Health+Benefits the June 2017 issue

States Debate Single-Payer

Harbinger or Passing Storm?
By Richard Sorian Posted on June 26, 2017

As The Council explains (CIAB password protected), “The significant problems in the individual and exchange marketplaces, and corresponding cuts to the federal safety net of Medicaid, will have consequences for years to come on the entirety of the health care ecosystem—as evidenced by the growing political movements on the left in support of single-payer health coverage.”

Echoing that sentiment is a recent Washington Post article, which notes that the continued healthcare debate at the national level has rekindled calls for a single-payer system among some states. Eyes and ears have been trained on two of the nation’s largest states, California and New York, where legislation has been making its way through the system.

In California, legislation known as the Healthy California Act cleared the state Senate by a 23-14 margin and was pending in the state Assembly. However, state Assembly Speaker Anthony Rendon pulled the bill from consideration by the Assembly on Friday, June 23. As the Huffington Post reported, “Rendon, much to the chagrin of the bill’s supporters, opted to pull it last week despite his support for a single-payer system, calling the plan ‘woefully incomplete.’ He urged the state Senate to ‘fill the holes’ and send the Assembly a ‘workable’ bill next year. So while on hold for now, single payer still seems like a possibility in the state.

In New York, the Democratic-led state Assembly has approved the New York Health Act on a 94-46 vote and sent it to the Republican-led state Senate. If the measure can get through the Senate—a slim but real possibility—Gov. Andrew Cuomo is likely to sign it.

Despite this momentum, major barriers lay waiting in the path of these bills including:

  • Opposition from insurers, providers and employers. Not surprisingly, insurance companies oppose the notion of the government (federal or state) taking over their business. And there also is strong opposition from physicians, hospitals and other providers who worry a single-payer system would have far too much leverage over what they are paid. Finally, large employers, especially those that do business in multiple states, also object to the single-payer movement. They worry about giving control over a key benefit for their employees and, very possibly, being stuck with a new tax burden to pay for it.
  • Resistance by the federal government. Both the New York and California single-payer bills assume the state can take control of spending for Medicare, Medicaid and veterans’ care in their states. That would require unprecedented permission from Congress and the White House and in the current political climate the odds of that are slim and none.
  • Taxes, taxes, taxes. Perhaps the biggest trump card held by opponents of single-payer healthcare is the fact states would need to impose significant new taxes on citizens and employers to pay for it. In California, healthcare spending is estimated at $400 billion a year, more than double the state’s spending on all services in 2016. Single-payer proponents argue half of that spending ($200 billion annually) could come from money now spent by the state and the federal government on healthcare, and another $100 billion to $150 billion would be saved by employers who now pay for coverage. Even with this “fuzzy” math, it still leaves a $50-$100 billion hole to be filled by new taxes. New York legislators are looking at math that looks very similar.

All this is not to say it is impossible for a single-payer plan to pass in 2017. But even it were to be enacted, observers often cite the state of Vermont as an example of a locality that enacted single-payer legislation in 2011 only to drop it in 2014 when they could not figure out how to pay for it. Similarly, the state of Colorado appeared moving toward a single-payer model in 2016 through a ballot initiative that seemed certain to pass. However, on Election Day, the plan went down to an overwhelming defeat, primarily due to the specter of new taxes.

This summer is certain to be full of headlines about the debates going on in D.C. and around the country on which direction the nation should take on healthcare. What is likely, at least for now, is continued status quo. Even if the single-payer efforts in California and New York fail in 2017, the debate won’t go away. Democrats in Congress are increasingly backing a single-payer bill. Moreover, Aetna CEO Mark Bertolini told a private investors’ conference, the U.S. should give the notion serious debate. He cited Medicare, a single-payer program covering millions of American seniors, utilizes insurers to process claims and other key responsibilities. So a debate that has been raging, on and off, since Harry Truman was in the White House, continues.

Editor’s Note: This article was updated on June 30, 2017, to reflect changes in the movement of the Health California Act.

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