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California’s Ambitious Single-Payer Plan Isn’t Dead — Yet

Art courtesy inewsource.
Brandon Quester / inewsource
Art courtesy inewsource.

Despite rumors of its death, the Healthy California Act, a bill that would create a massive single-payer insurance system for nearly all 39 million Golden State residents, is alive and, in the eyes of its supporters, imperative.

It is just waiting for enough political will to bring it back for hearings after the Legislature reconvenes Aug. 21, and passage later this year.

That is what its proponents, including numerous groups of frustrated physicians and other health professionals, and its key sponsor, the California Nurses Association, passionately insist.


The state may no longer be in panic mode since last month’s defeat in Congress of efforts to repeal the Affordable Care Act, also known as Obamacare, voided the threat that billions in federal cuts would cripple California’s Medicaid funds and marketplace subsidies.

But the nurses union and many others backing the bill are certain the federal guillotine remains sharply suspended over the state’s federally funded health programs.

“Just because the (repeal/replace) bills were defeated doesn’t mean they’ve gone away,” said Don Nielsen, government relations director for the nurses group. “(Sen.) Lindsey Graham (R-S.C.) is working on another version.”

Additionally, President Donald Trump has tweeted threats he will end federal subsidies for insurance companies and not enforce the individual mandate, both established under rules of the Affordable Care Act, , Nielsen said.

People forget how broken California’s system still is, he said. Even with the Affordable Care Act, some 14.7 million Californians often cannot afford to get the care they need. Of those, some 2.7 million people in the state remain uninsured. For the other 12 million, health plan premiums, deductibles or copays place many of their medical needs out of financial reach, Nielsen said. The Healthy California Act would make health care every resident’s right.


The bill, SB 562, has been characterized by many as dead since late June, when Assembly Speaker Anthony Rendon shelved it to a committee, though it had passed with fanfare June 1 in the state Senate, 23-14.

The two lawmakers who introduced the bill, Democratic Sens. Toni Atkins of San Diego and Ricardo Lara of Long Beach, declined requests to comment on what the bill’s chances are now.

Got $404 billion?

Rendon, a Democrat from Paramount, said he sent the bill to the Assembly Rules Committee because it contains severe gaps.

Most significantly, the bill doesn’t say how some $404 billion required to provide health care to the state for a year would be financed, or how the new system would control costs.

Nor does it deal with the reality that the Trump administration could reject the state’s request for a federal 1332 waiver, an essential step for the state to divert Medicare and Medicaid funding — an estimated $225 billion a year — to the Healthy California Trust Fund. Only one has been granted, to the state of Hawaii.

The fund, run by the state, would be the sole payer, distributing reimbursement to qualified fee-for-service providers, cutting out all the insurance company middlemen, the brokers and many of the tens of thousands of clinical staff required to process claims under so many conflicting rules.

The bill has broad support from patient advocacy groups, teachers, churches and many larger cities. Advocates note that employers would no longer pay huge sums to buy health coverage for their workers.

An end to health insurance

Other important stakeholders are unhappy.

The possibility that new employer fees would be required to fund the program make the bill especially unpopular with the California Chamber of Commerce and more than a dozen other chambers, and several agriculture and taxpayer groups. The state’s insurance industry, represented by the California Association of Health Plans, would be essentially run out of business. Asked for comment, the association referred to its June 1 news release that says the plan would be too expensive.

The bill would, for example:

–Eliminate health insurance companies, including Kaiser Foundation Health Plan Inc., which covers 8.5 million Californians. Insurance companies would be able to offer only those services that aren’t covered by Healthy California. Kaiser Permanente hospitals and doctors would still provide services like other providers.

–Abolish the need for employer-sponsored insurance policies, an estimated $100 billion to $150 billion a year, the amount that employers now pay for their workers’ health insurance.

–Cover all medical expenses for patients in any typical health care setting, regardless of immigration status, with the exception of military personnel.

–Eliminate all patient premiums, copayments, coinsurance, deductibles or cost-sharing, which some worry would lead to unnecessary visits and overutilization.

–Cover more services than what many medical plans typically do today, such as vision, dental, long-term care and substance abuse care.

–Allow patients to select any qualifying provider, eliminating health care networks.

–Allow Healthy California to negotiate prescription drug pricing.

In an effort to analyze how such a statewide system could work, the University of Massachusetts Amherst research group, at the request of the California Nurses Association, produced a report in May suggesting several ways Healthy California could get the billions of dollars needed to fund a single payer plan.

First, its $404 billion cost could be reduced to $331 billion through efficiencies: removing administrative overhead, lowering pharmaceutical prices through negotiation, and by reducing unnecessary and inefficiently delivered services and fraud.

In addition to rerouting Medicare and Medicaid dollars to Healthy California with the granting of the 1332 federal waiver, the trust fund could get the rest of that $331 billion in two other ways: A new gross receipts tax of 2.3 percent applied to all businesses with more than nine employees and a new sales tax of 2.3 percent, exempting housing, utility and food used at home and certain services, the report said.

Patients are concerned

Mission Hills photographer Gigi Ebert is a single-payer advocate who is worried how she will get coverage next year, especially with so much talk in Washington about repealing and replacing Obamacare.

On Aug. 1, she received an email from Anthem Blue Cross with a link to a letter from President Brian Ternan saying all Southern California Affordable Care Act plans, including her $1,000 a month policy, will be canceled Dec. 31. “The market for these plans has become unstable,” he wrote. “And with federal rules and guidance changing, it’s no longer possible for us to offer some of those plans.”

That is a huge problem for Ebert. She was recently diagnosed with conditions in her shoulder and hands that will require tens of thousands of dollars of injections, surgery and other services through early next year. As it is, she has spent $7,000 out of pocket on copayments and deductibles, in addition to her premiums.

“If we had a single payer system, I wouldn’t have to worry about any of this, about deductibles and premiums and coinsurance,” Ebert said. “Now I have multiple pre-existing conditions, so I have huge concerns about getting a plan next year.”

Some doctors fed up

Retired San Diego family practitioner Dr. Jeoffry Gordon has advocated for a single-payer system for a long time because he has been frustrated by what he calls the “commercialization” of the way the pharmaceutical and insurance industries influence what care doctors may provide to their patients.

“Money has trumped the priorities of a doctor to try and get the best and most appropriate medical care for each patient,” Gordon said.

He felt so strongly, he organized single-payer advocacy meetings out of his home. But now, Gordon said, he is concerned the political will has somewhat evaporated. “The pressure is off. The state is not going to lose $20 billion. And that was the main motivation that single-payer might have this moment.”

The time for universal health care will come, said Dr. Mihir Parikh, last year’s president of the San Diego County Medical Society and a La Jolla ophthalmologist. Medicare and Medi-Cal already cover half the state’s population.

“Right now, the system is so complicated and jumbled, and health plan uncertainty every year makes it a challenge for doctors and patients to anticipate what’s going to happen next year. Is the plan even going to be here, and is the patient going to have to change their doctor? How much will it cost?”

But any-single payer legislation must have a solid mechanism to fund $400 billion before it can move forward, Parikh said. “The worst-case scenario would be an underfunded system … where people can’t get care, and then care becomes rationed.”

Not all doctors, even those who are frustrated with the current system, favor SB 562. Dr. Howard Williams, an internal medicine physician in Hillcrest, sees a role for health plans in a Medicare-for-everyone model.

“I’m more in favor of a system where you have choices of different insurance companies, and the ability to choose whatever plan you want, like we do with Medicare Advantage plans,” he said.

Health insurance companies run Medicare Advantage plans and often combine medical care with vision and pharmacy coverage under one plan. Physicians are paid a monthly rate per patient and agree to pay other providers if those patients need other services like hospitalization.

Where is accountability for care?

A key but under-recognized feature of the Affordable Care Act is how so many of its provisions are changing the way doctors practice, to be more efficient, with more coordinated, integrated care, meeting certain quality metrics like fewer hospital readmissions.

Some Affordable Care Act models, for example, pay a flat fee to a network of doctors, hospitals and physical therapists to replace a patient’s hip or knee. The idea is that by working together, unnecessary care and duplication is averted, and patients get better care.

But that could disappear under California’s proposed single-payer bill.

The bill “doesn’t incorporate any type of integrated delivery system model,” said William Barcellona, senior vice president for government affairs for the Los Angeles-based group CAPG, which represents 300 multispecialty group practices in 32 states.

“It’s really more about what I call 1950s Marcus Welby-style medicine: independent solo practitioners practicing in a fragmented model,” which may increase costs and impair continuity of care, Barcellona said.

Dr. Ted Mazer, president-elect of the California Medical Association and a San Diego ear, nose and throat doctor, said the bill by Atkins and Lara was shelved because it is a legislative shell. It does not spell out a plan for how “the federal government would turn over every federal dollar that it puts into health care over to the hands of California to do with it as they saw fit as a single-payer,” Mazer said.

“Nobody had bothered to ask the federal government, ‘Would you consider that?’” he said.

The California Medical Association has not taken a position on the bill. Nor has the California Hospital Association.

Mazer noted that California is often seen as a bellwether by clinicians in other states. He’s heard doctors express concern that any significant movement of single- payer legislation in a state as big as California could pressure their states to do the same.

Nielsen of the California Nurses Association thinks Rendon should relent and let the bill be heard in open debate and then amended, but he declined to say what compromises his groups would be willing to accept.

“The legislative process is where all of these questions should be answered,” he said. “Let’s develop the political will.”

Dr. Joseph Scherger, a former University of California San Diego physician who is vice president of a 60-physician primary care group at Eisenhower Medical Center in Rancho Mirage, is one who wants to overcome what he calls today’s “dysfunctional system.” But even he doesn’t think the Healthy California Act will become state law anytime soon.

“We could sort of say that Kaiser got it right, and so now everybody in California will now have Kaiser. That might be a solution. But that’s not America. America likes choice and variety and freedom, and wouldn’t want to be forced into something like a Kaiser. So no, I don’t see any real type of solution right now.”