States Rights: A Healthy California

Caiaimage/Chris Cross

The Healthy California Act (SB-562) is a bill set before the Californian Legislature that seeks to establish, in the words of the bill itself: “Comprehensive universal single-payer health care coverage and a health care cost control system for the benefit of all residents of the state.” The bill, introduced by Senators Lara and Atkins, seeks to, at least marginally, subvert insurers through a government single-payer health care system that covers all 38 million Californians, including undocumented residents.

Sen. Ricardo Lara (D – Bell Gardens) said in a recent interview: “now more than ever is the time to talk about universal health care,”. Unfortunately, that’s all this bill really is at the moment, ‘talk.’ The bill does not offer any specifics other than good intentions, and when it comes to single-payer healthcare in the United States, good intentions are about as fruitful as a McDonalds’ breakfast. After all, Colorado voters rejected a similar proposal at last year’s election because the potential costs were unclear. Vermont went farther towards a single-payer system than any other U.S. state in 2014, but ended up having to scrap the whole proposal when they couldn’t find a way to fund it. Could California really make this work?

Single Payer Healthcare: Not Why, but Which?

Whether single-payer systems are more effective in comparison to the messy multi-layered labyrinth in place around the U.S. is an empirical yes. However, these direct comparisons may not be overly helpful. Anyone embarking on a serious conversation about healthcare in the U.S. will no doubt encounter and frustrate over comparisons with other developed nations. While such comparisons are helpful in understanding just how faulty the American systems are, it would be spurious to say that America’s failure to adopt such objectively superior (but by no means perfect systems) is the result of purely partisan, or even purely corrupt or negligent reasons. Of course those are contributing hurdles but by no means are they the entire shape of the obstacle.

Often when the systems of other developed nations are referenced, they are invoked as if they were all equally composed, and equally successful. Other nations, like the U.S. have to develop systems that work best for them - accounting for their population, territory, cultural behaviors and a litany of other factors. As such, single-payer healthcare structures are approached in a variety of ways.

According to Robert Field, a professor of health management and policy at Drexel University, the model that would best suit California best is the Bismarck Model. This system, as outlined by T. R. Reid in “The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care.” uses payroll deductions to fund non-profit insurers and requires that they cover everyone. The coverage and the pricing is regulated by the government. This system and similar versions are in place in Germany, France, the Netherlands, Switzerland and Japan.

Pros/Cons:

The benefits of a single-payer system are immediately obvious: it eliminates multitudes of administrative middle-men and paperwork, and centers on the most basic need of a citizen (their health) into the most basic of structures. Moreover,  proponents of this particular bill, argue that these inflated and artificially monopolized costs of insurance premiums would be eliminated by the new taxes. Those opposed to the idea suggest that such a basic and all-encompassing system imposes too much cost on the tax-payer and in turn provides the government with too much power. These critics are wondering how California can pay for such a superficially expensive system. Some have cited a 2008 Legislative Analyst’s Office study estimating a shortfall of $40-billion in potential funding. However, as David Lazarus at the LATimes points out, this study “was based on out-dated national (not California) data from as far back as 1998.”

The Bismarck model would result in a world for the Californian in which they would simply show up, receive treatment, and leave. There is also flexibility in choosing your doctor and insurer. However, the shortcoming of the system could be that such choice may prove limited, and some significantly expensive treatments may be unavailable. For those who wish to continue in their private clinics, they may be subjected to higher fees from their private doctor.

Can It Be Done?

One of the most complicated aspects of implementing such a system will be coordinating with the federal government. California already relies on approximately $22 billion in federal funding annually in order to cover private insurance subsidies linked to plans purchased through the state’s health insurance exchange, as part of the Affordable Care Act. This subsidy also pays for the expansion of Medicaid (Medi-Cal). Would these funds be repealed if California pushed ahead? 

The irony of this proposal is that part of it relied on the expectation that Republicans and the Trump Administration would, as they fervently promised, repeal and replace ‘Obamacare’ – which they failed to do. The Republicans had promised the repeal of ACA would empower the states to pursue their own healthcare initiatives. Now that ‘Obamacare’ is still in place, more reshuffling will inevitably have to take place.

Interestingly, California’s ability to legislate by public referendum may be integral to the success of such a proposal. According to a Pew Research report from early this year, 60% of Americans – up from 51% last year, agree that government should be responsible for ensuring health care coverage for all Americans. The report noted that there has in fact been a spike in support for this position from low and middle income Republicans. Moreover, considering Gavin Newsom is the current front-runner in the 2018 California Governor’s race, the issue will most likely run as a major electoral talking point. The California State Legislature has already passed similar bills of this nature in both 2006 and 2008 - both of which were vetoed (I won’t say it) by Arnold Schwarzenegger. Newsom was mayor of San Francisoco when it implemented the similar Healthy San Francisco program, and he intends to do the same if he becomes Governor. While Newsom admits such a program might not be able to reach all parts of the state, at least not initially, “it can be adopted…where the majority of California’s population is.”

Many observers, including Professor Field note that the German model is not the best, but might be the best for California. Field argues a model closer to the Canadian system is generally better because it does without most private insurers, who simply serve to “add another layer, which can drive up costs.”  The fluidity of the German model makes it the most likely to find a way through the maze of interests and pre-existing structures. Furthermore, existing Californian systems, such as Kaiser, which has been largely successful, could ideally be integrated into the more pliable model.

All progress in the United States is made in small steps. It is difficult when clear answers seem to lay themselves out in the Californian sun, but like all difficulties in the American experiment, it all comes down to one singular truth: the United States is simply too big to govern. Perhaps if California can show the way, it won’t take long for a domino effect to topple across the country. The task of drawing up and implementing a bill of this magnitude will be a complicated and possibly even fierce task. However, what is clear is that if any state has the ability to make this work, it’s California.