CALMATTERS EXPLAINERS ARE PRESENTED BY
The concept of universal health care has gained steam in recent years because of skyrocketing medical costs and the idea that health care is a right for all.
In California, the debate over one type of universal care, known as a single-payer system, has continued after a failed effort in the Legislature to pass such a plan last year, largely due to its expense and a lack of specifics about how it would work. In 2018, lawmakers are pondering an array of options they say would lay the groundwork for a single-payer system by insuring more residents and containing costs.
Those options could include a public insurance program to compete with private ones (perhaps by offering different coverage and price choices), more state authority to regulate costs and a requirement that Californians have health insurance after the federal mandate ends this year.
Those pushing single-payer care, for now or later, say it would cover everyone, streamline an unwieldy bureaucracy and bring down costs. Opponents say it could lead to unacceptably high taxes, a flight of doctors to other states and a rationing of care as patients’ needs overwhelm providers.
Consumers have questions. Here are some answers:
Sometimes referred to as “Medicare for all,” single-payer care is set up to cover all residents of a state or nation equally. It is paid for by a single public or quasi-public agency, typically through the collection of taxes, and overseen by that agency.
Some systems incorporate contributions from employers, or from individuals in the same way Medicare recipients pay a monthly fee based on income. Patients usually continue to get care from private medical providers. But insurance through employers becomes unnecessary. The government takes over.
Predominantly public: Government essentially takes over for insurance companies, contracting with doctors, hospitals and other providers and paying them directly. England does it this way, covering nearly all residents, and does not charge patients any co-pays or fees.
Mixed public and private: Combines private and public funds. France uses this system. Workers can get coverage through employers or through the government. In addition, the government regulates private complementary insurance that is also available. Patients pay a modest share of these costs, except in the lowest-income families, who pay nothing.
Other methods exist, too. For example, China has three major insurance types, covering people depending on whether they live in rural or urban areas and whether they are employed.
The common thread is that the government has made a significant commitment to being the main payer for health care.
People also asked this question before the federal Affordable Care Act was launched in 2013. Since then, consumers have had mixed experiences, according to a study in the journal Health Affairs. Some chose plans that included their doctors. Others unknowingly picked plans their doctors didn’t participate in. Now, a few years in, most consumers are checking with their physicians before they select a plan.
In a system with both private and public insurers, most of what changed would be how bills are paid. For instance, health services would still be provided privately, as they are for Medicare patients, and the government would pay. In that kind of program, many health plans could remain intact and patients could keep their doctors.
In a predominantly public plan, the state may negotiate prices for care, as it does now for Medi-Cal (the state and federal program for California’s neediest). Some doctors consider Medi-Cal’s payments too low and have stopped accepting those patients. That leaves some patients with fewer choices.
Architects and supporters of single-payer plans say quality health care would be available to everyone in such a program. They argue that today only those with premium coverage have such access, and often those with no insurance or too little insurance get inferior care or wait longer to see doctors. They say a single-payer system would not have levels of care, but simply the same type of care for all.
Opponents say quality could continue to depend on income or geography. Some argue that countries with universal care show the pitfalls: long wait times to see doctors, especially specialists, varying quality of care and options for those with more income to go outside the system. They worry that physicians would leave the system or leave California, and access to care could become a bigger issue than it is now, especially in areas that already lack enough providers.
In a recent report, the California Chamber of Commerce said single-payer models create the false impression that health care is free, which increases demand and strains the system. That requires care to be rationed, the report said, “which is why countries with a single-payer system, such as Canada, have a wait-time crisis on their hands.”
A single-payer plan does not mean free health care. Consumers would shoulder some cost, but how much is unclear. Taxes would probably replace premiums, deductibles, co-pays and other out-of-pocket expenses. But the overall cost of single-payer health care depends on the system design. In some countries with public systems, patients pay out of pocket for dental and vision care. Some also buy supplemental insurance.
Most single-payer advocates say out-of-pocket costs could drop because the taxes consumers would pay to foot the overall bill would be based on income rather than on an insurance plan. Critics aren’t so confident, because tax rates for the program could increase over time. Californians spent about $7,549 per capita on health care in 2014, according to the federal Centers for Medicare and Medicaid.
The big unknown, opponents of single-payer plans note, is how steeply—and how often—taxes would rise. They also worry that other costs could be added over time.
Maybe. If the system is set up like Medicare, it would cover many prescription drugs. Lower prices are possible if the state negotiates them or regulates them in some other way.
Drug makers have generally opposed universal health care. In 2016, the Pharmaceuticals Research and Manufacturers of America trade group spent $64 million in California fighting a ballot proposal that would have required state agencies to pay the same for drugs as the Department of Veterans Affairs, which is considered a single-payer system. Voters said no.
The question about medicine prices looms large. The U.S. spends more per capita on prescription drugs than other high-income countries—even though usage is about the same in all the countries.
That depends on the program. Two approaches have been proposed in California in the past. One would keep insurance companies as they are, and the government would pay them, in the same way insurers work with many Medicare and Medicaid patients now.
The other approach would eliminate insurers. The government, rather than insurance companies, would contract with medical providers and pay them directly. Supporters of this plan argue that insurers, with their well-paid executives and other high overhead, are the reason health care is so expensive, and this is a way to both reduce costs and streamline the care and payment systems.
Insurers disagree. They say consumers deserve choices about health care. And Kaiser Permanente has said eliminating insurance companies would disrupt its entire business because it is both an insurer and a medical provider.
It is unclear whether California, if it adopted a single-payer program, would include the possibility of supplemental or premiums plans. Single-payer systems can be as open or closed as its creators wish.
Under last year’s proposal in the Legislature, private insurers would be barred, and the government would cover all services. The only way to get care outside of the plan would be to pay cash. Supporters of this version say outside plans would defeat the purpose of a single-payer system and could insinuate that the system is deficient.
Some countries with universal health care do allow outside insurance plans, such as those provided by certain employers. Others permit supplemental insurance for premium services, such as cosmetic surgery, not covered by the universal plan. In Canada, private insurance is not allowed for hospital or doctor coverage but is permitted for prescription drugs.
Experts are not sure whether offering supplemental plans would increase public support for single-payer care. Most Americans get their health insurance through their employer, and the single-payer proposals have been too vague for meaningful comparison.
In 2017, the single-payer plan was shelved. Two possible price tags had been floated, with two possible payment options.
A Senate committee estimated the cost at $400 billion a year, saying it could be paid for partly by trading current consumer and employer expenditures for a 15 percent payroll tax, and partly by rolling in the $200 billion a year that is already being spent on health care by federal, state and local governments.
An analysis by the California Nurses Association, a proponent of the legislation, put the price around $330 billion a year. It also would trade consumer and employer spending for two new taxes, a 2.3 percent levy on businesses’ gross receipts and a 2.3 percent sales tax. Like the Senate’s analysis, this study said the rest could come from money currently spent on health care by government agencies.
Vermont tried to implement universal health care. In 2011, its Legislature approved a plan but did not initially include a way to pay for it. Three years later, then-Gov. Peter Shumlin, a strong backer of the plan, reversed his position and set it aside. A proposed 11.5 percent payroll tax on businesses and an individual income tax of up to 9.5 percent was not going to fly.
Shumlin said no one had mapped out what residents had been paying for health care and how it would change. There was fear the tax would increase each year and become untenable.
Universal health care isn’t a new idea. Previous efforts go back to 1915 nationally. Employer-based health plans took off during World War II, and efforts to extend care more widely came and went for decades.
In the 1970s, U.S. Sen. Edward Kennedy of Massachusetts advocated for a bill that would have provided Medicare for everyone. Since then, only a few measures have been introduced in Congress, and none garnered much attention. That is, until Vermont Sen. Bernie Sanders began talking about single payer in 2013 and promoted the concept in his 2016 presidential campaign and in a bill he introduced last fall.
In the 1940s, Gov. Earl Warren promoted a universal health care plan, but the Legislature shot it down in the face of opposition from businesses and physicians. In 1994, voters rejected a plan placed on the ballot by groups including the AARP and a nurses’ union.
In 2002, a single-payer option outlined by the state Secretary of Health and Human Services died in a legislative committee. In 2006, the Legislature passed a single-payer bill, but then-Gov. Arnold Schwarzenegger vetoed it.
Labor groups have largely been behind these efforts. The California Nurses Association, the most vocal force for such a system in the state, echoes Sanders’ views on the issue. Nurses attended hearings, protests and marches across the state last year to press for a single-payer system and mounted a short-lived recall move against Assembly Speaker Anthony Rendon when he shelved last year’s bill.
Not all health providers are supporters. Physicians have not, by and large, backed such proposals. They say the plans are too bureaucratic, could reduce their fees, could compromise patient privacy and might cover too little, possibly even leading to rationing of care.
Business groups and insurance companies, including Blue Cross, the California Chamber of Commerce and the California Taxpayers Association, objected to last year’s proposal, which was introduced by state Sen. Ricardo Lara, a Democrat from Bell Gardens.
Kaiser Permanente lobbied against Lara’s bill, saying it supports the idea of universal coverage but arguing that a single-payer system makes false promises, such as no out-of-pocket costs. “The level of payroll deductions, taxes and fees that would be necessary to finance such a system is mind-boggling,” the company wrote to the Legislature.
This year a new coalition of doctors, dentists and other health care providers emerged to oppose Lara’s plan. The group argues that the ACA is successful in California, and the focus should be on reaching and enrolling the remaining 2 million-3 million uninsured residents, many of whom are undocumented.
Lawmakers who back the single-payer concept want to cover all residents, including the undocumented who account for about halfof California’s uninsured. Those already enrolled in Medi-Cal, employer health plans or the Covered California insurance exchange would be rolled into the new system.
Currently, undocumented youths with Deferred Action for Childhood Arrivals (DACA) status, called “dreamers,” qualify for Medi-Cal and other insurance options. Some undocumented children are also eligible for Medi-Cal. Although Medi-Cal is not available to undocumented adults, they may have insurance through their employers or Covered California. Some legislators propose that the state admit all undocumented residents to public insurance programs. But previous attempts to achieve that have failed, and prospects going forward are uncertain.
The candidates for governor are debating the issue of single-payer care as they campaign. But the prospects for such a plan in the Legislature this year are virtually nil, which is one reason lawmakers are considering less comprehensive options.
Permission from the Trump administration would be needed before federal funds, such as the money that pays for Medicare and Medicaid, could be transferred into a state-run system that would absorb the patients in those programs. It is unclear whether permission would come: Federal officials said they don’t comment on pending or possible requests.
Although studies show that many families lack emergency funds, and the expense of a serious accident or illness can bankrupt the uninsured or underinsured, experts say the status quo works for most people, especially those who have insurance through their employers.* And that’s most Californians.
*This sentence was expanded for context 4/16/18
Yes. Fifty-six percent of likely voters surveyed last spring by the Public Policy Institute of California favored a single-payer system—but nearly half pulled their support if it meant higher taxes.
In any case, raising taxes is always a tough sell among lawmakers—two-thirds of them would have to approve—but especially in an election year, when voters can turn against them. And Gov. Jerry Brown, who has the rest of this year in office, has said he’s reluctant to sign off on such a system because of its expense and the lack of a guaranteed way to pay for it. Lawmakers appear to be waiting for a new administration to take over rather than risk a veto.
Even if a single-payer proposal were approved and Washington OK’d federal funds for it, there could be an additional hurdle: Voters’ permission would be needed if the expense of such a system caused the state to exceed its constitutional spending limits. There are ways to design a system that may not violate those limits.* But if a proposal were too complicated or voters were mad about a tax hike to pay for it, they could say no, sending lawmakers back to the drawing board.
*This sentence was added for context 4/16/18
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