Show me the waiver

The California State Senate passed the single payer bill. This is hopefully the start of the process of exploring what that actually means and how it can actually be done in a state with resources and technical sophistication.

Michael Hiltzik in the LA Times identifies the key implementation challenges:

Under the Senate bill, the “Healthy California” program would take over payment for almost all medical spending in the state. It would absorb funding currently going to federal and state programs, and relieve employers, their workers and buyers in the individual market of premiums, deductibles and co-pays….

They need multiple waivers from the federal government to refashion Medicaid (known in California as Medi-Cal), Medicare and other federally funded health programs and redirect federal dollars into their own systems….(emphasis mine)

Show me the waivers.

If there aren’t waivers, this plan is vaporware.

California would need federal funding streams from Medicaid, Medicare, Medicare Advantage, the ACA or AHCA, Veterans Administration, and the IRS via the cash value of the tax advantage of employer sponsored insurance coverage. I can see a legal pathway towards a Medicaid waiver. I can see a legal pathway towards an ACA waiver. I can squint hard to see an AHCA waiver.

I don’t know how California convinces a friendly administration that state wide single payer is worthy of a Center for Medicare and Medicaid Innovation (CMMI). An unfriendly administration won’t grant a Medicare CMMI waiver.

Transferring all of the VA’s funds and responsibilities to a state is a radical redevelopment of the obligations of the VA and its service delivery system/.

The IRS/Treasury ceding the cash value of a tax deduction to a state is an incredible renegotiation of power and leverage between the state and the federal government. California’s federal tax code would be fundamentally different than the tax code in the rest of the country.

I am going to let the political scientists and the constitutional lawyers really examine the altered relationship that would occur within the US governing framework if California received all of these waivers. I just know that at least half of the money that the feasibility analysis assumes that California will get from federal sources needs waivers that require Congressional majorities in both chambers, a Presidential signature and at least five votes on the Supreme Court.

California would need some incredible waivers to finance single payer in a single state.

Show me the waivers.

26 replies
  1. 1
    zach says:

    The IRS/Treasury ceding the cash value of a tax deduction to a state is an incredible renegotiation of power and leverage between the state and the federal government.

    Do they have to? Just tax effective subsidies at 100% (either by taxing the business or the individual).

  2. 2
    Jager says:

    If you don’t ask the answer is always no.

  3. 3
    Baud says:

    @Jager: Agree. This is the way to accomplish hard things.

  4. 4
    Another Scott says:

    @Baud: Yup. One has to start the conversation and debate the policies before the laws can be changed.

    I haven’t read the links, and thanks David for highlighting this action in California. I’m curious as to whether if CA finds a way to transition to single-payer, if there’s a mechanism for other states to “buy-in” or whether they would have to try to set up their own system. Presumably it would be much easier and more sensible for NV to join CA in their system than to try to set up their own…

    Oh, Ed Kilgore at NYMag says the NY State Assembly has passed a single-payer bill 3 years in a row

    The Democratic governors of both states are not yet onboard, however. California’s Jerry Brown, a single-payer proponent back during his presidential campaign of 1992, fears the revenues won’t be available to support a shift to that model today. New York’s Andrew Cuomo has been less forthcoming, but it is widely believed his interest in a possible 2020 presidential run would keep him from vetoing legislation popular with the progressives he would need to win over.

    There are a lot of questions about how to design a state-based single-payer system that are being answered in various ways. The New York bill contemplates that all existing federal health-care dollars will be “pooled” in the state trust fund that would pay for services and insulate patients from virtually all out-of-pocket costs. Assuming Obamacare is not repealed, it’s possible the state could get megawaivers to use both Obamacare individual insurance subsidies and Medicaid for a new system. But there is no existing federal authority for turning over Medicare dollars, or for letting states abolish the private insurance that underlies Medicare Advantage plans. The more such problems persist, the less the new system can really be described as providing “single payer” as opposed to a public option that supplements existing public and private insurance sources.

    Cheers,
    Scott.

  5. 5
    Laura says:

    PPIC poll, 65% of Californian’s support single payer. Support drops to 42% when asked if taxes are increased to cover the cost.
    Sadly, the tax question crowds out any contemplation of the savings from eliminating premiums, co-pays and other out of pocket costs.

    Also, fuck Andrew Cuomo and his presidential aspirations.

  6. 6
    But her emals!!! says:

    @Laura:

    This is a huge problem everywhere. Somehow paying a $1 in tax is worse than paying a $1.25 directly to get the same thing. It’s something I have tried to explain to people and it just doesn’t seem to penetrate.

  7. 7
    hovercraft says:

    @Laura:

    Also, fuck Andrew Cuomo and his presidential aspirations.

    I fully endorse this comment. Andrew Cuomo has screwed over his state in pursuit of his dream to be president, sadly for him the base hates him, and he won’t be able to rely on the BernieBros because he has Wall Street cooties, so no matter how much the media will try to promote him, he won’t win the nomination. Perhaps he should have considered that before he spent his entire governorship punching hippies. Fuck him, with a rusty pitch fork.

  8. 8
    Laura says:

    @hovercraft:Andrew Cuomo has screwed over his state in pursuit of his dream to be president,
    When he could have actually used his position to the betterment of his party, his base and all New Yorkers. But NO! his every act, every intention was to ensure that no good deed went unpunished, that corruption continued apace, that Chris Christie had a friend in Andrew Cuomo, that electing more republicans was more important than electing more and better dems, like Shuan Francis.

    So yes, rusty pitchfork.

  9. 9
    TriassicSands says:

    They need multiple waivers from the federal government to refashion Medicaid

    Waivers? The point of the waivers is to kill Medicaid, not help a state provide insurance for all of its residents (who are citizens?).

  10. 10
    TriassicSands says:

    This is a huge problem everywhere. Somehow paying a $1 in tax is worse than paying a $1.25 directly to get the same thing something inferior.

    Your statement was correct, but I think it can be taken a step further.

  11. 11
    Mike J says:

    The IRS/Treasury ceding the cash value of a tax deduction to a state is an incredible renegotiation of power and leverage between the state and the federal government.

    Would anyone be happy with this if it were Mississippi trying an idea popular with Republicanso? I don’t think I would be.

  12. 12
    Fair Economist says:

    California already passed a “single payer concept” bill a few years back but it was just generalities and nothing came of it. It got hung up on the need for a 2/3 vote in the statehouse to pass new taxes. This is a more detailed plan than that one was but it’s still short of passage – it got 23 state senators but it needs 24 plus an abstention.

  13. 13
    Anne Paulson says:

    Wait wait wait wait wait…

    I understand that the planners envision a negotiation with the Feds that will end in the Feds writing a check to California for the amount that would have gone for California’s Medicare, Medicaid, VA. OK, I can imagine that, from a friendly administration. But now you’re telling me that the financial analysis assumes the Feds are going to write a check to California for the cash value of the tax advantage of employer insurance? That would be silly. I don’t see that assumption in the brief financial analysis presented to the legislature, but maybe I missed it: https://assets.documentcloud.org/documents/3728610/SB-0562.pdf

    Also, is it true that in California, Medicare reimbursement is the same as reimbursement from private insurers, as is claimed in the analysis? I thought Medicare paid a lot less to hospitals.

  14. 14

    @But her emals!!!: Taxes are resented, not for their economic impact, but as indicia of accountability.

  15. 15
    bupalos says:

    There could be a bargain to be struck here (remember that block-granting dollars to states for Medi-x lies on the road to the Republican holy grail of going back to trading chickens for cancer treatment. Maybe cal could just ask that they get all their med money block granted back, in proportion to their federal tax contribution?

    I dunno. In reality, there’s not much of a way forward on this without some major assertion of (and conflict over) state’s rights first. It’s going to be a confusing time going forward, for the first couple hundred years the ascent of power up the federal ladder largely served liberal/humane purposes. There is a LOT to be said under the current structure for that power devolving back down, in fact, all the way to localities.

    Or we could just zap the electoral college and disproportionate and diluted representation, and actually become a regular sane country. But something has to happen. We’re in a very very bad place right now.

  16. 16
    Camembert says:

    “Do they have to? Just tax effective subsidies at 100% (either by taxing the business or the individual).”

    Yep.

    Governating is hard, but it can be done if you want to try.

  17. 17
    scott (the other one) says:

    @Laura: I like to think that his friendship with Christie alone will be enough to sink him—Christie could not have gotten away with as much as he did if not for Cuomo either deliberately turning a blind eye or actively helping him.

  18. 18
    Burnspbesq says:

    As always, funding is going to be the make-or-break consideration.

    I’m basically indifferent to whether the $400 that gets taken out of every paycheck goes to United or the Franchise Tax Board, as long as quality of service stays the same. If the FTB starts taking more, then I will have a beef. Our personal income tax rate is already pretty beastly (up to 12.3 percent).

  19. 19
    craigie says:

    So California gets all these waivers and does “the right thing.”

    Then some red state says “great, we want that too” and gives all the money to millionaires, and somehow forgets to actually fund any health insurance / health care.

    Or put another way, how is this different from block grants designed to destroy the programs they are supposedly funding?

  20. 20
    Burnspbesq says:

    @hovercraft:

    It’s hard to imagine Cuomo getting any traction if Gillibrand is in the race. For that reason alone, it’s your patriotic duty to run. Senator, for the good of the country and the party.

  21. 21
    Anne Paulson says:

    @Burnspbesq The financial analysis for the California plan envisions a 15% payroll tax, 10% to be paid by employers and 5% to be paid by employees. And that’s with some pretty rosy assumptions, notably that providers will accept Medicare levels of reimbursement. My California activist friends keep assuring me that Californians will be just fine with a 5% tax hike on their income. I’m dubious.

  22. 22
    Brachiator says:

    The California proposal is ambitious, but probably dead in the water. The Legislative Analyst projects that it would cost $400 billion. An LA Times article notes that the bill going through the state legislature lacks any means of paying for the entire program. Other obstacles:

    Even if the bill is approved, it has to go to Gov. Jerry Brown, who has been skeptical, and then voters would have to exempt it from spending limits and budget formulas in the state Constitution. In addition, the state would have to get federal approval to repurpose existing funds for Medicare and Medicaid.

    The provision that all California residents would be covered regardless of immigration status is humane, but a huge political liability.

  23. 23
    Fred Fnord says:

    @Burnspbesq: at an income of half a million dollars. And even then you wouldn’t feel it until you were making substantially more than that.

    Or to put it another way, if you have to worry about that and you ARE worried about that, feel free to leave.

  24. 24
    🌷 Martin says:

    Point worth bringing up, but the authors of the bill said that the reason the bill is so broad is to give the followup bill more opportunities to find an avenue. If the VA won’t waive, then they simply won’t co-opt the VA component. Same with Medicare. They have that flexibility here because both Medicare and the VA are already single payer systems so carving those Californians off still meets the intent of the bill.

    They also left out all copays and premiums and so on so they could get the broadest possible cost score and where the costs were, and they would narrow from there. They may still add co-pays to make the costs balance, and so on. At the same time, by not specifying negotiating for drugs, etc, they get a worst case scenario for cost that they can still pull in.

    Unlike a federal piece of legislation, one issued by a state supermajority party that the bulk of the population supports isn’t going to be nearly at risk for over-politicization at this stage. They have more room to chase accurate but overly broad numbers and work down to something manageable. So, at this point I’m not too concerned about the lack of waivers. But to the overall point, I would think the GOP at the national level would pull out all the stops to block this. If California is successful, it’s going to suck other states in like a black hole. They’ll not only be able to copy California’s model, but they can enter in alliances to get greater leverage for cost control. In short, a CA single payer model will become a national single payer model whether the federal government likes it or not, in much the same way CARB is effectively a national standard, etc.

  25. 25
    ColoradoGuy says:

    I live in Colorado, and the initiative here failed because people on Medicare (and military TriCare coverage) would have paid *twice*, once into the Colorado single-payer tax, and also into the Federal Medicare or TriCare system. And the Colorado single-payer tax, as opponents described it, would have pretty much doubled the size of the total Colorado budget.

    Those two things pretty much killed it at the ballot box; way too big, and a fair number of retirees and military personnel would have gotten whacked financially by the double-payment aspect. Integration into existing Federal programs is a big deal for retirees and military folks.

  26. 26

    @Laura: Was the question “Your wages will increase under single-payor because outsized deductions will no longer be taken from your salary.

    Rob

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