CONNECTING PEOPLE TO IDEAS AND TO EACH OTHER
CONNECTING PEOPLE TO IDEAS AND TO EACH OTHER
Essay

California’s Single Payer Health Care Bill Is Dead on Arrival

The Senate Democrats' Proposal Is Illegal, Unworkable, and Ignores Other Nations' Useful Models

Signs at a health care rally in downtown San Francisco, January 15, 2017. Photo by Kim Wilson/Shutterstock.

I am a lifelong Democrat who has been working hard for more than a decade to improve the policies and build the coalitions necessary for the success of the Affordable Care Act, also known as Obamacare. I believe the ACA didn’t go far enough and that the United States must do more to guarantee universal and affordable health coverage. My preference would be for America to move toward a system similar to that of the Netherlands, perennially ranked at the top of the Euro Health Consumer Index. 

So why I am so hopping mad about the “single payer” bill–SB 562–currently making its way through the California legislature?

My frustration is with how the bill exploits widespread confusion about what good health policy outcomes are, and how other countries achieve them. The bill’s proponents lead people to believe that only the United States has a profit-based system and everywhere else has a fully government-run system that produces better care at a lower cost.

In truth, every industrialized country has a hybrid system and all are wrestling with the same challenges we are, especially in terms of controlling health care costs. Health care, it turns out, is complicated, and snake oil solutions from the right or left undermine incredibly important efforts to learn from both our own experience and the models of other countries.

But the advocates for this bill press on. SB 562 is a compassionate bill, they say. It will bring health care access to people who can’t afford it, we are told. It is backed by all right-thinking Democrats.

Poppycock. 

If you care about people, you have to care about policy. And this proposal is very poorly designed and impossible to implement. It was a mistake for the Democrats to pass this out of the state Senate. Those legislators ignored the spectacular work of the staff of the Senate Appropriations committee, who pointed out all the bill’s basic and fatal flaws. In any sane world, that would have sent the proponents of the bill back to the drawing board. Instead it sent them to the barricades, declaring that the bill is the only way to save health care and denouncing anyone who might oppose it.

What are these flaws? Start with the total illegality of the bill. It plans to take all of the health care money being spent in the state through Medicare, Medicaid, the Veterans Administration and other programs and put it into a big pot. California could ask for waivers from federal laws so we could spend this money as we please, we are told.

In fact, we could not. There are procedures that allow states to temporarily waive certain requirements of the Medicare and Medicaid programs to experiment with improving those programs. These waivers do not allow states to do away with these programs entirely. The only funds for which there is a process that could clearly apply is federal private insurance subsidies, and that’s a $5 billion drop in the bucket of our $300 billion plus health care spending. It would take a change in federal law to make the basic financing scheme for this bill possible, and there are many other provisions that would violate other federal laws, such as the federal prohibition on state regulation of the health benefits of large employers.

Health care … is complicated, and snake oil solutions from the right or left undermine incredibly important efforts to learn from both our own experience and the models of other countries.

Second, the bill takes an enormous problem—rising health care costs—and makes it a runaway train. The Senate Appropriations Committee gave the bill a price tag of $400 billion, more than twice the size of the current state budget. This would obviously crowd out spending on any other state priority such as transportation, housing, or education (the investments most closely connected with better health, as it turns out). But as big as the initial spending would be, the long-term cost also would be much, much greater, as this bill would rapidly accelerate health care cost growth.

The bill’s provisions encourage people to consume more health care of any type, adding to costs. The bill makes private payments for health care, such as co-payments that people pay for doctor’s visits and prescription drugs, illegal. And the initial draft of the bill proposed that only providers of medical care would determine what is medically necessary, and that patients would be able to access any provider without a referral. The legislation is also based on a fee-for-service system—doctors would get paid for every procedure. Such a system is what California has been trying to get away from for decades, because these kinds of payments encourage a higher volume of procedures and health care interventions, rather than effective and valuable health care.

There is literally nothing that we have learned about health care in the past century that this bill’s drafters appear to understand.

Universal affordable health care cannot be achieved without a willingness to learn. Countries around the world do health care in many different ways, and we Americans have much to glean from these countries. But this bill does not look at other models or apply lessons. This single-payer system is not based on systems in Europe or Asia or anywhere else.

Some of the bill’s proponents say their system would be “Medicare for All,” but this proposed system wouldn’t work the way Medicare does either. Medicare has cost-sharing for patients and involves private insurers through the “Medicare Advantage” programs. This bill would entirely eliminate cost sharing as well as private insurers.

One argument is that the bill, whatever its flaws, is better than any other proposals out there. But only in the sense that a Pegasus is better than a pony. 

Flying horses, of course, don’t exist and there are many reasons why a system like this doesn’t exist anywhere in the world. A good health care financing system incorporates competition and private companies to drive down costs and drive up value. Cost sharing, if appropriately designed, can help encourage people to be better at utilizing the system, seeking health care preventively and at lower cost, and discouraging the use of low-value care.

Health care systems, especially government-run systems, require management. And the system being proposed here is essentially unmanaged. No country or state could afford such a system, in which patients are encouraged to consume as much health care as they want and doctors are paid more for every additional service they offer.

The final frustration of this phony single payer bill is that the efforts of those who are truly committed to universal affordable health care are needed elsewhere. The American Health Care Act, making its way in fits and starts through Congress, would take a buzzsaw to our progress on universalizing health care, not only wiping away the gains of the Affordable Care Act but also handicapping (if not destroying) the half-century-old Medicaid program for lower-income individuals.

The California legislature desperately needs to be devoting all its attention to opposing the federal legislation, and saving Medicaid, which is known as Medi-Cal here and covers nearly one-third of California adults and half of our children. Instead, the legislature is wasting its time on this nonsense proposal. Californians should be united around real progress on health care reform, not scattered by divisive fantasies.

  • DCampbell2

    Wow!!? I like it!!? Zocalo has matured into the world of thoughtful reporting. Excellent article. The Pegasus analogy was spectacular. This and your shipping article are two of the best secular article I have read this year. Thank you

  • Michelle Klein-Hass

    The author is either uninformed or willfully blind to some important facts: an independent, scholarly review of the bill has been released, and SB 562 represents a massive savings for individual constituents AND business. Remember when Toyota said they will never build another plant in the US, that they would rather build in Canada? That’s only one example of how Single Payer rids business of the vampire fangs at their neck…the fangs of the “Health Insurance” multi-national corporations. The Insurance industry adds NOTHING to the quality of health care, it is a DRAG on health care outcomes, and it stands between doctor and patient, making decisions that are based on COST, not value.
    Read the analysis for yourself.
    http://healthcareforall.org/economic-analysis-sb-562-5-29-2017

  • Dr. Weinberg, thank you for your thoughtful analysis. I would like to respond to, and/or clarify, a few of your points, as follows:

    1) “Illegality” – You state that it’s illegal to fail to provide any of the benefits of Medicare and Medicaid (Medical). My understanding of SB 562 is that it meets that standard, and thus would not be “illegal”.

    2) Cost – you quote $400 billion, and compare it to the rest of California’s budget. That is a false equivalency and misleading.
    It is a false Equivalency because Healthy California will be an entirely separate program, funded entirely separately. For comparison, CMS’s (Medicare + Medicaid + CHIPS) budget is many times the non-military budget of the US.
    It is misleading because you neglect to mention that Californians are now spending $500 billion on their healthcare, some paid as taxes, some paid as insurance premiums, and some paid directly to medical “providers”. Healthy California would immediately save about $100 billion, not cost an additional $400 billion.

    3) Lack of cost restraints – You allege that when a patient receives the care prescribed by a physician that medical costs will soar without limit. As patients, we see insurers (who limit our doctors) as greedy bastards practicing medicine without a license. On what planet do you find it appropriate to let someone without any medical knowledge or training, who has never examined you, determine what course of treatment is most appropriate for you?
    To put it more politely, Healthy California begins with the fee-for-service Medicare model most beloved by Medicare “beneficiaries”. There are no provisions in the plan that prevent the adoption of any of the cost-control measures you contemplate, including HMOs like the very medically and financially successful Kaiser Permanente system.

    4) Flying Horses vs ponies – You pretend a metaphor, but you create a straw man (a false representation easily shown to be flawed). Healthy California will immediately save me $100 billion. How is that a Pegasus? It sounds like a thoroughbred to me. I’ll ride that pony.

    Thank you,

    David Guth

  • Doug Schwartz

    Excellent article. I’m as much for universal healthcare as anybody, but when I read there would be no copays and fee for service I was wondering what they were thinking. And at a cost double the size of the entire budget? This is like the variation of the universal basic income idea where there wouldn’t even be a means test.

  • observenter

    The folks who sponsored the legislation said there were little issues like how to pay for this
    most magnanimous program. I can have a lovely life if we don’t ask where the money is coming from. Where do they get these people? Do they come from the Pelosi School of Governance?