Froma Harrop outlines how states may implement their own systems of single-payer healthcare insurance:
The prospects for single-payer health care — adored by many liberals, despised by private health insurers and looking better all the time to others — did not die in the Affordable Care Act. It was thrown a lifeline through a little-known provision tucked in the famously long legislation. Single-payer groups in several states are now lining up to make use of Section 1332.
Vermont is way ahead of the pack, but Hawaii, Oregon, New York, Washington, California, Colorado and Maryland have strong single-payer movements.
First, some definitions. Single-payer is a system where the government pays all medical bills. Canada has a single-payer system. By the way, Canada’s system is not socialized medicine but socialized insurance (like Medicare). In Canada, the doctors work for themselves.
Under Section 1332, states may apply for “innovation waivers” starting in 2017. They would let states try paths to health care reform different from those mapped out by the Affordable Care Act — as long as they meet certain of its goals. States must cover as many people and offer coverage as comprehensive and affordable. And they can’t increase the federal deficit. Qualifying states would receive the same federal funding that would have been available under Obamacare.
Vermont has already gotten out in front of this issue by enacting its own system of statewide single-payer insurance into law. I have little doubt that other states will be looking closely at Vermont’s experience in putting that law into practice.
A few observations. First, whatever the Administration’s intentions I think that the Obama Administration has closed the door on a national single-payer system for the foreseeable future. For one thing I believe that national single-payer is politically unthinkable until the dust has settled from the PPACA and, as a consequence of the law’s design, that won’t be until 2020 at the earliest.
Additionally, a national single-payer system would be politically quite difficult. Today’s Republican Party wouldn’t champion such a system and Democrats would need to begin their advocacy of such a plan under the burden of the Obama Administration’s incompetent handling of the PPACA to date, contending that the Administration was incompetent but it was uniquely incompetent and that future Democratic administrations would do better. Since I don’t see most Congresional Democrats making that argument for the foreseeable future, that leaves single-payer without support at the federal level.
Vermont’s success or failure in implementing its own system of socialized healthcare insurance will depend on the state’s willingness to control costs and Vermonters’ acceptance of the measures put into place. They may well succeed. I strongly suspect that the future of a single-payer system in the United States will largely depend on the success of state programs, much as was the case in Canada before it.
As to my own views, let me put it to you this way. Would you really want the state of Illinois administering your healthcare insurance? And this despite my support for single-payer for, quite literally, decades.
Vermont, because of its size and past insurance reforms, is an oddity and an outlier. Harrop seems to be under the impression that there are numerous Vermont insurers engaged in a lot of wasteful competition, advertising and profit-taking.
Vermont has three private healthcare insurance companies, and the largest, a Blue Cross/ Blue Shield, is a nonprofit that has about 70% of the market. The other two, Cigna and MVP appear to market themselves to very specific sectors of Vermont.
Vermont really doesn’t anticipate saving money on the administrative end, which is the unpopular end. It anticipates cutting reimbursement to providers to 105 percent of Medicare reimbursement rates, whereas Vermont providers currently receive approximately 122 percent reimbursement of those rates.
Shaw, this touches the main reason that I think the “use the states as 50 labs” for healthcare won’t work. Although MDs are state licensed, it isn’t that hard to move, and in the end, cutting reimbursements will hurt physician incomes.
Also, although BCBS is a dominant provider in many states, I think it’s somewhat misleading to say they have 70% of the market. That’s true, but that’s of the private market. Medicare/aid and the VA are also significant players.
If BCBS actually ran the insurance system for 70% of Vermonters, you’d think they’d have most of the benefits of single payer (plus whatever they reported as profit at the end of the year, minus whatever graft/wastage you’d get in a government system, which may well be far less in VT than it would be in IL.)
There’s also a widespread misconception that insurance companies compete with one another. I don’t think that’s the case. I think they operate as local cartels and do what cartels do: collude to divide the market amongst themselves according to some agreed-upon formula.
PD, that’s precisely what I was thinking about when I mentioned the “measures that would be taken” and, as TimH suggests above, I anticipate there will be some pushback from providers. It’s an open question as to how accepting Vermonters will be of the implications of all of this.
I might add that Vermont has no ability to regulate physicians in New Hampshire or New York and there’s nowhere in Vermont that isn’t a relatively short drive from New Hampshire or New York. The state can limit what it will pay but not what out-of-state providers will charge.
This might also be a good time to recall my frequent claim that Medicare is a price support.
Tim, I meant a BCBS has 70% of the private market, because Harrop is making a big deal about how a single payer would undo the inefficiencies of the private market (wasteful competitive and profit-seeking behavior). It appears that BCBS will likely administer any Vermont single-payer plan, so its not clear how much would really change on the administrative end by reducing (though not necessarily eliminated) the other two insurers.
Not 100% positive, but I don’t think Vermont (or the federal government for that matter) can outlaw private insurance competition, so to become a true single-payer system, the government has to offer something superior to the private market, which would then rot and die.
Two potential wedges: (1) The federal tax exemption for employer-sponsored healthcare insurance might help make some private plans competitive, and (2) and the extent to which Vermont is too small to provide all healthcare needs. This is why I thought McCain’s healthcare plan that focused on portability and eliminating the federal tax benefit are more likely to have improved the chances of single-payer systems.
Sure they can. Most states, maybe all of them, require “certificates of authority” or the equivalent for an insurance company to do business in the state. If the state issues no certificate of authority to anything other than the state-run insurance authority or writes the requirements in such a way as to preclude any institution other than the state from providing insurance, that would do it.
It’s easy to forget just how powerful the states are. The federal government on the other hand probably doesn’t have the power in this area that the states do and would need to operate as you suggested—by offering something better.
I think the state would have to be sneaky/indirect. Dormant commerce clause issue from discriminating against out-of-state business.
Oh, and I agree with the last point. States do have more regulatory power in many respects than the states. They can probably do more with an individual mandate. There are federal court cases as I recall, scrutinizing state requirements for out-of-state professionals.
Oops, should read: States do have more regulatory power in many respects than the feds.
The Commerce Clause is to me growing wheat in my backyard, but it is not applicable to an insurance company selling across state lines.
Hey single-payer advocates, how about getting rid of this dumb-ass crap. Stop whining about the Republicans, and make yourselves useful.
1) It is kind of hard to move. I have been geting some of my guys licensed in New Jersey. It takes a good six months lead time, longer if the lose some paperwork or you do something wrong. If you want to go to Texas, it gets even more difficult.
2) When there are lots of insurers, or very few insurers, prices tend to go up. Vermont only had 3 so they may be able to decrease a bit w/o much pain.
3) Insurers can sell across state lines now, they just need to comply with state rules.
4) I guess this is where I say Medicare doesnt make sense as a price support. Why do private insurers pay 20% more?
Steve
Because that’s the way price supports work. Why is the price per hundredweight of milk around $20 while the support price is a little over $16 per hundredweight?