After Health Care Reform – State-Level Single-Payer

In Budget Politics, California, Economic Planning, Economics, Health Care Reform, Inequality, Liberalism, Politics, Politics of Policy, Progressivism, Public Policy, Public Sector, Social Democracy, Social Policy, Taxes, Unions, Welfare State on May 8, 2010 at 7:59 pm

Introduction:

In the wake of the passage of the Affordable Choices Act into law, there are a lot of questions about how we go on from here. Obviously, one line of activism focuses on ways to improve the health care reform act. To some progressives so morally outraged at the defeat of the public option that they’ve given up on the Congress as hopelessly wedded to corporate interests, obviously, this isn’t so appealing.

However, if the progressive movement can be clever and strategic for a second, and is willing to work from within rather than to cry defeat, we can actually work on the state level to move the goalposts of the health care debate in the direction of single-payer before we even get to the next round of national legislation.

Movement on the State Level:

One of the shortcomings of the Affordable Care Act of 2010 is that instead of one national exchange (as progressives in the House had hoped to establish), we will have 50 state-level exchanges (possibly more if states decide to establish separate individual and group plan exchanges). While there are Federal standards applied to state exchanges (with the ultimate stick being that the Federal government will step in to create their own exchange if the state fails to meet the new standards), the double-edged sword of the bill’s passage means that a lot of political action now moves to the states.

We’ve already seen this starting on the right, with states like Oklahoma, Arizona, Mississippi and Tennessee acting to ban plans that cover abortions from their state exchanges. This is a terrible attack on the right of women to control their own health care coverage with their own money, and needs to be met with prompt resistance. However, while state exchanges are an opening for conservatives in the states in which they dominate, the reverse is also true.

There is an opening for progressives in deep blue states to act in ways not possible in Congress. While single-payer was completely boxed out in negotiations, and even a weak public option was ultimately thrown out at the behest of conservative Democratic Senators, there’s no reason why states where progressives dominate can’t take the lead and change the “facts on the ground.”

Step 1- Public Option and Single Payer in One State:

As I have repeatedly discussed, the single most important change that the Affordable Care Act made was to expand Medicaid to Medicare reimbursement levels (thus providing an incentive for most doctors, hospitals, and clinics to accept Medicaid patients) and to expand Medicaid coverage to everyone within 133% of poverty.  While most of the health care bill is not that historically revolutionary in nature, this is. Progressives who claim that this bill is worse than nothing cannot ignore the fact that 16 million out of the 32 million covered will be covered essentially through Medicare – while not Medicare for all, we have at least achieved “Medicare for half.”

Moreover, nothing in the bill prevents a state from increasing its eligibility standards above 133% of poverty, as many states have already begun to do with programs like SCHIP, or from expanding eligibility for “Medicare/aid” to groups who are interested in buying into public programs (like the labor movement, for example). Hence, there’s nothing that prevents states from establishing a single-payer system, either by expanding existing programs or by establishing entirely new entities.

At the moment, an entirely new system like California’s AB810, would likely run into a problem with ERISA (the Employee Retirement Income Security Act), which “supercede[s] any and all State laws insofar as they may…relate to any employee benefit plan.” (For example, AB810 bans the sale of duplicative private insurance plans) Progressives in the House and Senate tried to fix this problem, and the best that they were able to do was a provision that kicks in in 2017 for states to receive waivers from the Department of Health and Human Services as long as the new system is “at least as comprehensive,” “at least as affordable,” for “at least a comparable number of its residents.”

While one progressive objective in the next seven years will be to add an amendment to the law that either advances the timeline for waivers to the present, or that amends ERISA to explicitly allow for state single-payer programs, there’s a lot that can be done in the meantime. To begin with, state-level single-payer systems like AB810 can be drawn in such a way to avoid a conflict with ERISA (see here for the details). Alternatively, a state could pass a Medicaid For All law to cover the six year gap between the present and the time at which the new system could receive a waiver from HHS, or just pass a Medicaid For All law and stick with it.

Step 2 – Seizing the Commanding Heights of the Exchanges:

Even before 2017, there’s nothing that stops a state from placing a Medicaid-for-All plan on the state’s exchange as a public option. As the law is currently written, there’s already explicit provisions for states to put existing SCHIP programs on the exchanges (Title II, Subsection C, Section 2201) – and states are currently allowed to structure SCHIP within their Medicaid programs.

Thus at the very least, it’s possible to establish a robust public option on any state’s health exchange. Once such a program is on the state’s exchange, it can easily compete and win on price and quality. The robust public option envisioned by progressives in the House would have provided health care plans on the basis of reimbursement rates set at Medicare’s set prices plus 5%. Estimates of the robust public option suggested that premiums would be 11% cheaper than private plans – state public options would be 5% cheaper, at an average of $209/month for an individual and $443/month for a family. At the same time, the state public option would gain advantages of quality – providers would prefer to deal with payers that aren’t going to run up their administrative costs by trying to avoid paying its bills, whereas consumers would prefer to be covered by an insurer they know isn’t going to try to boost profits with premium hikes, rescissions, and fraudulent denials.

Once states either get waivers or are explicitly allowed to shift to true single-payer programs, premiums would likely fall even lower. AB810 envisions progressive premiums that vary by income, and further savings from administrative costs and bulk purchases, for example.

Step 3 – Uniting Across State Lines:

As other observers of health care reform (such as Ezra Klein) have noted, one major problem with state-run health care is the intersection between the costs of running their own health care systems and the budget limitations placed on them by balanced budget and debt limitation requirements, and the kind of massive declines in state revenues that come with recessions. Even in the case of cheaper single-payer systems, states are going to run into trouble unless they can capture revenues and budget counter-cyclically. This doesn’t have to be a problem – as I’ve written before, there are ways to make states capable of running a Keynesian counter-cyclical program either with or without Federal assistance.

One opening that the Affordable Care Act provides is explicit permission for states to combine their exchanges as early as 2013 (Title I, Subsection D, Part IV, Sec 1333), or to allow plans from other states onto their exchanges. This creates something of a domino effect – once one state establishes a Medicaid For All plan or a true single-payer plan, any other state that wants to have Medicaid For All or single-payer can do so through an inter-state compact. By sharing the costs of providing single-payer health care across a larger population and a larger revenue basis, states can reduce the overall fiscal burden on each state’s revenue system.

Obviously, conservative states that are rushing to ban abortion on their exchanges are unlikely to cooperate in this venture. Thus, what we are likely to see is a process by which the establishment of California OneCare or the New York State Health Plan leads to the union of states with progressive majorities, until we see something like “BlueCare” for everyone in the blue states. Now, I’ve written before that progressives who dismiss the red states or who envision either letting them or the blue states to secede are deeply wrong, because such an attitude ignores the millions of people who vote Democratic in those states, usually poor and minority voters.

A “BlueCare” system would still leave America grappling with enormous national health challenges, with Sweden in the Blue States and the Third World in the Red States. But what such a system would do is to change the political arithmetic of health care reform.

Conclusion:

From here on out, a huge part of the politics of health care reform will not be the establishment of new programs, but the capturing of territory and populations. We know that when people actually get public health insurance or single payer health coverage that they quickly learn to love it. Fears of government takeover of health care transform into “hands off my Medicare!”

Hence, the expansion of state public health coverage or single-payer coverage will (in addition to the immediate practical impact on health care outcomes in that state) will greatly change the expectations and thinking of the electorate. As significant populations shift from private health insurance to public health insurance, Congressional Representatives and Senators face a different electorate. Instead of a nation where the majority of the population have employer-based private health insurance and are afraid of losing it through some new government intervention, they’ll have to deal with a large and mobilized constituency of voters who are used to public or single-payer health care, who like it and want to keep it, and who will react with hostility to any attempt to limit it.

And that’s how we get to single-payer.

  1. […] starting in 2014 will we begin to do something about providing health care, and even then there is much work that will be needed to make health care for all a […]

  2. […] considerations is a relatively cost-free way of improving their political longevity. Having an ObamaCare card in one’s wallet would make a huge political difference in how people think about health […]

  3. Hello, I tthink your websitge migght be having browser compatibbility
    issues. When I llok at your blog in Firefox, it looks finne but when opening
    inn Internet Explorer, it has some overlapping. I just wanfed to ggive you a
    quick hads up! Othe then that, great blog!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: