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Monday, Apr 22, 2024

Reviewing Single Payer Health Care for California

AB1400 was aimed at revolutionizing health care in California. This was not The Affordable Care Act 2.0 — this was a complete overhaul. Ultimately it failed to pass out this time, but the measure marked the sixth attempt since 2003 to pass a Single Payer proposal. With repeated past attempts, and promises for future efforts, it’s worth evaluating this for Californians.

The bill would move California to a “Single Payer” style of healthcare. Single Payer, in its most basic sense, is legislative action that completely eliminates all options for health insurance as we know it today — no employer insurance is allowed, no individual health plans, no alternative choices or options for anyone, period. This is not, “if you like your plan, keep it.” This is not, “Cool option for people that don’t have insurance, but that doesn’t apply to me, because I’m covered through my company.” This is every single man, woman and child in California loses their health insurance plan, options, and all alternative coverage choices, and it all goes away in favor of putting everyone on the newly created government-run healthcare product. Insurance is literally completely abolished, and then the State of California raises a bunch of new revenue (taxes, budget re-allocation etc.), and then tells its citizens the rules under which they can receive medical care. Parameters are set for what is covered and what is not, what frequencies are allowed, what doctors and providers are permitted to do, and then the citizens receive their medical attention according to those rules. Whole courses could be taught on what Single Payer is in all of its nuances, but this is a broad overview.

With something this major we have to ask (a) what problem is it solving?; and (b) at what cost? According to UCLA’s Center for Health Policy Research, 94% of Californians already currently have health insurance and there is a remaining 6% who are uninsured. But, of the uninsured, 54% are eligible for subsidized health insurance and just chose to waive that available coverage option. The next biggest group of uninsured are undocumented immigrants — making up 41% of California’s uninsured population. However, importantly, Governor Newsom’s latest budget expands access to Medi-Cal for all Californians—regardless of immigration status. This move alone means that, on paper at least, Californians will Universally either be insured or have access to insurance.

We juxtapose this with the proposed move to Single Payer as a means of accomplishing Universal Coverage for all Californians. For context, the one time a state sought to implement a Single Payer healthcare system, it was in Vermont, and it was scrapped before it ever came to fruition. Vermont is about as ideal of a state to try this in — the political climate was supportive, the overall health of the state is better from a claims standpoint than many other places, and the existing insurance infrastructure was already basically a “One Game In Town” model with the single insurer, Blue Cross/Blue Shield of Vermont being the only real provider of care. And yet it still failed — providing a cautionary tale to legislators. Vermont literally passed the bill, celebrated its passage, and then when it came time to work out the finances were “pretty shocked at the tax rates we were going to have to charge” (Gov. Shumlin — Vermont’s former governor, who signed the bill).

For perspective on the finances, the entire budget for the State of California is currently about $262 billion. That amount runs the entire state’s budget. AB1400 called for another additional $400 billion on top of the current $262 billion. In order to raise that much money, not only were there a slew of new taxes proposed, but the legislation also called for Constitutional Amendments in order to permit the legislature to implement new taxes along the way, as needed, without voter approval. This was because the price tag was so massive that, in addition to the new taxes needed to fund it, a major part of the funding actually came from money captured by reallocating federal funds California receives via a proposed system of waivers — waivers that would be subject to White House approval. While you might be able to count on that grace from some administrations, passing legislation which requires financial favors from whoever happens to be in the White House at any given time is not an overly reliable long term financial strategy.

While California promises to continue evaluating Single Payer as a healthcare strategy, it is important to know what percentage of Californians are even uninsured under the current system, and, more importantly, to evaluate whether this massive and incredibly expensive undertaking is really the best way to redesign affordability in healthcare, or if there might be more incremental (and politically practical!) options that could move us along in the right direction, with more realistic chances of implementation. This is not to say that Single Payer, in and of itself, is a flawed healthcare system. It is more that, in the same way that biological evolution has a way of building upon and improving the existing entity, perhaps there is room for more legislatively palatable changes that might be aimed at more attainable improvements. There are ideas that wrap around the existing system and provide deeper premium subsidies, so the insurance that is offered is more affordable for folks, or even claims cost assistance (deductible/co-pay reduction assistance) for example, that might merit deeper consideration. These options leave the broad foundation of the healthcare system intact, but help those who are still struggling with affordability, and subsidize the citizens in need in more targeted ways.

A thoughtful approach to supporting Californians with the cost of their healthcare is clearly on the horizon, but the question about swinging for the fences versus building a better system brick by brick is a big one — and while Single Payer legislation is attractive to some Californians, there might be realities, once we really get into it, that make it just too big of a lift.

Tobias Kennedy is president of Montage Insurance Solutions and CEO of Simpolicy. Learn more at montageinsurance.com.


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