With Obamacare in jeopardy, California considers going it alone with 'single-payer' system

California and New York become the latest states to consider single-payer health insurance systems as Congressional Republicans prioritize repealing and replacing the Affordable Care Act.

By Soumya Karlamangla

Feb. 26, 2017 7:13 AM PT

With President Trump now vowing to put forward a replacement for the Affordable Care Act in March, some California politicians and healthcare advocates are once again promoting the idea of a state-run “single-payer” system that operates like Medicare.

Backers say the uncertainty surrounding Trump’s promise to repeal Obamacare presents California with a chance to rethink how healthcare is delivered to its 39 million residents.

“Why wouldn’t we take this as an opportunity to create what we want in California?” Dr. Mitch Katz, head of L.A. County’s health department, said at a conference in December. He mentioned a single-payer system as a possible solution.

Other suggestions for how California can capitalize on the threat to Obamacare include creating a public option, a state-run health plan to sell on the state’s insurance exchange, and mimicking how Massachusetts provided universal healthcare.

“Just as [healthcare] was a lightning rod and a rallying cry for opponents of the law for the past seven years, now it’s becoming a rallying cry for the supporters,” said Dr. Gerald Kominski, director of the UCLA Center for Health Policy Research.

State Sen. Ricardo Lara (D-Bell Gardens) introduced a bill Friday that would make California the first state to adopt single-payer, also called “Medicare for all.” Canada has such a system.

In a single-payer system, residents would pay into a state agency that essentially functions as an insurance company. The agency would pay doctors and hospitals when people sought treatment.

Previous proposals in California suggested financing the agency by pooling the state’s current funding for Medicaid, Medicare and other health programs and then taxing employees 4% of their income and employers 7% of payroll.

“More than ever we know that universal healthcare is popular in the minds of Californians,” Lara said in an interview.

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.

But advocates say Sen. Bernie Sanders (I-Vt.) increased support for single-payer by championing it on the national stage last year while vying to become the Democratic presidential nominee.

New York state unveiled single-payer legislation earlier this month. Rep. John Conyers Jr. (D-Mich.) introduced a similar bill in Congress that would expand Medicare to cover all Americans.

But a 2008 report from California’s Legislative Analyst’s Office found that even with a tax on Californians and the state’s pooled healthcare funds, the state would still be short more than $40 billion in the first full year of single-payer implementation.

“Where were they going to come up with the $40 billion?” said Micah Weinberg, president of the Economic Institute at the Bay Area Council. “It’s just not feasible to do as a state.”

Weinberg pointed out that a single-payer initiative was scrapped in a state as liberal and small as Vermont. A single-payer measure on Colorado’s November ballot also failed.

Even supporters tend to get nervous about single-payer when they realize it would affect everyone and might be a step down from their current insurance plan, Kominski said. People who currently get insurance through employers, for example, would receive coverage through the state.

“I’m a skeptic,” Weinberg said. “For better or worse, we sort of need to see how things play out at the federal level and react appropriately.”

California enrolled about 5 million people in healthcare because of the Affordable Care Act. Its uninsured rate reached a record low of 7.1% last year, according to data released this month.

The state would lose $20 billion if the Affordable Care Act were repealed with no replacement. That’s an enormous, irreplaceable sum the state should concentrate on retaining, said Anthony Wright, executive director of advocacy group Health Access California.

“The first fight is this federal right, which threatens to undermine the entire health system,” he said. “I don’t want to presume that we’ve lost stuff that we haven’t lost yet.”

Los Angeles County Supervisor Sheila Kuehl was at the forefront of the state’s single-payer effort when she was a state senator in the 2000s. She said she isn’t yet sure of the best way to back-fill cuts to the Affordable Care Act.

Kuehl and Supervisor Mark Ridley-Thomas introduced a motion that was unanimously passed by the board on Tuesday directing L.A. County officials to look into ways to offer medical care locally to people kicked off Obamacare, and to collaborate with the state on similar plans.

“We’re happy to work with the state to figure out a health insurance system, whatever that might be,” she said. “We have a lot of skin in the game.”

Kuehl said she thinks the state needs to consider replacing the $5 billion in Obamacare funds that subsidize Covered California plans. She said L.A. County is working to improve its hospitals and clinics in case it begins allowing people to buy into a local health plan and receive care from county doctors.

Michelle Klein-Hass, 53, is worried about losing her Medi-Cal coverage if Obamacare is repealed. She didn’t have to pay anything when she had emergency surgery recently to have her appendix removed. “It just about saved my life,” she said.

Klein-Hass, though, has supported a single-payer system since her mother was diagnosed with colon cancer two decades ago and was uninsured.

“They caught it real late, where they couldn’t do much of anything for her,” said Klein-Hass, who lives in Panorama City. “If we were living in a more civilized society, she would have had that found earlier.”

L.A. County’s Katz agrees single-payer would be optimal, but thinks it could take too long to implement. That doesn’t mean the state can’t improve on Obamacare, he said.

If Congress repeals the Affordable Care Act, California could pass its own mandate requiring that everyone have insurance and that employers provide insurance. The state could go a step further, requiring that employers cover part-time workers, who are currently not included in the law’s employer mandate.

The state could also create a public option — its own health plan to sell on Covered California — that could be open to immigrants who are in the country illegally. They are barred from signing up for Obamacare under federal law. If the health plan is successful, it could one day morph into a single-payer system, Katz said.

“We’re going to need a California plan,” he said. “In four or eight years, or whatever it takes, maybe we’ve created the kind of system that other states will get.”

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Twitter: @skarlamangla

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