Why Single-Payer Health Care Could Work in California

And why state-level reform is a risky proposition for most of the country.

By Natalie Shure
Pacific Standard, June 23, 2017

The California State Assembly will be busy this summer continuing to shape SB-562, a statewide universal health-care bill that passed the Senate last month. The legislation aims to create a so-called single-payer system: a unified public insurance pool that would cover all residents' health-care costs, thereby extending coverage to three million previously uninsured Californians, and eliminating the private insurance industry central to the Affordable Care Act. While the bill has garnered widespread enthusiasm—72 percent of Californians reportedly support government-run universal coverage—it remains light on funding specifics. One analysis conducted by the University of Massachusetts–Amherst pinned the cost of the proposal at $331 billion annually—a sum well beyond California's state budget of $180 billion, but below the state's $368 billion in health-care spending overall. As legislators deliberate details like how much revenue should be raised through payroll or sales taxes, such unknowns have have made some lawmakers reluctant, including an allegedly skeptical Governor Jerry Brown.

And yet, Republican control over all three branches of federal government has seriously worsened the near-term outlook for equitable health care at the national level: After weeks of working in secret to retool the American Health Care Act, the GOP has finally released the bill it hopes will replace the ACA. It includes deep cuts to Medicaid, allows states to drop minimum coverage standards, and eliminates the taxes on the wealthy built into the ACA. The version passed by the House of Representatives would threaten to leave 23 million more Americans without coverage, beyond the 28 million already uncovered by the ACA. For many, politics surrounding the would-be repeal of Obamacare have crystallized Republican lawmakers' willingness to lock millions of Americans out of the health-care system in exchange for upper-bracket tax cuts. And even if the AHCA remains a non-starter, there's no shortage of ways Republicans can deliberately erode Obamacare—a system mired in problems even under better circumstances, that has failed to achieve universal coverage.

Given the fragility of a health-care system so recently overhauled, there's been a resurgence of calls for single-payer health care in the United States. Bernie Sanders' Democratic primary campaign reintroduced the concept of single-payer to a national audience, a message that many voters were acutely receptive to given a growing list of Obamacare bugs: declininginsurer participation, rising premiums, shrinking networks, rejected expansions of Medicaid in GOP-controlled states, and cost-sharing tactics by insurers that leave millions unable to afford to even use the insurance they pay for. There's also mounting evidence that single-payer is more popular than ever: Videos of constituents at town halls calling for expanded Medicare-for-all have gone viral, and recent polls show 60 percent of Americans support the idea.

This groundswell of public enthusiasm has given rise to multiple initiatives to construct single-payer systems at the state-level, in places where local politics are more amenable to leftward reform than Washington's. California's bill advanced on the heels of a similar one in May that made it through the New York Assembly. Last week, Nevada's legislature voted to allow anyone to buy into Medicaid coverage—a move that would effectually create a so-called "public option" that some argue could be a gateway toward single-payer. The overwhelming majority of proponents of state-level single-payer cite a unified national program as their endgame, and state-based overhauls may indeed by the most feasible route there. But using states as Medicare-for-all laboratories also comes with strings attached, and presents structural challenges that wouldn't apply at the national level.


In many ways, California seems better poised for a single-payer coup than any other state. A Democratic supermajority controls both houses of the California legislature, which has already passed similar bills in 2006 and 2008 (albeit arguably underdeveloped ones, which were subsequently vetoed by Governor Arnold Schwarzenegger). California's massive population and strong economy could also help it absorb shocks that might destabilize a single-payer system in a tinier state, and could also likely secure lower drug prices by commanding more leverage over negotiations.

California's unique geographic realities also work in its favor here: Major Metro areas often span across state lines, which not only presents logistical complications surrounding out-of-state providers, but also makes it easier for wealthy taxpayers and health-care providers to relocate to a friendlier jurisdiction. California's main population centers are practically all exempt from this problem. (Compare California's situation to that of Vermont, where a single-payer program was abandoned in 2015: With fewer than one million Vermonters, even a mild contraction of the tax base could prove devastating, the state budget would be more vulnerable to recessions, and many state residents receive care at hospitals like Dartmouth, located outside of the state.)

But even beyond considerable political obstacles, the bigger hurdles for state single-payer are more likely to be legal, chief among them the reallocation of billions of federal dollars funneled to each state to bankroll already existing public health-care programs. A study conducted by the University of Massachusetts–Amherst on California's SB-562 bill estimated these federal payouts were slated to account for over 70 percent of the program's projected annual cost. But securing them won't be easy. For one, there's no existing mechanism to repurpose a state's share of Medicare. And employer benefits are regulated at the federal level, leaving states without the authority to unilaterally disband the system of employer-provided coverage.


While blue states embarking on progressive health-care projects may resent this bind, it's crucial to remember that ceding control over federal health-care funds to states can just as easily limit access to health care as expand it. When it comes to "state innovation waivers" available through the ACA, Don McCanne, a health policy fellow with Physicians for a National Health Program, notes, "the waivers they want us to get are privatization waivers—they want us to take Medicaid and turn it over to private insurance companies … if California went to [the Trump administration] and said, 'give us the waivers so we can set up a government-run insurance system,' I know they would not ever agree to that … it's totally opposed to their ideology."

But giving states total freedom over whatever funds they receive could be even worse—this is the basic premise behind Medicaid "block grants," a Republican proposal to distribute fixed amounts of money, over which each state would enjoy complete discretion. Such a scenario could stand to benefit those states progressive enough to build universal health-care systems, but would annihilate already precarious systems in poorer or GOP-dominated areas.

Of course, such explicit state disparities in health-care access are anathema to single-payer advocates, who, by definition, believe in universal coverage for all. A patchwork system that varies by state does little to alleviate the immorality underpinning the tiered system of coverage and care that has galvanized the single-payer fight in the first place. As such, the effectiveness of state-level single-payer experiments as a bridge toward federal reforms will depend on how local movements orient themselves toward national ones. Universal coverage activists often point to the example of Saskatchewan, whose successful provincewide universal coverage program acted as a springboard for Canada's system. This model demands a sense of national solidarity absent from much of the political discourse in the U.S.


For activists like McCanne, the promise of state-level single-payer movements lie in their role as vehicles for education and mobilization. Even amid the protracted crisis facing America's labyrinthine heath-care system, health-care policy is hardly intuitive—and a well-informed public will be better able to resist the messaging of powerful interest groups against single-payer. Such grassroots organizing—conversations about health-care reform on a house-by-house basis—is the kind of long-game political work that localized movements are uniquely able to deploy.

Ultimately, any movement to secure health-care justice for Californians or New Yorkers must also be understood as a fight for Arkansans and Wisconsinites, not only because the viability of any statewide system will depend on mobilizing pressure against the federal government, but because envisioning the battle for single-payer as an overly localized one risks inoculating us against suffering in red states as soon as blue ones get theirs.