Gavin Newsom backed an assortment of ambitious and expensive programs as he campaigned for governor, none more so than the idea of converting the state to a single-payer healthcare system. On his first day in office Monday, Newsom reaffirmed that goal, but set the state on a more measured — and far more achievable — path toward insuring all Californians.
The most dramatic step Newsom took was also the one least likely to bear fruit: He signed a letter asking the federal government’s permission to mingle federal dollars (such as funding for Medicare, Medicaid and veterans health benefits) and state funds into a single-payer system, replacing the various public and private insurance programs with one run by Sacramento. The chances of the Trump administration signing on to such a plan seem more remote than the most distant star in the Milky Way.
The other moves the new governor unveiled, including more spending on insurance subsidies and a new approach to prescription drug purchases, were more modest. Yet they still tee up some of the important questions that the Legislature — and the public — need to grapple with en route to a better healthcare system.
Switching to a single-payer system, in which the government would cover the costs of necessary medical care, involves considerably more than just replacing insurance companies with bureaucrats. Once the state becomes the only insurer, it raises more pointed questions about who should be covered and for what types of care, how much the state should pay for treatments, how to hold down costs, how to finance the healthcare system, what alternatives, if any, consumers should have.
The Legislature has already started wrestling with one of those issues: Who should be covered? According to estimates by the UC Berkeley Labor Center, the vast majority of the roughly 3 million Californians who lacked health insurance in 2017 were lower-income residents, and the biggest group of them — an estimated 1.8 million — were low-income people living in the country without authorization. But providing subsidized healthcare to that group through Medi-Cal, the state’s version of Medicaid, would cost hundreds of millions of dollars, which is why the Legislature balked at a proposal to do so last year.
The state needs to get there eventually, however. Extending healthcare coverage to all would not only help low-income working families climb out of poverty and off other government assistance programs, it would make it easier to implement programs that improve efficiency in the healthcare system and slow the growth of healthcare spending.
The Legislature took an incremental step in that direction a few years ago, opening Medi-Cal to all low-income Californians under age 18 regardless of their immigration status. Newsom’s budget proposal is expected to provide funding for one more step, albeit a small one: covering all low-income Californians under age 26, regardless of status. Notably, the state is already paying some of the healthcare costs associated with that age group — it offers maternity coverage to anyone who meets the income cutoff, and emergency rooms treat everyone in need of acute care.
Providing free health insurance to people who are in the country illegally is a tough sell for some Californians. So is Newsom’s proposal to require all adults in the state to carry insurance — a requirement that is also in the federal Affordable Care Act, but which no longer has a penalty to enforce it. But the argument for the requirement is every bit as strong as the argument for requiring drivers to carry insurance. Everyone is going to require expensive healthcare in their lives, and they should be able to pay for it when they do.
Granted, rising insurance premiums have made coverage increasingly hard to afford for many people who aren’t part of an employer-sponsored plan. To that end, Newsom is proposing as-yet-unspecified increases in subsidies for the roughly 1.4 million people who shop for policies on the state’s insurance exchange, Covered California.
As they work to make coverage more universal, Newsom and state lawmakers will also have to look for ways to slow the growth of healthcare costs. One Newsom move along those lines is to create a single state entity to buy prescription drugs for all state healthcare programs, including those for prison inmates, retired public workers and low-income Californians. The combined buying power should give the state much more leverage to negotiate discounts from drugmakers. But it’s a complex undertaking, given that the state will be deciding which drugs will be covered by all those plans — a decision that raises the specter of rationing.