Posts Tagged ‘Healthy California’

Collapsing the silos: Structural challenges pose greatest obstacle to proposed California single payer system

June 23rd, 2017 Comments off

Update: The Sacramento Bee reports today SB 562, the single payer measure discussed this post, has been designated a two-year bill to allow lawmakers more time to work out the details into 2018.

California is considering legislation that if enacted, would make the largest state the first in the nation to implement a single payer system for all medical care rendered to Golden State residents. It faces enormous obstacles.

The first is the deeply entrenched (since at least the 1940s) scheme of paying for medical care for most working age families though employee benefit programs. Both employers and employees complain about the rising cost of these programs. But they are heavily tax advantaged for employers, particularly larger ones who offer them to attract and retain employees despite the cost.

The second and related major challenge is America’s fractured medical care finance system with its numerous silos, each with separate eligibility, payment and reimbursement rules. The proposed Healthy California program is inherently radical in that it would have to somehow collapse all of those silos into a single one.

Easier said than done. When it comes to the federal Medicare program that covers those age 65 and older, that could require a change in federal statute to accommodate what would effectively be a state opt-out while retaining the federal program funding. It’s not clear the federal government would be inclined to allow states to do so since this is a federal – and not state – entitlement program. Medicaid is a different story. It’s a joint federal-state entitlement program. As such, the feds have historically accorded states substantial leeway on how they administer their Medicaid programs and set eligibility standards. Then there are program silos for veterans, active and retired military families and interstate employer and union plans.

Reshaping this fragmented landscape into a unitary scheme would require an enormous amount of shared political will both within California and the federal government in order to make single payer a reality. It’s far from clear that it exists. California policymakers may have to reduce the scope of the single payer legislation to cover those under age 65 who are:

  • Not offered employer group benefit plan (possibly with employer or employee option to select instead of employer plan)
  • Medicaid only eligible
  • Self employed.

Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Study: Single-payer plan would save California $37 billion per year

June 1st, 2017 Comments off

The new study estimates it would cost California $331 billion to provide health care to everyone living in the state — less than the $368.5 billion spent today in a system that leaves millions without coverage. To pay for it, they say, the state needs to find $106 billion in annual tax revenue — far less than the Senate committee’s estimate of $200 billion. The figures are probably on the optimistic side, said Laurence Baker, a professor of health research and policy at Stanford, because they hinge upon California’s ability to negotiate lower costs with the powerful pharmaceutical industry and other key players, such as hospitals and doctors. “It may be that they could do that,” Baker said, “but getting from where we are now to there would be a tricky, difficult proposition.”

Source: Study: Single-payer plan would save California $37 billion per year

California’s proposed single payer legislation would create a state monopsony that could flex considerable market power with providers of medical services as Baker suggests. But in order to obtain the potential savings it could bargain, the Golden State would have to blow up the current payment pie (illustrated in this post) that carves out slices for different populations and bake a whole new one covering everyone. That’s nothing short of reshaping the entire payer side of the state’s medical care system — a heavy lift considering most people are happy with their slice of the pie with the possible exception of those in the non-group market ineligible for meaningful premium subsidies under the Affordable Care Act.

Then as others have pointed out, there’s the obstacle of getting the Trump administration to approve federal waivers allowing California to redirect those subsidies and Medicare and Medicaid funding to the proposed Healthy California program. The administration is quite favorable to states devising their own schemes for covering those not eligible for group plans and Medicare. But it’s not clear if would go so far as to approve combining all federal medical dollars into a single pot in one state.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

California single payer bill would amalgamate federal, state health program funding

March 30th, 2017 Comments off

A California state lawmaker this week fleshed out proposed legislation that would create a single payer scheme of medical care financing in the Golden State named Healthy California. The proposed legislation would create Healthy California Trust Fund to fund medical care for all Californians and combine federal funding for health programs (Medicare, Medicaid, Children’s Health Insurance Program, Patient Protection and Affordable Care Act) as well as state funds. Waivers would be sought from the federal government as needed to redirect funding from the federal programs to the Healthy California Trust Fund.

A key part of the funding under the measure is federal approval of a waiver under Section 1332 of the Affordable Care Act that allows states to set up their own medical care financing schemes using federal dollars that would otherwise be available under the ACA such as subsidies for health plan premiums and out of pocket costs in the non-group market and expanded Medicaid eligibility. Vermont took a similar tack with a single payer plan but ultimately concluded it would require substantial state funding to an extent the program would not be politically feasible.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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