California’s Single Payer Plan

Reader EM put this comment up in the AB open thread. I thought it was interesting enough to place on AB as I also wonder about the question being asked and the answer; “can a state divert Medicare funds to support a state single payer system?” The simple answer is “no,” Medicare funds can not be allocated to states and the same holds true for VA funding for healthcare and the tax credit to companies for healthcare insurance. Congress would have to approve it in new legislation. David Dayan discusses this issue of California Single Payer starting at minute 31 David Dayen on CA’s SIngle-Payer Debacle on Politics and Reality Radio. This is in direct answer to EM’s question.

Furthermore for Medicaid and CHIPS a 1332 wavier for state contributions must be deficit neutral and not create a deficit in the Federal Program which is required for CHIP and Medicaid. I assume a similar wavier for Medicare fund diversion would also have to be deficit neutral so as not to cause harm to overall Medicare.

The state of California is one of the top 10 states in income (median income 9th). If a state such as California pulls out of Medicare, who makes up the difference in funding? There are other states such as McConnell’s Kentucky who rank in the bottom 10 with the lowest income (median income 46th) and a higher percentage of people living in poverty.

Here is EM’s dilemma:

Mother Jones, Kevin Drum, June 29, 2017 12:38 PM; “I Get Letters

The single biggest proponent of SB562, California’s single-payer health care bill, is the California Nurses Association. But here’s something I didn’t know until yesterday: the CNA is aggressively using support for SB562 as a litmus test for being a true progressive. The bill is basically unpassable, but it’s being used as a way of whipping up the Bernie wing of the Democratic Party against traitors who fail to support it.

Apparently this applies even to B-list bloggers. I got an email today from Chuck Idelson, Communications Director for CNA’s umbrella organization, National Nurses United. Here is how it ended:

“Having seen two years of your hatred for Bernie Sanders, it’s not surprising you would be equally hostile to ideas he champions like single payer, but it would be nice if you were a little more honest with your readers, or maybe you can recommend the name of your magazine be changed from Mother Jones – who actually fought for working people – to Milton Friedman, which would better reflect your class sympathies.”

It is good to see that progressive organizations are learning communications skills from the Trump administration. But, I wonder if this kind of attitude is helpful in attracting and maintaining support for progressive causes?

POSTSCRIPT: “Just for the record, I have supported single-payer health care for at least the past 25 years. But for a variety of reasons, it needs to be done at the national level. No state has ever been able to make it work.”

EM: Still trying to find answers to this Cal single payer thing in terms of financing.

New Republic, Clio Chang, June 30, 2017, “ What Killed Single Payer in California?

“A legislative analysis found that California’s single-payer plan would cost $400 billion to implement, $200 billion of which would be new spending. Critics were quick to point out that this “hefty” price tag is twice the state budget. Furthermore, the bill did not include a funding plan (although the bill’s language ensured that Healthy California would not launch unless it was funded).

However, a report by professors at the University of Massachusetts Amherst, commissioned in part by National Nurses United, estimated that after taking in the savings of single-payer, such as lower administrative costs and prices of pharmaceuticals, the actual cost of the plan would end up at around $331 billion. And, because 70 percent of the state’s current health care spending is covered by public programs like Medicare and Medi-Cal, California would only need to come up with $106 billion in new revenue, which researchers proposed could be done through two new taxes (a 2.3 percent gross receipts and sales tax), with exemptions for small businesses and tax credits to offset costs for low-income families. In exchange, nearly all of Californians’ medical expenses would be covered, doing away with premiums, copays, and deductibles . . .

But according to the Affordable Care Act’s Innovation Waiver, if a state comes up with a credible alternative to the ACA, the federal government is obligated to provide the funding. Pollin said that while it is impossible to know in advance what the Trump administration will do, “you can also pass the bill, and obviously it has to be contingent on us continuing to get 70 percent of funding that we now get.” Pollin felt that Rendon’s objections were technical ones — they need to be addressed, but don’t raise any issues that can’t be worked through. “The concerns that they raised were pretty narrow. Nobody said this is crazy, we can’t do this,” he said.

There are problems other than the fact that the bill did not include a specific funding mechanism. The biggest hurdle may be Proposition 98, a complicated California funding law that requires that around 40 percent of the state’s budget go to schools. This means that a huge portion of any increase in the state budget would have to go to education, so legislators would have to come up with almost double the money to cover the single-payer plan. To get around this, voters would have to first pass a ballot initiative.”

EM: I cannot find anything at all in the ACA’s Innovation Waiver that says Medicare funds can be used.

FamiliesUSA,Cheryl Fish-Parcham, January, 2016 “ What Advocates Should Know about 1332 State Innovation Waivers

“The 1332 waivers apply only to private health insurance coverage and the marketplace, not to public programs like Medicare or Medicaid. But states can seek multiple waivers from HHS at the same time. For example, they might ask permission to change their Medicaid programs under an 1115 waiver and their marketplace coverage under a 1332 waiver. However, the federal government will evaluate each type of waiver separately – an 1115 waiver must still meet all of the existing standards for Medicaid 1115 waivers, and a 1332 waiver must meet the requirements we describe below. How Could a 1332 Waiver Affect Medicaid or CHIP?

EM: I cannot believe there is anything in Medicare law that would allow such a transfer, and it does not appear to me there is anything in the ACA that even mentions using Medicare funds.

Perhaps someone in here has more knowledge than I have been able to find, but I see no purpose whatsoever in this financing plan from Pollin that relies on funds that cannot be accessed. All this thing does is confuse the issue.

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