Will New York and California Take the Plunge on Single-Payer Health Care?

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Hey, it could happen! Photo: Mike Groll/AP/Corbis

Fed by health-policy chaos in Washington and dissatisfaction with aspects of both Obamacare and its proposed GOP replacements, New York and California are taking steps toward state-based single-payer health insurance systems that would provide universal coverage without insurance premiums, deductibles, or co-pays.

In New York last week the State Assembly passed a single-payer proposal for the third consecutive year. Prospects for Senate passage have gone up significantly thanks to backing from the Independent Democratic Caucus that often holds the balance of power in the Republican-controlled chamber.

In California, Democratic supermajorities in both legislative chambers have enhanced prospects for single payer among other progressive priorities, and a new bill has already cleared one hurdle in the lower chamber of the legislature. It gained some fresh attention recently when the nation’s most prominent single-payer proponent, Bernie Sanders, visited California and urged the state to show some leadership by adopting the new system.

The Democratic governors of both states are not yet onboard, however. California’s Jerry Brown, a single-payer proponent back during his presidential campaign of 1992, fears the revenues won’t be available to support a shift to that model today. New York’s Andrew Cuomo has been less forthcoming, but it is widely believed his interest in a possible 2020 presidential run would keep him from vetoing legislation popular with the progressives he would need to win over.

There are a lot of questions about how to design a state-based single-payer system that are being answered in various ways. The New York bill contemplates that all existing federal health-care dollars will be “pooled” in the state trust fund that would pay for services and insulate patients from virtually all out-of-pocket costs. Assuming Obamacare is not repealed, it’s possible the state could get megawaivers to use both Obamacare individual insurance subsidies and Medicaid for a new system. But there is no existing federal authority for turning over Medicare dollars, or for letting states abolish the private insurance that underlies Medicare Advantage plans. The more such problems persist, the less the new system can really be described as providing “single payer” as opposed to a public option that supplements existing public and private insurance sources.

The bigger problem politically is the sticker shock associated with the new taxes that would be needed to implement single payer. That is what killed Vermont’s tentative experiment, abandoned by Democratic governor Peter Shumlin in 2014, and probably what ensured the defeat of Colorado’s 2016 single-payer ballot initiative, which lost by nearly a 4–1 margin. You can tell people all day long that the taxes will be paid by the wealthy (new taxes on capital gains and dividends and a progressive payroll tax are the heart of New York’s financing proposal), or that higher taxes will be more than offset by the end of premiums and other out-of-pocket costs, and lower costs for businesses that would no longer have to provide employer-sponsored insurance — but the idea of large tax increases remains daunting. The move would nearly double New York taxes according to a friendly analysis. When a similar estimate emerged in Vermont, that was what convinced Shumlin to call it off. And now an official estimate from California’s Democratic legislature has equally bad news for those hoping to enact single payer without a big tax increase:

The pricetag is in: It would cost $400 billion to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday.

California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations committee found. The estimate assumes the state would retain the existing $200 billion in local, state and federal funding it currently receives to offset the total $400 billion price tag …

The cost is higher than the $180 billion in proposed general fund and special fund spending for the budget year beginning July 1.

There is also a certain plan-meets-expectations problem with the single-payer cause. Its best-polling description, “Medicare for all,” sounds intuitively good. But the most common versions of single payer are not really “Medicare for all” insofar as Medicare depends on premiums, co-pays, deductibles, and private supplemental insurance, and is only available for the most part to people who have paid into the system for many years. It is really difficult to design a truly universal system that functions exactly like Medicare, and if you could, it might not be affordable without additional subsidies.

In other words, single payer is popular because it sounds very simple and equitable — especially when compared to Obamacare, the catch-as-catch-can system Obamacare replaced, and the dog-eat-dog system most Republicans prefer as Obamacare’s replacement. It may be what any sane and progressive community would adopt if it was creating a health-care system from scratch. But it is a lot more complicated in practice than in theory, and getting from here to there, a state at a time, won’t be easy. And it does not help that Donald Trump and a Republican Congress, for all their dysfunction and all their theoretical commitment to federalism, could yet come down on the state-based single-payer parade with an emphatic “hell no!”

Still, the popularity of single payer makes it difficult to resist for Democratic pols, especially in states where Republicans really don’t have the power to stop them. At this last weekend’s California Democratic convention, numerous speakers were interrupted or shouted down by protesters (mostly organized by the California Nurses Association) demanding stronger support for the single-payer bill in the legislature. It will be interesting to see if Jerry Brown chooses to cap his (cumulative) 16 years as governor by disappointing them.

New York and California Consider Single-Payer Health Care