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Republicans in the U.S. Senate are currently weighing their options to repeal-and-replace the Affordable Care Act, an act that would mirror the intent of the legislation passed by the House a while back. With the prospect of the Affordable Care Act on the chopping block (or, at least due for major revisions), some states are considering action: namely, the establishment of state-run, single-payer healthcare systems.

We recently discussed single-payer systems and how unlikely we are to see them at a national level. But are they any more likely at the state level? And can individual states even do this? In this blog post, we’ll try to break down what’s happening.

WHAT STATES ARE CONSIDERING THIS?

First, as you might expect, this discussion is happening in only a few select states. There has to be political willpower: only states with strong Democratic legislative majorities are considering such action, as their constituents remain strongly interested in single-payer systems.

Second, the states involved need to be large and populous enough, with enough economic power and wealth creation—not to mention administrative capability—to make such a program even remotely possible. That’s one of the reasons that California is considering this system, and not Delaware.

HAVE STATES TRIED THINGS LIKE THIS IN THE PAST?

States have implemented their own healthcare systems at the state level before. Perhaps one of the most famous examples—and a major point of contention in the 2012 U.S. Presidential campaign—was Massachusetts’ 2006 “Act Providing Access to Affordable, Quality, Accountable Health Care.” Signed by then-Governor Mitt Romney into law, this bill was considered an inspiration for the Affordable Care Act.

More recently in 2011, Vermont’s state legislature established “Green Mountain Care”, a state-level single-payer system. In 2014, citing a $2 billion shortfall in funding, the state abandoned plans to establish their own single-payer system. Coloradans roundly rejected the concept of state-run single-payer system of their own on a 2016 ballot measure, turning it down by a 80% – 20% margin.

WHAT’S HAPPENING IN CALIFORNIA?

The logo for a movement supporting a single-payer program in California

This past week, the California State Senate passed a bill that proposes to eliminate private health insurance and current forms of government insurance, while establishing a single-payer system. Supporters for the program tout that this single-payer system would result in zero out-of-pocket costs and an insurance program every Californian could participate in.

However, such a program comes with a pricetag. The state senate estimates that the program will cost California $400 billion per year—roughly double the state’s entire budget. Proponents and those opposed have some disagreement on the true costs, but few disagree that implementing the Healthy California system will be expensive.

HOW LIKELY IS THIS TYPE OF LEGISLATION?

There’s a significant hurdle here, and for any state looking to implement their own single-payer healthcare system. In order to use federal money currently being spent in California—money from programs such as Medicare, Obamacare, Medicaid, and more—California will need a number of waivers from the Trump administration. As you might expect, that’s very unlikely.

That’s also before any legal challenge from private insurers or other interested parties interested in testing the myriad of national laws surrounding employer-offered healthcare plans. Should the legislature pass this and the governor sign it, expect further debate and legal action.

No doubt, other states are watching to see what California does next. However, even in the unlikely event single-payer goes live in the Golden State, it may not necessarily be a blueprint for other states to follow. By some estimates, California alone is the world’s 6th-largest economy, rivaling countries like France and Brazil. Few other states are in such a position to implement a program typically left to national governments in other nations.

HOW CAN I LEARN MORE ABOUT THIS?

We’ll continue to follow any developments in this story about healthcare systems moving forward, as well as the development of national healthcare legislation crafted by the U.S. Congress.

At FBC, we keep close watch on all developments in healthcare in both the public and the private sector. We’ve been providing our clients with insurance and benefits consulting services since 1983.


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