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California Ignores Trump And GOP, Unveils It’s Own ‘Single-Payer’ Healthcare Plan

While President Donald Trump and his Republican allies plow ahead to replace the Affordable Care Act and leave over 23 million Americans without health care, California boldly forges ahead with a plan of its own, and it’s golden.

Under the proposed single-payer health plan, all California residents, regardless of employment status, age, income or health conditions, would be insured.

How does it work?

Well, in a nutshell, the comprehensive state-run health plan covers:

• Medical care; like doctors visits, lab work and hospital stays.
• Dental services; such as cleanings, fillings and root canals.
• Vision benefits; including routine exams and prescription lenses.

And, Californians could access all of these services for free. That’s right. Under the proposal there are no out-of-pocket expenses like deductibles, copayments or insurance premiums. (Prescription drugs would also be covered, but they may be subject to, limited, cost sharing amounts.)

How will California pay for it?
The progressive health plan is estimated to cost California $331 billion dollars. And there are two main components that would be used to fund the proposal:

• Federal waivers that would allow the state to redirect Medicare and Medicaid (MediCal) funds towards the new system. ($225 Billion)
• An additional individual sales tax and a business gross receipts tax of 2.3%. ($106 Billion)

Keeping costs in check

California isn’t just throwing money at the problem. They are taking two, very smart, steps to ensure that their single-payer plan remains financially solvent:

• Negotiating Pharmaceutical Prices — Using a combination of VA price setting and Canadian mass purchasing tactics, California’s single-payer plan will lower its current pharmaceutical prices by an estimated 30 percent.

• Basing Provider Payments on Medicare Rates — Medicare payments for physician and other health services are, on average, 20 percent lower than commercial insurer reimbursement rates. Therefore, California will realize immediate cost savings by paying these reduced amounts for their residents’ medical care services.

• California’s Current Healthcare System is Unique — Integrated providers, like Kaiser Permanente, that offer both medical services and insurance plans dominate California’s current healthcare market. And these types of medical systems are better suited to a single-payer change over than the more disparate healthcare models found in many other states.

Potential Pitfall

After reading the economic analysis of the proposed policy several times, experts are convinced that this program will actually work. However, it has, at least, one potentially detrimental oversight.

• Medical providers are paid for each procedure, test and consultation that is completed, regardless of the result of the treatments. In essence, we are paying for the quantity of care instead of the quality of care. And since there are no deductibles or copayments to deter residents from accessing virtually unlimited amounts of health care services, utilization costs may quickly get out of hand and overrun budget estimates.

Thankfully, this may be prevented by controlling provider-induced demand. This is something that California lawmakers should consider before enacting this bill into law.

But experts agreed: California’s single-payer health proposal could be a blueprint for the nation.


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