Federal vs State Strategies
By Jill Zorn
Despite the political challenges, when it comes to universal health care, all policy roads lead to a federal solution.
What about the Laboratory of the States?
In the United States, the states have always been seen as laboratories for trying out big ideas. For example, the Affordable Care Act (ACA) approach to health insurance coverage was piloted in Massachusetts.
The Canadian single payer system started in one province, Saskatchewan. It spread to several more provinces and then was adopted as a national program.
But when it comes to covering everyone, I don’t believe that state-based single payer is the way to go.
Financial and Legal Hurdles to State-Based Single Payer
States face huge financing and legal obstacles. These include:
- The ability to raise taxes sufficiently to cover the cost of bringing in thousands of workers currently insured by their employers, when working from a much smaller tax base than the federal government has. It was the taxes, more than anything else, that killed Vermont’s single payer
- The size of state budgets. The Vermont state budget would have doubled, and similar predictions have been made for California.
- The need, generally, for states to balance their budgets, which gives them much less flexibility if they have a “bad” health care year. The federal government is in a much better position to absorb the financial hits of an epidemic, or a new expensive drug, than are state governments.
- The federal government has more bargaining power than any given state to keep health care prices under control — as long as it chooses to use that power.
- A pesky law called ERISA, which allows larger employers to “self-insure”. Self-insured companies can only be regulated by the federal government. In Connecticut, most people with insurance work for companies that self-insure. That means the state government has no ability to regulate how they get their insurance. During the passage of the ACA, ERISA was modified to make sure that most new health insurance rules, like eliminating life time and annual limits, applied to all plans. But the chances of opening up ERISA to accommodate a few states who want to go to single payer don’t look very promising. Blogger Jon Walker refers to ERISA as “the 900-pound-gorilla standing in the way of state-based reform.”
Federal Government Resources
By one measure, government’s share of health spending is already close to two-thirds of all national health expenditures and the federal government is already funding the lion’s share of these costs. This includes Medicare, tax subsidies for employers, ACA subsidies, federal employee health benefits, direct coverage provided by the Indian Health Service and for veterans and active military members, and at least half of states’ Medicaid budgets.
The federal government is already funding and setting standards for a huge portion of our health care. They have the size, the organizational expertise and experience, the authority and the ability to raise the revenues to finish the job. That’s not to say it will be easy, but it is certainly doable.
While the policy challenges for figuring out how to get to universal health care at the federal level are enormous, the political challenges are even bigger. Some of these hurdles are discussed in the first two blogs in our single payer series. Nationally, it is politics, not policy that is keeping us from moving forward.
Because the political challenges are so strong at the federal level, there is a natural tendency to look again at whether single payer is possible at the state level.
There may be a handful of states that have the potential to overcome the politics. If any state is going to do it, it is a wealthy, solidly left-of-center state like California. But so far they have not succeeded. The cold hard reality is that the policy barriers may be too steep to overcome at the state level, even if the political will is there.
Here in Connecticut, we are struggling to close a $3 billion budget deficit and have started the new fiscal year without agreement on the budget for this year and next. Even if the policy challenges listed above where not there, we are far from being in the fiscal shape or building the political consensus in the “insurance capital of the world” necessary to take on crafting and implementing a single payer bill.
But that doesn’t mean that supporters of single payer should just sit back and wait for federal action following the 2020 election. As we know, election results are very unpredictable.
The next two blogs in the series will look at possible policies to focus on at both the federal and state level to move us closer to universal health care.
To learn more:
Road to Single-Payer: Overcoming Hurdles at the State Level, by Jon Walker, Shadowproof
Vermont Single Payer: What Went Wrong? by Jill Zorn
What Killed Single-Payer in California? by Clio Change, New Republic