Rocky Road Ahead for California Single Payer Proposal
Despite rumors of its death, "the Healthy California Act," a bill that would create a massive single payer system for nearly all 39 million Golden State residents, is alive and essential. It's just waiting for enough political will that will bring it back for legislative hearings, and ultimately, passage later this year.

Despite rumors of its death, "the Healthy California Act," a bill that would create a massive single payer system for nearly all 39 million Golden State residents, is alive and essential. It's just waiting for enough political will that will bring it back for legislative hearings, and ultimately, passage later this year.

At least, that's what its proponents, including the California Nurses Association (CNA) and groups of frustrated physicians, passionately insist.

Some may now be complacent because the state is no longer in panic mode. They sense that last month's defeat of efforts to repeal Obamacare voided the threat that billions in federal cuts would cripple California's Medicaid funds and marketplace subsidies.

But the CNA (the Healthy California Act's key backer) and other supporters 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, the CNA's government relations director. "[Sen.] Lindsey Graham [R-S.C.] is working on another version." Additionally, 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.

Best Fix for Broken System?

People forget how broken California's system still is, he said. Even with the ACA, some 2.7 million people in the state remain uninsured and, for another 12 million, out-of-pocket expenses place many of their medical needs out of financial reach, he said. The Healthy California Act would make healthcare their right.

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

Rendon did that, he said, because it contains severe gaps and controversial provisions.

Perhaps foremost among them: the bill doesn't say how its estimated $404 billion annual cost would be financed.

Nor does it indicate how the new system would control costs, or deal with the possibility that the Trump administration could reject the necessary federal 1332 waiver, allowing the state to divert Medicare and Medicaid funding -- an estimated $225 billion a year -- into a Healthy California Trust Fund, which would become the sole payer to qualified fee-for-service providers.

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.

But far too many of its provisions make many important stakeholders unhappy.

The possibility that new employer fees would be required to fund the program make the bill especially unpopular with the Chamber of Commerce, agribusiness, 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 CAHP referred to its June 1 press release that contends the plan would be too expensive.

The bill would, for example:

Essentially eliminate all health insurance companies, such as Kaiser Permanente, which covers some 8.5 million Californians. Their services would be relegated to cover the few that were not offered by Healthy California. Kaiser could still provide services like other hospital systems.

Eliminate the need for employer-sponsored insurance policies, an estimated $100 billion to $150 billion a year.

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

Eliminate all patient premiums, co-payments, co-insurance, deductibles, or cost-sharing, which some worry would lead to unnecessary visits and overutilization.

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

Allow patients to select any qualifying provider, eliminating the concept of networks.

Allow Healthy California to negotiate prescription drug pricing.

Federal Assent Required

The bill could come up again when the legislature reconvenes August 21, or in committee session next spring. Efforts are apparently underway to amend the bill in back rooms, sources said. But whether compromises will go far enough is doubtful.

Asked by the CNA to study the issue this spring, a University of Massachusetts Amherst research group's May report suggested several ways Healthy California could work as a national model.

First, its $404 billion cost could be pared to $331 billion through efficiencies: removing administrative overhead, lowering pharmaceutical prices through negotiation, better management of provider fee structures, and by reducing unnecessary and inefficiently delivered services, missed disease prevention opportunities, and fraud.

In addition to Medicare and Medicaid dollars rerouted to Healthy California, the report identified two other possible sources of funding: a new gross receipts tax of 2.3% applied to all businesses with more than nine employees and a new sales tax of 2.3%, exempting housing, utility, and food used at home and certain services, the report said.

But a key concern is that federal 1332 waiver. Only two have ever been granted, to Hawaii last December and Alaska a week ago.

Ted Mazer, MD, president-elect of the California Medical Association (CMA), suggested that it's naive to believe "the federal government would turn over every federal dollar that it puts into healthcare over to the hands of California to do with it as they saw fit as a single payer ... Nobody had bothered to ask the federal government, 'would you consider that?'"

He also noted that pressure to do something at the state level has diminished, with the ACA still intact for the foreseeable future. "The uncertainty of what may come from Washington is still concerning," he said, "but for the time being the removal of threats to cut Medi-Cal payments ... makes California less pressured to find another system immediately."

The two key lawmakers who introduced the California bill, Democrat senators Toni Atkins and Ricardo Lara, declined to respond to requests for comment on the bill's chances.

But diehard support among some physician groups remains.

There's the California Physicians Alliance, a non-profit group whose platforms include advocacy for a single payer system. Member James Kratzer, MD, a solo-practice pediatrician in Fresno, said he's tired of dealing with 600 sets of insurance plan rules that cover different drugs, require different co-pays, and cover different services that are impossible to keep straight.

"Insurance companies inconsistently deny various services," he said, adding that the same plan will deny a benefit for one patient in the morning but allow it in the afternoon.

San Francisco family practice physician Jeff Gee, MD, advocates single payer conversion because insurance companies have become "my silent partner in the room. They pretty much guide decisions regarding diagnosis and treatment, referrals, who I can consult, and how soon I could see patients back ... what drugs I could order and tests."

His clinical expertise, he said, is "second-guessed by Aetna, and Blue Cross, while not contributing anything to the clinical encounter."

Docs Divided

But the Healthy California bill is far from universally popular among physicians.

Some physicians that have modeled their practices under Medicare and insurance plan risk-bearing models, where they're paid flat rates for episode based care, are nervous about a single payer disrupting their practices.

The current bill "doesn't incorporate any type of integrated delivery system model," said William Barcellona, senior vice president for government affairs for CAPG, which represents 300 multispecialty group practices in 32 states with bundled or capitated risk-bearing models.

"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.

And Joseph Scherger, MD, vice president of a 60-physician primary care group at Eisenhower Medical Center in Rancho Mirage, said he doesn't think Americans (even those in California) are ready for a one-size-fits-all system for healthcare payment.

"We could sort of say that Kaiser [Permanente] 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."

The CMA has not taken a formal position on the bill.

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. "Then they'd be stuck doing something that they can't afford or manage." Others have said a single payer system in California would attract un- and under-insured people from other states to move there, with potentially major adverse consequences.

Nielsen of the CNA 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."

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