Some insist that the switch to a single-payer, government-run health care system in California is inevitable. Others argue that such a feat has no chance of occurring either at the state or federal level. But whether or not the switch to government-run health insurance is probable, we asked: Is it possible?
The short answer appears to be yes. The long answer is also yes – but there would be significant hurdles to overcome. And whether or not these hurdles are surmountable is the subject of heated debate.
The prospect of a single-payer health care system in the United States is often referred to as “Medicare for all.” The premise is that a government agency would organize health care financing, which would be paid through taxes. This financing would cover all medical services and visits for citizens (and, under some proposals, undocumented residents).
Health insurance companies would no longer exist, except perhaps to cover elective procedures such as cosmetic surgery. Health care providers would likely remain privatized. Canada has such a system. The United Kingdom, on the other hand, has a single-payer system with the option of supplementing with private insurance.
“Have you heard the joke, ‘What’s the difference between theory and practice? In theory, nothing.’ That’s the essence of my take on single-payer in America,” Paul Hughes-Cromwick, pictured left, co-director of the Center for Sustainable Health Spending at Ann Arbor’s Altarum Institute, told the Business Journal. “And what I mean by that is that we’re never going to have single-payer in America. And I’m not being cynical. It’s for reasons that are really linked to what exactly it entails.”
Hughes-Cromwick has been in the field of health care economic and policy analysis since 1981, having worked for Detroit’s Henry Ford Health System, the University of Pittsburgh Graduate School of Public Health, the Connecticut Partnership for Long Term Care Insurance, and the U.S. Department of Health and Human Services, among others.
While the concept of “Medicare for all” sounds simple, in reality it is a complicated premise, according to Hughes-Cromwick. Medicare has a total of 19 payment systems, each of which has “hundreds of thousands of pages” of regulations used to determine how each medical service is paid for, he explained. These regulations are updated on an annual basis.
“With this backdrop, ‘Medicare for all’ no longer seems so simple. I’m not denigrating Medicare, but rather pointing out the massive complexity of the program that is often ignored,” Hughes-Cromwick said.
According to the Centers for Medicare & Medicaid Services, 16.9% of the U.S. population were Medicare beneficiaries in 2015 (the latest statistics available). Adopting such a system of regulations for the entirety of the population would be “unbelievably messy,” Hughes-Cromwick said.
While other countries have functioning single-payer systems, Hughes-Cromwick believes that the years of adjustment it would take to get it right in the U.S. would be the downfall of such a system succeeding here.
“Yes, it is a way to make health care cheaper and more efficient, and that’s the reason why we spend roughly twice as much as our peer developed countries on health care,” Hughes-Cromwick said. “But getting there is complicated, and Americans aren’t very fond of being told no.”
He added, “We all believe in the efficiencies of single payer. [But] because it’s America, two months [to] six months later, I can just see it going right down the tube when people see choices restricted or some of the other characteristics that we’re just not very good at tolerating.”
Despite the associated challenges, there are many who believe single-payer health care is a simple solution and an inevitability, at least in California. The California Nurses Association (CNA) was a strong proponent of Senate Bill (SB) 562, legislation authored and championed by Sen. Ricardo Lara that would have created a single-payer system. But Assemblymember Anthony Rendon, speaker of the assembly, chose to put the bill on hold for a year in July, calling it “woefully incomplete” in a press release.
Lara represents the majority of Long Beach, while Rendon represents a portion of North Long Beach.
“The California Nurses Association sponsored SB 562 in order to guarantee health care for all Californians and to eliminate insurance company premiums, deductibles and co-pays and those practices of the health insurers that are denying patients care,” Michael Lighty, policy director for National Nurses United and CNA, said. “The nurses believe this is the best reform to achieve guaranteed health care for all and also control costs.”
Rendon held back SB 562 from consideration in the assembly because, as his press secretary, Kevin Liao, told the Business Journal, “It didn’t have the funding mechanism for how the program would be paid for.” Additionally, the bill lacked specifications about delivery of care and cost controls, he said. It also did not address state law requiring voter approval for significant increases in state spending, he noted.
The Senate Appropriations Committee’s analysis of SB 562 found that the total cost of implementing the proposed single-payer health care program would have been $400 billion, of which $200 billion would be derived from state, local and federal funding. The other $200 billion would be sourced from additional tax revenues. If a payroll tax (with no cap on wages to be subject to that tax) were used as the source of funding, the additional payroll tax rate would be 15% of earned income, the analysis stated.
Lighty said that in California, 70% of personal health care expenses are paid for by taxes already. He also argued that “all the federal dollars that are designed to cover health coverage will be available to Californians, period.”
However, as pointed out in SB 562, the state would need to obtain waivers to continue to receive federal funding for Medicare and Medicaid if it were to adopt a single-payer system.
“Our contention is that there is existing statutory authority for California to be what’s called a Part B provider under Medicare. We have an existing Medicaid waiver . . . . And we can build on that,” Lighty said. “There is the statutory basis, a precedent, and an inclination by this current administration to devolve health care policy to the states,” he added.
Lighty believes the switch to a single-payer system in California could be made immediately. “We believe we can transition from the present financing system to single-payer without any disruption of people’s access to care, and [it] in fact will improve it,” he said. “Nationally, in 1965, we transitioned to Medicare within a year. Since so much of the money is already publically financed, we will be able to establish rates and simplify payments to providers such that [it] makes the transition easier. So, we believe it’s quite feasible.”
As for the question of taxes, they would have to be progressively structured, according to Dr. Don McCanne, pictured right, a retired family physician and senior health policy fellow for Physicians for a National Health Program, an organization dedicated to the creation of a single-payer health system in the United States.
“Our health care system has to be progressively funded because lower- and middle-income individuals and families can no longer afford their share,” McCanne said. “Wealthier people have to pay more into the system. And actually, that’s only fair, because in the last few decades the gains in productivity have all moved to the top,” he argued. “And the wealthier are gaining much greater resources than the rest of us. So, all the money is there at the top and far in excess of what they need. And so this would be a way of taking some of that money and distributing it more fairly.”
Hughes-Cromwick pointed out that there are issues with the payroll tax system, which funds Medicare and social security, for this reason. “There are terrible problems with it. For example, people at the low-end wage scale, they are paying all of these social insurance taxes. It doesn’t exactly feel right,” he observed. “That’s kind of a long way to say, ideally it would be something like an income tax or you can design a progressive sales tax.”
McCanne believes single-payer health care would improve delivery of medical services. “We would continue with the current health care delivery system, [which] is public and private – mostly a private system – here in the United States. Health care facilities would be expanded and new clinics established under centralized planning, he explained. “The fact that everyone is included also would result in a more equitable distribution of health care resources of the delivery system,” he said.
McCanne, too, cited the quick transition to Medicare as evidence for the feasibility of switching to a single-payer system. But he did note that the existing private insurance industry would be affected. “The private insurance industry, of course, would no longer be involved nearly as much. And we, in our models of reform, include transitional funds for retraining of the individuals who lose their employment,” he said. Some people employed by the health insurance industry would be integrated into the public system, while others could find work in related fields, he suggested.
The loss of the health insurance industry would have significant economic implications, according to Hughes-Cromwick. “Just imagine the president of the United States saying, ‘Well, tomorrow there won’t be health insurance companies,’” he said. “That is not an adjustment or an enhancement. That is a cataclysmic change, wiping out an entire industry. You might as well be saying there aren’t going to be food sellers anymore.”
Hughes-Cromwick noted that Vermont – the state of U.S. Sen. Bernie Sanders, one of the most vocal advocates for single-payer health care – failed to adopt its own single-payer program. One was passed in 2011, but the governor scrapped the program before it ever got off the ground when estimates showed it would be too costly.
“The fact that you couldn’t pass it in Vermont, little tiny Vermont where they have laws that say you can run around in public naked. . . . Whoa,” Hughes-Cromwick said. The state has a much smaller, more homogeneous population than California and, as such, should not have to contend with the same scale of problems in implementing a single-payer program, he noted.
But Lighty believes single-payer health care will eventually come to California. “I think the likelihood is 100% because we have tried every other element of the present system in order to expand coverage and control costs,” he said. “That is, we have tried Medi-Cal, we have tried private insurance through Covered California. But what we haven’t tried is an expansion of Medicare. And that’s the one part of the overall U.S. health care system that is popular and that works well.”
Rendon is catching flack for putting a temporary stop to that endeavor. CNA sent out mailers to the speaker’s constituents lambasting him for halting the progress of SB 562, and state residents outside of his district have begun a recall effort, according to Liao.
But Rendon is not opposed to single-payer health care. “He is absolutely supportive of achieving single payer. I just think he didn’t feel like SB 562 itself was the way to achieve that goal,” Liao said.
CNA argued that if the bill had gone to the assembly, all of its missing pieces would have been fleshed out there. “We believe that process can fulfill the promise of SB 562 and that the speaker needs to exert political will to support the bill’s completion through that process,” Lighty said.
“I would say it is unprecedented for a bill of this magnitude that would result in state spending in the hundreds of billions of dollars to be moved through one house without addressing such basic things as funding,” Liao said. “The sponsors of the legislation sort of got the hopes up of many Californians who have legitimate concerns about health care.”
Liao continued, “You know, hypothetically, if the assembly had passed SB 562 and it was signed into law, it wouldn’t have provided care to a single person. Because without the funding, you can’t make the program actually happen.”
McCanne pointed out that Rendon did not kill the bill – he just held it for a year, which means it could continue forward after that time has elapsed.
“There has certainly been an increase in interest and support of single-payer system. It’s still a difficult political hurdle,” McCanne said. “Even if a proposal looks like it would pass, it doesn’t take much for the opponents of single payer to initiate a campaign to defeat their efforts. . . . So, yes, it’s a very difficult hurdle. And it’s just a matter of people understanding what single payer really is.”
Hughes-Cromwick noted that the idea of health care as a right is likely to continue to gain steam in America. “I do think that we will move back to a situation where we believe that health care is more of a right than we had previously, and we will start to build on the successes of ACA [Affordable Care Act],” he said. “And I think that that will diffuse the single-payer and instead put the focus on, look, how can we just bring these ridiculous health care prices down, how can we do a better job of figuring out where there is waste and that way make the system more efficient?”
Still, Hughes-Cromwick admitted, “This period is particularly chaotic, and anybody who presumes they can predict it I think should be examined.”