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What If They Passed Single-Payer and Didn't Tell Anyone?

That might have just happened, at least at the state level. The Wyden folks quietly slipped in an amendment giving states enormous flexibility to experiment upward. Essentially, states can ask the federal government for a waiver that allows them to keep the federal funds they're receiving and do pretty much anything they want with them, so long as the coverage they provide is "at least as comprehensive as required under the Chairman’s Mark" and will "lower health care spending growth, improve the delivery system performance, provide affordable choices for all its citizens, expand protections against excessive out-of-pocket spending, provides coverage to the same number of uninsured and not increase the Federal deficit."

That could be used for a public option. But it could also be used for single-payer. The potential problem, as Jon Cohn points out, is that a Republican statehouse could use it to ratchet back coverage in existing public programs. But since the amendment doesn't allow anything to drift beneath the levels envisioned in the bill itself, it's hard to imagine a conservative state using it to be any less generous than the state would otherwise be.

On the other hand, it's not impossible to imagine a liberal state using the waiver to introduce some mega-public plan that's a lot stronger than what's currently on the table and can be used as a demonstration project for other states. At the very least, this should make governor's races more interesting from the health-care perspective.

By Ezra Klein  |  October 1, 2009; 4:39 PM ET
Categories:  Health Reform  
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Comments

This would actually be a lot like the Canadian system if you did it right. In Canada, single-payer emerged after Saskatchewan and Alberta had already made moves towards single-payer on the provincial level, with the federal government mainly providing funding in exchange for obedience to the precepts of the Canada Health Act.

To be honest, this is what I would like to do as a "back-up plan" in case the current effort at health care reform fails. Have it so that states can use the federal funding however they like as long as they meet minimum standards and work towards universal coverage. The "blue states" might aim towards either the Massachusetts Model or a state-level single-payer, and the "red states" might do something different. Then watch the results.

Posted by: guardsmanbass | October 1, 2009 4:51 PM | Report abuse

I think a blue states health plan that would cover a majority of americans (the majority live in the blue states after all) would have enough size to bargain effectively with providers. What are the impediments to this kind of approach. What a great marketing tool to bring industries to the blue states! Come to Michigan where we will lower your health care costs! Lots of workers ready to go!

Posted by: srw3 | October 1, 2009 5:02 PM | Report abuse

does "provide affordable choices for all its citizens" imply the need for multiple affordable options for each citizen? If so, I don't see how a single payer system can be justified.

Posted by: ehcohen | October 1, 2009 5:04 PM | Report abuse

On the other hand, it's not impossible to imagine a liberal state using the waiver to introduce some mega-public plan that's a lot stronger than what's currently on the table and can be used as a demonstration project for other states.


I love this. some MEGA PUBLIC PLAN. You mean like Medicare and Medicaid that has rampant fraud and abuse? Like the other states that had public plans that flopped like TennCare and the Oregon Health plan that has a lottery to see who gets coverage?

And you still have the problem that if reimbursement levels run too low you won't have any providers willing to participate. You need to strike a reasonable balance and none of these options do that in terms of reimbursement levels. All you're doing is creating more bureaucratic messes now on a statewide basis instead of a federal one. Its the old saying of you can create a public option but if you save too much too quickly no doctor will participate and what good is that??? To that end an insurance company could negotiate a discount of 70% for providers and I'm sure they'd get a bunch of "new" doctors but any doctor that has built up any practice won't participate and then what good is it??? You need to slowly creep down provider reimbursements. Do it too quickly and it destroys the plan itself no matter if its a public option or private one.

And technically it wouldn't be single payer on state levels unless you said insurers couldn't operate in that state. How much pushback do you think you'd get from those with private plans? Remember the approval rate for those plans are greater than those that THINK they'd want a public option no matter how the question is asked.

Posted by: visionbrkr | October 1, 2009 5:18 PM | Report abuse

visionbrkr, you do live up to your name. Clearly a national public option open to everyone would be preferable, but if the big blue states sponsored a plan, they could bargain effectively to lower costs. Medicare and medicaid fraud and abuse is overstated. It certainly less than spending 20% of premiums on administration (ie delay, discuss, and then deny care) advertising, dividends, and multimillion dollar CEO salaries.

Posted by: srw3 | October 1, 2009 5:28 PM | Report abuse

I'd like to see Ezra walk through the hoops that a Liberal State would need to take to go Single Payer. In other words, pull everyone out of their Private Insurance and fund their State Single Payer simply on the Federal $$$ received.

Possible? Doesn't seem likely.

Even if you do an "opt in" for people like me who have insurance from their company, you've got to figure out a way to fund my coverage. Out of my pocket without my company increasing my salary because they no longer have to cover me?

Good luck with that.

John

Posted by: toshiaki | October 1, 2009 5:31 PM | Report abuse

Well toshiaki, its a start. I would love to take my and my employer's contribution to my plan and use it somewhere else...Employer based health care is a vestigial system from WWII when wage and price controls were in force. Lets come up with a way to wean people away from this system instead of nay saying a possible solution to the spineless democrats in the senate who can't get a 60 vote majority to pass a decent health care bill. Why can't employers put that money in an account like an HSA pre tax for us to use to pay premiums to the new blue state insurance plan. Seems workable to me...

Posted by: srw3 | October 1, 2009 5:39 PM | Report abuse

There's no need to pull anyone out of private insurance. The state simply agrees to pay for certain types of care, and proceeds to do so. All health insurance plans covering those forms of health care will become obsolete. Voila, you now have something close to France's system: single-payer covering preventive, emergency, and everything determined to be cost-effective, and private insurance to cover everything else.

Posted by: kme1 | October 1, 2009 5:39 PM | Report abuse

Blog post on this issue:

http://healthcare4us.wordpress.com

Posted by: michaelterra | October 1, 2009 6:00 PM | Report abuse

Well toshiaki, its a start. I would love to take my and my employer's contribution to my plan and use it somewhere else...Employer based health care is a vestigial system from WWII when wage and price controls were in force. Lets come up with a way to wean people away from this system instead of nay saying a possible solution to the spineless democrats in the senate who can't get a 60 vote majority to pass a decent health care bill. Why can't employers put that money in an account like an HSA pre tax for us to use to pay premiums to the new blue state insurance plan. Seems workable to me...

Posted by: srw3 | October 1, 2009 5:39 PM

===================================

I think you mistake me for someone who loves their Private Health Plan. I don't, other than as being better than what I'd have if I currently was a contractor or part time worker rather than a full time employee. I'd much prefer to see our country have Medicare For All. Now, not in the 30-50 years that incrimental.

What I'm interested in is how on the State Level one extracts Private Helath Plans provide by Employers to Employees from all of out favorite tax boondoggle:

The Tax Exclusion for Employer-Sponsored Insurance

That's a national item. Legislated.

Do you think the forces that have killed off even a watered down Public Option at the behest of Big Health are going to *help* change the Tax Code to allow Difty F'n Hippy States to roll out Single Payer?

I'm not the naive.

So there must be some ninja way to go from what Ezra post above to the State Single Payer Nirvana that he thinks is possible through it.

John

Posted by: toshiaki | October 1, 2009 6:08 PM | Report abuse

There's no need to pull anyone out of private insurance. The state simply agrees to pay for certain types of care, and proceeds to do so. All health insurance plans covering those forms of health care will become obsolete. Voila, you now have something close to France's system: single-payer covering preventive, emergency, and everything determined to be cost-effective, and private insurance to cover everything else.

Posted by: kme1 | October 1, 2009 5:39 PM

==================

I live in California, thought by most of the country to be Liberal DFH Central.

The reality is that Cali wants to pay for very little these days, and doesn't want to raise any taxes to pay for that very little.

Does anyone honestly think in Cali we can find the funding to pay for offering these items? Or that there's enough money in the various federal bills being proposed to fund that type of Single Payer Nirvana in where 11.95% of the folks in the country live... and that state and that 11.95% of the population of the country is offering to kick Nothing into paying for it?

I think Single Payer has the potential to be a massive cost savings in the country, and gets rid of Big Insurance. But talk to me about funding it in California through this "backdoor" approach.

Or is this something that only works in states that aren't as completely screwed up as Cali?

#2 Texas?

Ain't happening.

#3 New York?

Their legilation is even more screwed up that CAL.

#4 Florida?

Watch Big Health get all the seniors up at arms that by providing Everyone a state based Single Payer, it will kill their Medicare. Doesn't matter if it's not true, it will work.

#5 IL?

Maybe, though we all know it's a wildly corrupt state government (as opposed to incomptent like CA). Good luck trying to ram it through there. Also good luck finding funding there.

PA... OH... a bankrupt MI?

How far do we have go down the list to find states where this can happen? #15 MA?

So the Backdoor starts with a state that has 2% of the population?

Color me not terribly impressed.

John

Posted by: toshiaki | October 1, 2009 6:21 PM | Report abuse

John,

I think that if we don't put any options on the table, we will be stuck with what we have now which sucks. Let the wonks work out how the tax subsidy will be treated. If we can't get medicare for all nationally, maybe CA, NY, IL, MA, PA, WA, OH can get together and offer a nonprofit healthcare plan that would have the bargaining power to lower costs. It doesn't have to be single payer and drive out private insurance. It just has to be cheaper and attract employers that want to save on health care. Sure there are lots of parts to work out. State regulations need to be synchronized, differences in the cost of care balanced, payment systems worked out. It won't be easy. If you don't like this idea, provide some others. But don't just say, it won't work and not offer something else in its place. Its not an easy problem, but we need to throw out ideas until we hit on a good one.

Posted by: srw3 | October 1, 2009 6:27 PM | Report abuse

California will certainly have problems paying for anything dramatic, it's true. But there's no need for sudden leaps; leave that to the smaller New England states that can afford to trailblaze. The big states can start by paying for, say, two visits to a primary care doctor each year. Or they could cover generic prescription medications to leverage their market power and obtain steep discounts. Once the smaller states have shown that a given reform controls costs, it can be adopted by the larger ones. No, it's not an immediate panacea, but it's a huge step in the right direction.

Posted by: kme1 | October 1, 2009 6:36 PM | Report abuse

Blog post on this issue:

http://healthcare4us.wordpress.com

Posted by: michaelterra | October 1, 2009 6:00 PM

==============================

I've read Michael's piece earlier in the week. While I don't disagree with statements like this:

"The Democratic majorities in the Vermont and California state legislatures have been trying for a number of years to establish single-payer systems only to be thwarted by Republican governors."

It's meaningless when running into this:

"While there are inefficiencies in formally breaking up health reform by region, it allows states with more progressive leadership or more pressing health insurance problems to address those more directly, though of course there are dangers. Firstly, states are not allowed to run budget deficits which, in the building of a health care system might be required because of start up costs. Furthermore states do not usually collect much revenue as compared to the federal government, so a lack of coordination between federal and regional taxation or premium collection will perhaps create certain classes of people who are at least temporarily differentially effected by a state single-payer initative."

CA has budget issues that are quite insane, and all spring from our state's unwillingness to tax in a proper fashion to pay for the services that the majority of people in the state wants. The problem one would quickly run into with Single Payer CA is that when you combine:

* the overwhelming majority of people in CA who vote don't want to have their taxes raised

with:

* the majority of people in CA who vote already have Health Coverage in some form

It's going to be really, really, really hard to take to the "voters" a bill or prop that creates a Single Pay from scratch with those massive start up.

I'm not even sure at *this point* (rather than back when the state didn't have as bad of budget issues) that you'd find enough Dems who would pass it in both houses in the State. When you start tossing around the numbers of what type of revenue will need to be raised, and work the Fear Card... it's going to be a real hard sell.

Really, the only way single payer on a large scale in this country gets done is through the Federal Gov. And by large scale I don't mean Vermont and North Dakota going that way. When states with 40% of the population go that route, then it's large scale. I just don't think the large state can fund it unless Uncle Sam is picking up the tab in a massive way. As of right now, Uncle Sam is arguing over the degree to which subsidies would be used to cover people at a % of the poverty level. That's a drop in the bucket compared to the costs of covering everyone in CA and NY and IL with a Single Payer plan.

But if you guys can workout the costs and see a way of it being sold in California, I'd love to see it.

"Have fun storming the castle."
-Miracle Max


John

Posted by: toshiaki | October 1, 2009 6:39 PM | Report abuse

I'm not sure that folks grasp California.

We're cutting funding for low cost care to the elderly even through in the long run is will cost us much more in High Cost Care. People generally know that and have pointed it out, but the objective if to close the budget gap this year and deal with those cost down the road when everything is rosey (or in the case of out GOP friends just not deal with it at all).

We are not going to pull a massive start up funding rabbit out of the hat for Single Payer in this state when the majority of voters already have Private Health (via employers) or Government Health (via Medicare, an expanded Medicare under the current "reform" VA, our large military population).

I'd be happy to. The realities are that it wouldn't happen here in CA.

The *best* that we could do in CA is a Public Option that is, over the long term, a back door to Single Payer. You're just not going to get people to give up what they have to be "taxed", no matter how hard you explain it to them that they're saving money. This is Prop 13 Country, and it's screwed up the tax psyche of the state for 30 years.

I'm an advocate of Single Payer rather than a PO. But in *this* state, the only way something would happen is via a PO. And there *might* be enough funding in the current reform to to get that up off the ground in CA.

John

Posted by: toshiaki | October 1, 2009 6:56 PM | Report abuse

Here's the point. People are already paying for health care now. It just needs to be redirected toward a public nonprofit entity that avoids the overhead of paying CEOs and shareholders. CA came up with bond money for light rail and solar rooftops. Why not healthcare? All governments have problems, including state governments. That doesn't mean we should give up on trying to build a better system than the one that leaves 40 million + without care while paying 2x as much as most other democracies. That money has to be going somewhere. Lets direct it toward a nonprofit healthcare system.

Posted by: srw3 | October 1, 2009 7:13 PM | Report abuse

I agree it's hard to believe states would ever get their act together enough to come up with a better system...

But once the trojan horse that is Baucuscare is fully deployed, I think it will quickly focus a lot of people's attention on how to improve things.

Posted by: bmull | October 1, 2009 7:42 PM | Report abuse

visionbrkr, you do live up to your name. Clearly a national public option open to everyone would be preferable, but if the big blue states sponsored a plan, they could bargain effectively to lower costs. Medicare and medicaid fraud and abuse is overstated. It certainly less than spending 20% of premiums on administration (ie delay, discuss, and then deny care) advertising, dividends, and multimillion dollar CEO salaries.

Posted by: srw3 | October 1, 2009 5:28 PM | Report abuse


GAO would disagree with you. extrapolate these statistics out and the problem is very disturbing. Fraudulent providers are drooling over single payer.


http://www.gao.gov/products/GAO-09-957


But sure keep throwing good money after bad.

And what Ezra no posts on the MLR ammendment? Maybe you should speak how the Senators HAVE NO CLUE. Do you realize they argued about an 85% MLR when they say the Price Waterhouse Cooper studies showed it at 87% (i'm looking it up now) and Senator Rockefeller stated that what do they have to worry about if its true its only 2% different.

Does he need to back to second grade math. That's 2% THE OTHER WAY!!

Why no talk of what an idiot he is???? I'm sure if Grasserly said this you'd be destroying him. Oh my I love the double standard here!

Posted by: visionbrkr | October 1, 2009 8:10 PM | Report abuse

As a Californian, I'm second to no one in my disdain for the intelligence/generosity of our voters when it comes to taxes.

However, I think that if a "public option" is structured as an alternative, paid for by premiums rather than taxes, you'd see a rush of individual, self-employed, and small employers to it.

I agree that a big pool = ability to negotiate with insurance companies, and that's what the FEHBP does. Their prices are about half of what individuals have to pay for the same coverage, so to my mind, this could be very, very competitive here.

Posted by: theRealCalGal | October 1, 2009 10:39 PM | Report abuse

There has been a bill for single payer in New Mexico for the last number of years, and it comes close, but never makes it through the Legislature.

But it's ready and fully vetted to try again if this amendment sticks.

Posted by: stokescorrales | October 1, 2009 11:03 PM | Report abuse

Wrong, Ezra. It is impossible for a SINGLE payer plan with NO CHOICE to meet the requirement to "provide affordable choices for all its citizens."

Posted by: pgkerpen | October 2, 2009 12:02 AM | Report abuse

"But .... it's hard to imagine a conservative state using it to be any less generous than the state would otherwise be."

Ezra, you clearly haven't lived in a state ruled by Republicans, like Florida. The Waiver and letting the states distribute the Federal funds is a colossally bad idea!! They will find a way to subvert the program and keep worthy people out of it.

Posted by: olderwiserwoman | October 2, 2009 12:06 AM | Report abuse

and here's that price waterhouse cooper study:

http://www.platformforprogress.com/Data-Research/PWC%202008%20health%20costs%20study.pdf

some nice little tidbits:

this included employers with 11 million total employees (not necessarily the small pools that most polls you see have).

admin costs of insurers were listed at 13%. not necessarily that difficult then to get down to an 85% MLR.

Also another example of the cost-shifting of medicare and medicaid is:

In 2009, the amount of spending shifted to privately
insured patients is expected to be nearly 36%. This includes underpayments
by the uninsured, Medicare and Medicaid.

As a person with a private plan I'd sure love a 36% reduction in my cost.

Posted by: visionbrkr | October 2, 2009 12:56 AM | Report abuse

Democrats are the new Federalists (States Rights advocates).

Posted by: HalHorvath | October 2, 2009 1:39 AM | Report abuse

I think the most likely good outcome from this is a blue state public option available to all with the states negotiating prices together.

That is a very good outcome.

Bravo senator Wyden. He's my senator but I've never had much of a sense of him. I'm becoming a fan.

Posted by: wrb1 | October 5, 2009 12:01 PM | Report abuse

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