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.
I don’t even see it necessary since it is about as close to single payer as anything is likely to be. It, combined with Medicare Advantage together with copays is largely there.
To move in a parallel direction with actual funding, one could create another exchange that businesses could buy into, offering similar plans and even offer a state plan. It would get you most of the way there but only if it out competed them.
Medicare Advantage is federally subsidized commercial Medicare. The gov pays ~15% to insurance companies to do the same as Medicare.
Any fiscal analysis of a single payer system by an individual state falls apart as economically viable because no single state, not even CA with it’s huge population can create sufficient leverage for drug and medical providers to cut prices enough.
For one thing, medical providers have mobility and options outside CA to practice elsewhere.
For another the pharmaceuticals will simply do the math to find their break-even price (volume v price equivalence) which doesn’t lower drug costs enough relative to the current prices paid.
The reason national single payer works is that the entire population of a nation is the leverage which a national gov’t can use along with changes in national laws to insure it works to reduce costs without reducing health care and outcomes for the entire population.
In a single state system there are several issues the state can’t control:
Folks hitting retirement age move to CA to become residents before their high health costs hit… what cutoff time to residency is to be established for participation when they didn’t participate until then?
Younger folks will flock to CA to have low costs, especially child bearing age families… this will increase labor supply and drive down labor wages without other laws to counter the effect.
These kinds of “unintended” but clear and obvious consequences are avoided by a national system.
LT:
As a CA resident, I am sure you already knew this. I have written on this before also. Thank you for your comment.
well, yes. may i point at two things this post brings up that make the medical care problem “unsolvable.”
!) the left trying to match the right for deceptive language.
2) the rube goldberg design of all plans under consideration by the serious people ™.
Coberly:
You do know Bernie was pushing this in California? I have issues with it too which is why I took EM’s words and posted it along with an explanation I had to find.
Run
no. i didn’t know Bernie was pushing this. but the Democrats, or the further Left, are not going to beat the Republicans if they can’t come up with something simple that the people can understand. and they probably can’t beat the Republicans with something that depends on “tax the rich”.
I have nothing against taxing the rich, but there are limits to what can work politically in this country. and in any case even the rich can’t afford to sign a blank check. and it is intellectually if not morally bankrupt for the left to think that “tax the rich” is the solution to all problems.
am i in trouble yet? (for what it’s worth, i deeply despise the Republicans of today, but we won’t beat them by acting like them.)
“The great state of California can send a message that will be heard all over this country and all over the world if you pass single-payer here,” Sanders said while visiting the state last month.” Everything You Need To Know . . .
Run
i am all for single payer. the california plan didn’t exactly sound like single payer to me. and the price tag, and lack of funding, made it sound like something they hadn’t thought very hard about.
meanwhile the Idelson letter sounded like the Left’s penchant for “choosing your enemies” has become “make enemies of everyone.”
just to be “positive” even though i don’t imagine i am necessarily “right” or that anyone would listen to me anyway:
The cost of health care is what it is, at least for now, until some controls can be put on costs. The only hope of that, I think, is from the Federal government, if we ever get back to a federal government that actually wants to solve this problem.
Meanwhile the cost looks like something in the range of 5000 per year per person (per taxpayer?). This is a lot, but if it’s what it takes to not die of something that “medical care” can keep you from dying from, it may be a reasonable price to expect to pay. But when people who are making 50,000 a year say they can’t afford it, and therefore the costs should be borne by “the rich,” they are creating an unsolvable political problem. the rich are only about 10% of the population, for them to bear all the costs of medical care for the whole population would cost them 50,000 each on average. They won’t pay this much, and if it comes to it, they don’t care if you live or die. That, I am afraid, is just a fact.
So I propose that we each make up our mind to pay for our own health care as insurance, the money taken out of our paychecks as a flat tax (ability to pay), dedicated and transparent, where in fact those better off do subsidize those too poor to pay a reasonable cost for health insurance, but not at the obscene levels called for by “make the rich pay.” Furthermore the tax should be capped at a level that represents a “reasonable” cost for insurance including the “extra” insurance against becoming at some time in your life one of those poor who need the subsidy.
But even this won’t work unless costs are controlled. That will make the “providers” unhappy, and with “government” controls there is room for our old friends “waste, fraud, and abuse,” which, I am afraid we would have anyway under a perfectly free market solution…. but no one is proposing that, even thought they talk like they are.
Single payer will work in CA only if (and it won’t happen) a portion of federal taxes are rebated to CA to help pay for it, just like what would happen (federal tax dollars paying) it we had universal healthcare.
The main problem with this incredibly premature plan is how it divides Dems. No liberal is not interested in improving our healthcare system, but throwing together this swiss cheese legislation and then complaining when the neoliberals notice it has no basis in reality and stops wasting time with it is another cause of why trump is in the white house.
As Will Rogers said. “I am not a member of any organized political party. I am a Democrat.”. Exactly, and those Democrats are the worst team mates in the world. The details in this episode appear above, but one is simply startling:
“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.”
Seriously? Before anything else happens with this legislation, Califronia budget laws will have to be changed? Beyond silly to try to put the building up without thinking about the foundation.
It is fine to dream. But then there is math. You have to do the math to attain the dream.
EM:
Listen to the David Dayen discussion starting at minute 31.
I will when I hit the east coast tomorrow. I have to tell you, I am not a big fan of Dayen based on his “neoliberal” meme, which I consider the main reason why this country has bee run by Republicans for most of the last 50 years.
The “real proressives” cannot seem to figure out that there are not enough votes for them to do anything unless they work with the “neoliberals”. And that has been true from FDR on, yet somehow they take credit for the things they like (New Deal, SS, Medicare) while attacking “neoliberals” when things they do not like happen.
The ACA is a classic example. The “real progressives” made it unpopular with their incessant whining, mostly based on lies(Yeah, Lieberman was a Democrat in 2009 like I am a Dallas Cowboy fan). Go Eagles!
He is in your favor. I stopped listening after 12 minutes. There is probably more.
EMichael
the “real progressives” don’t like Social Security either. they like the name. they like its success. but they want to ride on its name and success to turn it into welfare for all seasons.
i can’t say i like the neo-libs either. but it looks like we don’t have a Roosevelt anymore to actually see what it takes to solve the problem and to convince people that they understand it.
coberly:
Don’t read into it. David comes out and says there is no way a state can take Medicare contributions which is good in my opinion. Some states pay more than other states due to poverty, higher income, etc. We need to keep them in SS/Medicare as they fund for those who can not afford to pay more. I think I explained it pretty well.
Coberly,
Please explain: “the “real progressives” don’t like Social Security either”
My response to reading this statement was “Huh?” because the first thing you said after that was “…they like its success…” You’re not making sense. SS does x, produces result y which liberals deem a success .. e.g. producing result y from method x.
Then how can “real liberals” not like Social Security if they like the results it produces as a success of the methods used to achieve the results?
Run
sometimes i think i explained things pretty well, too. then i am surprised that no one understands a word i said.
i am most probably not talking about what you are talking about.
see my attempt to reply to Longtooth below.
Longtooth
I used to be closer to some people who called themselves progressives than i am now. irreconcilable differences emerged.
they talked a lot about saving social security. but it turned out that they didn’t understand the first thing about social security, which is that it is an insurance program for workers paid for by workers. Roosevelt was adamant that it not be “the dole.”
The “progressives” today are determined to “make the rich pay their fair share”… meaning turn it into the dole.
the success the “progressives” like about SS… and the reason they want to hang their own program on it’s name, is its success in popular opinion. SS has succeeded exactly because it is NOT “the dole,” but “we paid for it ourselves.”
The workers can continue to pay for their own Social Security themselves by raising the amount they contribute to their own retirement through the payroll tax by about a dollar per week each year. The progressives think a dollar a week is too heavy a burden for working people to pay for their future retirement needs, so they want to “make the rich pay for it.” these “progressives” neither understand that a dollar a week is not much money, nor do they even understand that in the real world some solutions are better than others. they think in terms of talking: negotiation and compromise… as in we’ll only force you to work an extra year before you can retire and you won’t have to pay more than half of that dollar per week.
i no longer think either the progressives or the people were ever smart enough to save their social security, but it is tragic to watch them destroy the best deal the working man ever had because they are greedy (wanting someone else to pay what they can and should pay for themselves) and too stupid to understand the difference between a dollar a week and an extra year of work when you are old and hate your job and could have paid for an extra year of retirement for an extra dollar a week.
Run
this departs a little from the subject of your post: medical insurance. i know a lot about SS and not so much about insurance, but i think the principle is the same: the progressives don’t understand that the math counts, that you can’t “tax the rich” for everything you want. they don’t present any workable plan, just a “sounds good” non-plan to provide medical care for all without anyone actually paying for it. except the mythical “rich” of course, but even they don’t have enough money for that.
and i have to issue a disclaimer: this is not because i “love the rich.” i don’t. those represented by the Republicans are evil people, but they will continue to rule the country until the left gets some sense.