a written article, and again as testimony this year to the Assembly Select Committee on Universal Healthcare Delivery Systems. Enact Universal Healthcare for California also chimed in with the history of how these constitutional issues arose. The only way these issues can be addressed is through a constitutional amendment voted on by the people.

Peter Shumlin, the former governor of Vermont, famous for attempting to implement a single payer system in his state but failed, said his “biggest regret” was not working on cost controls first. Simply studying current costs but doing nothing to keep them from increasing out of control was what ultimately doomed single payer in Vermont. All countries that implement universal healthcare, whether single payer or another system, have cost controls. Even the two hybrid single payer systems here in the United States, Medicare & Medicaid, both have some form of cost controls baked in. Canada, the closest example of single payer, has global budgeting and rate/price controls. Even Maryland, which has been flirting with single payer, has had global budgeting and price controls since the 1970s. While most people focus on private insurance, which takes as much as 15% for profit, the CMS’ own figures show doctors and hospitals to be 51% of total spending, with pharmaceuticals at 10%. Focusing only on private insurance but not also reining in costs would be a mistake. The US spends 17% of its GDP, almost $11,000 per person, on healthcare. In all the countries with universal healthcare, this figure drops by half to two-thirds.

And just what will California’s implementation look like? One recent proposal in 2017, SB-562, didn’t even have an implementation, and punted it to a commission to be worked out over several years, while mandating that state coverage for everyone began immediately. Other proposals have charted a much more cautious and incremental course. One wanted to expand Medicaid to undocumented residents. Another wants to create a public option (Medicaid buy-in) to be offered on the Covered California exchange for all areas. The state already has an administrative body for Medicaid, and while it is villified for being underfunded, it exists, can be expanded, and be better funded. In fact, the national single payer effort, AKA “Medicare for All,” would expand Medicare, which actually covers less than California’s Medicaid (dental, for example). However, Medicare is a federal program, not administered by the state, and therefore not even part of a state-level discussion.

A part of implementation that is important to half of California is hospital infrastructure and physician availability. Half of California is rural, and in many places, it can take an hour or more to travel to a hospital that provides the services needed. Almost no thought is given to availability of psychologists or even dentists. The urban half of California may not have this problem, but if one were to be so dismissive in, for example, California’s expansive 1st Assembly District in the northeastern corner, one might end up experiencing this drought of services firsthand. All of these need to be addressed, and largely no one has proposed anything more than bandaids.

Despite some proponents assurances to the contrary, federal waivers are needed to use Medicaid and Medicare funding for a single payer system. And for those that acknowledge waivers but claim they are automatic, one need look no further than last week where CMS’ Seema Verma declared that no waivers would be given out for any single payer system. Now that the gloves are off, it is clear that only a change to a more friendly federal administration will allow a single payer system that uses federal dollars. Instead of prolonged litigation against a hostile party, where every inch of ground must be fought for anew, the cheaper and arguably speedier way will be to elect a majority who wants or will allow states to implement single payer (and work with them).

ERISA is back in the news, with the current administration writing rules to allow small businesses to join into self-funded plans that, aside from solvency issues, prohibit states from regulating any aspect of these plans. ERISA has been interpreted so widely by the courts that even a payroll tax for healthcare may even be considered as illegally coercing employers to drop self-funded plans. If employers don’t want to give up self-funded plans, and the state can’t tax these employers for healthcare, then it may fall to less desire methods, such as an increase in income & sales taxes, which don’t directly tax employers. But those have issues too.

Now, after all that, we get to funding. It’s a big issue, but can only be considered after all the other issues above. Without the constitutional amendments, funding is illegal. Without implementation, we don’t know what we’re funding. Without cost controls, we can’t plan for how much we’re funding. Without waivers, there’s simply a lot that can’t be done. Without changes to ERISA, we’re even limited in the kinds of taxes we can impose. And with the recent federal tax law changes, state income taxes deductions from federal taxes are now capped, costing people even more than anticipated.

This is why EUHC4CA co-sponsored the Single Payer Planning Commission. Instead of ignoring all these issues, the California Legislature took our bill, (AB-2517 as passed by the Assembly), included it into the budget, and allocated $5 million to address these issues head on. To have Governor Jerry Brown agree to its inclusion and sign the bill is monumental, considering he was instrumental in putting Article XIIIb’s spending cap into the constitution.

To ignore the issues is to fail. One only needs to look at the efforts of the last 20 years to see that. Single payer should not be a publicity stunt. We Californians need to acknowledge and tackle everything head on if we want to succeed. With the Single Payer Planning Commission, and with everyone pushing together, we will succeed.