Could California have its own single-payer health insurance system providing coverage for all residents? A bill has been introduced in the state Legislature that would do just that — and its chances of success could be vastly improved by President Trump and the Republican-controlled Congress.
First, a little history lesson. Stick with me because this is important.
California flirted with a single-payer system when the Legislature signed off on the idea in 2006 and again in 2008. The bills were vetoed by former Gov. Arnold Schwarzenegger, who declared in 2006 that “socialized medicine is not the solution to our state’s healthcare problems.”
Those legislative efforts were spearheaded by Sheila Kuehl, who was then a state senator and is now a Los Angeles County supervisor. She and I spoke frequently during California’s flirtation with single payer and we caught up on the topic this week.
Her biggest mistake in 2008, Kuehl told me, was not effectively countering the “socialized medicine” line from Republicans and conservative critics.
“What we should have done from the very beginning was use the phrase ‘Medicare for all,’ ” she said. “People are familiar with how Medicare works. They would have understood that we weren’t taking over healthcare providers.”
Under the typical single-payer system, payroll taxes replace premiums, deductibles and co-pays as a funding mechanism for health insurance. This is how almost all other developed countries succeed in providing affordable coverage for everyone — and for about half as much as what Americans pay.
No one is proposing a government takeover of hospitals and doctors’ offices.
“Single-payer isn’t socialized medicine,” Kuehl said. “It has nothing to do with hospitals and doctors. It’s purely a form of insurance. But we didn’t communicate that as well as we could have.”
Messaging aside, she thinks the public has become more open to new ideas.
“With so much uncertainty from the Trump administration,” Kuehl said, “I’m more convinced than ever that single-payer is the way to go for California. It’s a very, very good idea.”
The idea is back in play thanks to state Sen. Ricardo Lara (D-Bell Gardens), who last week introduced a bill aimed at creating a Medicare-for-all system for Californians.
It doesn’t yet say how this would be accomplished. Instead, it declares the Legislature’s “intent” to pass a law that would “establish a comprehensive universal single-payer healthcare coverage program and a healthcare cost control system for the benefit of all residents of the state.”
Details, presumably, will come later.
“If Republicans abandon California and Congress moves to cut Medicaid, we will insist that the federal government treat us like any other state and give us the flexibility and freedom to address the health needs of our entire population through a universal healthcare system,” Lara told me.
Studies have shown that a single-payer system would result in lower out-of-pocket costs for most California residents.
But one big problem with Kuehl’s earlier bills was how the $100-billion Medi-Cal program — the state’s version of Medicaid — would integrate with a California single-payer system. Medi-Cal covers about a third of the state’s population. About $67 billion in funding comes from the federal government.
That state-federal partnership meant Washington would have needed to sign off on any move to incorporate Medi-Cal into a state single-payer plan, and Kuehl acknowledged at the time that this probably would have been hard to obtain.
Thanks to Trump and the Republican-controlled Congress, things are now very different.
“We should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out,” Trump said in his speech to Congress this week.
What he and Republican leaders mean by that is giving states a fixed amount of Medicaid money in the form of block grants to cover low-income people. States currently are guaranteed at least $1 in federal funds for every $1 in state spending.
The Republicans’ goal is for the federal government to pay less for Medicaid annually. But what they’re also unintentionally doing is removing perhaps the biggest obstacle to California and other states establishing their own single-payer systems.
With block grants, states wouldn’t need congressional approval to use Medicaid money for a broader insurance program.
“Yes, that solves the problem,” said Gerald Kominski, director of the UCLA Center for Health Policy Research.
But he noted that block grants create a different issue in the form of program sustainability. Unless the annual grants grow with healthcare costs, states will find themselves increasingly underfunded in covering Medicaid populations.
“If the grants are linked to inflation, that won’t be sufficient,” Kominski said. “Healthcare spending always grows faster than the overall economy.”
The average cost of living for Americans rose about 2% last year. Healthcare spending, meanwhile, climbed 4.8%, and is expected by the Centers for Medicare and Medicaid Services to rise 5.4% this year.
“Block grants are a poison pill,” Kominski said. “They’re a slow-acting poison that cuts off your healthcare funds.”
That’s not an insurmountable problem. California could structure a single-payer system so that it’s sustained by a greater share of state tax revenue, with program efficiencies offsetting a gradual decline in federal dollars.
A 2005 study by the Lewin Group found that a single-payer insurance plan would save California nearly $344 billion over 10 years, primarily by streamlining bureaucratic overhead and relying more on bulk purchases of prescription drugs and medical equipment.
The study also predicted a significant economic boost for businesses because they’d no longer be responsible for employees’ health coverage. This, in turn, would probably spur job creation.
A single-payer system would be a clear improvement for California and would serve as a model for the rest of the nation. Don’t forget: Canada didn’t adopt a single-payer system overnight. It rolled out its universal-coverage program gradually, province by province. The same methodical approach would be prudent for the United States.
But now another question arises: What sort of single-payer system do we want? They’re not all created equal.
On Tuesday, we’ll look at alternative approaches to covering everyone.