Single-payer healthcare won’t pass muster in California or other states

DALLAS — Not so long ago Democrats would run for cover whenever a colleague proposed a government-run, single-payer healthcare system. Today, they scramble to out-single-payer other Democrats, even at the state level. Under a single-payer system, the government pays most if not all healthcare bills for virtually every resident and taxpayers pay higher taxes to finance it. While most of the single-payer legislative efforts have been at the federal level—such as Senator Bernie Sanders “Medicare for All” proposal—some left-leaning states are jumping on the bandwagon.

Vermont became the first state to pass such legislation in 2011, Governor Peter Shumlin proudly boasted at the time that it would cover all 620,000 Vermonters. But the governor abandoned the effort claiming that the needed tax increases were too large. And then there’s California! California Healthline reports that donations are pouring into the governor’s race, where both Gavin Newsom, California’s Democratic lieutenant governor, and John Chiang, the state treasurer, support the concept of single-payer, which would offer universal coverage to Californians, likely at a significant cost to the state.” “Likely”? The Los Angeles Times pointed out last year that “Single-payer has a long, troubled history in California. Bills made it through the Legislature in 2006 and 2008 only to be vetoed by then-Gov. Arnold Schwarzenegger.” And with good reason! A 2008 report from California’s Legislative Analyst's Office found that even with a tax of 4 percent on employees and 7 percent on business payrolls the state would still have come up about $40 billion short the first full year. This from the same state that in 2009, only one year later, handed out nearly 29,000 IOUs worth $53.3 million because of a $26 billion budget deficit. But state-based universal coverage isn’t just financially impractical, it’s virtually impossible—because federal law trump’s (pun intended) state law. There are nearly 57 million Americans on Medicare, which is a federal program. States have no say in it. So a state might offer government-run coverage to its seniors and disabled, but it can’t change or take away their Medicare. And any politician who tried would likely be unemployed after the next election. There’s about 73 million Americans on Medicaid, the federal-state health insurance program for the poor. While states have some say over Medicaid, the feds set the parameters and provide most of the money.

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A state might petition the federal government for a block grant of its Medicaid funding to help subsidize its single-payer system, but don’t count on them getting it. Republicans have been pushing the Medicaid block-grant idea for years, and Democrats have consistently blocked it. And then there’s employer-based coverage. About half of the 160 million workers with employer coverage are in “self-insured plans”—where the company pays their employees’ claims rather than health insurers. Those plans are governed by federal law. States have some ability to micromanage employer plans that depend on health insurers to pay the claims, but not self-insured plans. States certainly could tax employers and individuals to pay for a single-payer system, as the last California plan did. And they could allow—or force—individuals with employer coverage to join the government-run plan. But how many employees of major California-based companies such as Apple, Google, eBay and Hewlett Packard would be willing to trade their excellent employer-based insurance for under-funded coverage managed by politicians? And why would any politician even try to make the switcheroo, since neither employer-provided coverage nor Medicare cost the state a dime? Thus the good news is that state-level Democrats can rattle the single-payer saber in the hope of attracting progressive voters, but they can’t do much about it. The bad news is that Democrats in Washington can.