In case you haven’t heard, there’s a ballot initiative accompanied by lots of passionate organizers in the U.S. state of Washington. The ballot initiative in question is I1362, known as ‘Whole Washington.’ It’s an effort to implement single-payer healthcare for the state of Washington, using Washington’s state budget to furnish the costs involved. As a state rather than the federal government, Washington’s expenditures are limited to state and municipal taxes levied. Whereas the federal government can, does, and will spend our currency into existence whenever Congress authorizes spending, each individual U.S. state is reliant on taxation as a form of revenue generation. In other words, states operate like households whereas the federal government does not.
The analytical and scientific framework behind understanding our currency paradigm is known as Modern Monetary Theory, or MMT. Now, the word ‘theory’ is used here in the academic or scientific context, meaning a collection of knowledge describing how we know something to work. It doesn’t mean that the concept is a guess or untested. Unlike colloquial usages of the word ‘theory’ that often mean little more than ‘I have a guess,’ the word ‘theory’ in Modern Monetary Theory is indicative of our total sum knowledge of how money works under monetarily sovereign, fiat-based, currency issuing governments like the United State Federal Government.
MMT explains that every dollar in the federal deficit is the private surplus. This means the federal debt is the sum total of the dollars available to private hands, like you and me, as they haven’t been taxed into deletion by the federal government. Of course, billionaires, our modern-day titans of industry themselves, have hoarded much of this money supply for themselves and hidden most of it stocks. This matters to the fight for universal healthcare in the states on several levels.
In the case of Whole Washington, or any other legislation to implement single-payer healthcare at the state level, healthcare coverage and the necessary expenditures requires the classical ‘pay-for’ argument to be considered, and that consideration means taxing for every dollar spent on healthcare. Even in the case of progressive taxation, that means the cost pool of health insurance is going to weigh on the middle and working classes. It also means when healthcare costs become more than expected, whether due to healthcare tourism or other hard to calculate increases to overall costs, state legislators are going to have to choose year after year, where to cut other necessary public services to cover the burden of healthcare placed on the currency user that is the state of Washington.
In the case of National Improved Medicare For All, PatriotCare, or another federally implemented and federally funded single-payer healthcare system, the expenditures are fully covered by the authorization Congress would issue to fund the program. No additional taxes need levied. In fact, some economists argue that, since Medicare For All would be deflationary, federal taxes would need to, or at least could, go down after its implementation.
Going further than analyzing the currency paradigm behind Whole Washington / I1362, one should also analyze the bill itself. The same is true for any bill that claims to be federal Medicare For All. Advocates for Whole Washington’s bill claim it would be an improvement from the federal Affordable Care Act. The implementation, however, relies on a lot of assumptions and wishful thinking that may or may not pan out. The bill instructs the health care trust created under its authority to apply for federal waivers that would allow federal payments for healthcare normally made to individuals via programs such as Medicaid and Medicare and other programs to made directly to the trust itself. As long as the waivers remain unapproved or if they are denied completely, one of the funding mechanisms Whole Washington relies on would become completely unavailable to the state, and the state may be liable legally for interfering with federal healthcare regulations.
Both of these potentialities would incur large costs borne by every Washington resident. Furthermore, the bill I1362 prescribes vaguely defined cost-sharing measures on incomes above 200% of the federal poverty level. Unlike the deeply flawed Obamacare cost-sharing mechanism, the Whole Washington cost-sharing prescribes additional costs to the healthcare consumer based on their income. The ACA (Obamacare) on the other hand issues cost-sharing reductions from 100% to 250% of the federal poverty level, and premium tax credits at 100-400% of the federal poverty level. These two combined means for individuals in those income brackets and on a federal marketplace plan, their co pays, deductibles, and other out-of-pocket expenses go down, sometimes significantly. Of course, Obamacare was always a giveaway to the health insurance companies and is not a good or functional model to provide actual healthcare to every American.
The fact that Obamacare cuts in cost reductions at 100-400% of the federal poverty level via tax credits and other federal subsidies, whereas Whole Washington cuts in cost increases at 200% of the federal poverty level, further highlights the divide between currency issuer and currency user. If the federal government chose to, it could cover 100% of all healthcare costs for every US resident, at any time, with no expenditure restrictions based on tax revenue raised. In other words, as long as there are real resources and labor to purchase in the US dollar, there is no limit to federal spending on healthcare (or anything else).
Here is a screenshot of one of the bill’s provisions for cost-sharing at 200% of the federal poverty level.
To be fair, looking through the bill text, there’s also provisions to ensure the cost-sharing isn’t higher than it would be on the ACA marketplace.
However, this relies on the federal government approving a transfer of those funds from the marketplace that would no longer operate in Washington and directly to the costs of each individual healthcare consumer in the state of Washington to the state of Washington itself and the health care trust that would be created by I1362. Such a transfer would require a federal payment mechanism that doesn’t seem to exist, and, given that our Congress is captured by healthcare lobbies, the likelihood of one being created to better facilitate a single state moving off of private healthcare for any length of time is likely very low.
In the context of corruption and lobbying, also known as legalized bribery, it is important to note that federal taxes are a currency deletion measure. Upon receipt, all monies paid to the federal government to satisfy a tax obligation are deleted, destroyed. As such, federal taxation can be used to check income inequality and promote the wealthy to invest in their communities and workers in order to avoid taxes. However, the upper marginal tax rate has been deliberately lowered in stages since shortly after the end of Eisenhower’s presidency. Compared to Eisenhower’s time, there are also less marginal tax brackets now than there were then. Once an understanding of federal taxes as a currency deletion measure is attained, one can more effectively argue for the reduction of billionaires’ and multi-millionaires’ influence. Deleting their extracted wealth through federal taxation is a sound way to limit their ability to corrupt our institutions and political representatives.
The age-old socialist adage is ‘seize the means of production.’ In the modern age, that adage carries more wisdom than one might think. If you try to seize the billionaires’ inordinate wealth they extracted from the working class with a revolutionary mob, the value of that wealth plummets. Their wealth is hidden in stocks and bonds, and those are valued based on confidence. For example, if you were to swarm Bezos’ house, Amazon stock valuation would likely plummet. This is why the call is to seize “the means of production” rather than to seize ‘the hoarded wealth.’ To argue for seizing the hoarded wealth as a means to pay for federal policy is at once ahistorical, economically illiterate, counterrevolutionary, and fiscally impossible.
There isn’t enough hoarded wealth to ‘pay for’ every progressive policy. The good news is, once we understand MMT, we understand that, from Medicare For All to the Green New Deal, no amount of billionaire wealth redistribution is necessary to finance these programs. Conversely, limiting ourselves to Robin Hood economics has us all waiting for justice and prosperity, when we don’t need to wait. In a fiat world, money is a tool for acquiring real resources and labor. As such, the creation of money (such as the US dollar) is only limited by purchasable real resources and labor.
When discussing Whole Washington and the state-by-state strategy, many proponents have compared passing single-payer in each state to the history of Canada’s healthcare system, where Canadian Medicaid was passed province-by-province.
However, this surface-level analysis fails to consider that Canadian healthcare isn’t fully single-payer. Private health plans still exist. Individual mandates to purchase private health plans still exist. In other words, the history of Canadian healthcare teaches that passing a state-by-state patchwork of systems won’t wholly eradicate the private, for-profit insurance industry. And, of course, the currency paradigm is at play, regardless of the Canadian model’s lessons.
As one example, residents of Canada on a study permit often must purchase private insurance from their university, a student union, or on their own.
Using the Canadian model as some sort of ‘gotcha’ to prove state-by-state single-payer is the way forward is, frankly, ahistorical.
Don’t forget, a Lancet study found that Bernie Sanders’ implementation of National Improved Medicare For All would save 68,000 U.S. lives per year. Multiple studies have found that Medicare For All is actually significantly cheaper than the ACA. However, the cost isn’t the object here – once we understand how fiat economics work, as explained by MMT. Despite, and because of, bad economics parading around as ‘common sense,’ we have work to do to win actual healthcare for all in the United States.
Bernie Sanders has never shown a full understanding of how modern economics work. Of course, right-wing elements say something along those lines whenever a policy to help all the people is the topic of discussion. They don’t understand it either, it seems, because the reactionary elements perceived as the right-wing here in the U.S. are often the most obsessed with ‘pay-fors.’ Ironically, the right-wing and reactionary elements known as neoliberals are also completely obsessed with ‘pay-fors,’ despite their theatre putting them on the opposing side.
Additionally, the argument here is not one of myopic doompilling (‘things will never get better, don’t try’) but more of optimistic realism (‘this is how we make things better for real.’) In that vein, here are some tactics that can be used to force our federal government to pass National Improved Medicare For All.
- General Strike + Mutual Aid
- March For Medicare For All
- Build Up The Green Party + Vote For Independent Candidates
In other words, to pass meaningful healthcare reform, we must meaningfully pressure politicians and their donors by threatening the former with loss of their seat and the latter with loss of their extracted wealth.
“All the major correctives to American democracy have come through movements and third parties that have operated outside the mainstream. Few achieved formal positions of power. These movements built enough momentum and popular support, always in the face of fierce opposition, to force the power elite to respond to their concerns. Such developments, along with the courage to defy the political charade in the voting booth, offer the only hope of saving us from Wall Street predators, the assault on the ecosystem by the fossil fuel industry, the rise of the security and surveillance state and the dramatic erosion of our civil liberties.”Chris Hedges
If it’s hard to stomach that Bernie doesn’t understand the currency paradigm making pay-fors’ obsolete, he recently indicated, in his role as Budget Committee Chairman of the Senate, that the Biden infrastructure package would absolutely use taxation, albeit progressive taxation, to ‘pay for’ the package.
The lesson here: implementation matters. Bernie Sanders, for all his grace and faults, never fully committed to understanding Modern Monetary Theory. His model for ‘paying for’ Medicare For All was both flawed and unnecessary. Bernie’s flawed understanding of fiat economics led to a fight over ‘pay-fors’ that arguably cost him the electoral steam necessary to beat DNC electioneering. The fact that Whole Washington based its initiatives’ funding mechanisms on Bernie’s federal bills shows that there is a fundamental misunderstanding of our country’s economics involved in the design and implementation of this policy. On that topic, let’s look at how state-based single-payer has been tried, how it failed, and how that has undermined our movement based on the attempts to implement it in Vermont.
According to Cornell Policy Review’s analysis, a combination of economic stressors and administrative failures are behind the failure of state-based single payer in Vermont. Cornell researchers hold that Vermont’s system should’ve been economically viable, but failed nonetheless. However, this recent experiment shows us forcing a currency user to take in the entire burden of healthcare is bad economics. Even more concerning is the narrative ammunition that each failure gives corporatists and the alt-right.
“I see no evidence from the Medicare-for-all advocacy community of a serious effort to understand and learn from the lessons from Vermont’s failure. Those who ignore history are cursed to repeat it.”John McDonough, Professor of Public Health at Harvard
Regardless of whether Professor McDonough ultimately supports National Improved Medicare For All, he conveys a strong point. If they don’t learn from their own past, recent and otherwise, Americans will never win any meaningful reforms for the people. (Those meaningful reforms include Medicare For All.) Despite having passion and justice behind them, implementation should matter to Whole Washington advocates. It undeniably matters to the rest of the residents of the United States whose battle for healthcare will be harmed by another failed state-based experiment based on bad economics, rather than a successful federal policy.
There are countless articles decrying federal National Improved Medicare for All as a bad idea and doomed to fail based on the results of the Vermont experiment. These articles are a taste of the venom that will be unleashed when the Whole Washington system fails, and it will fail due to the currency paradigm. Why add another state and all the human cost of another failed healthcare experiment to the pile?
Read the I1362 full bill text here.
On the topic of the state-by-state strategy, and for additional clarification as to why it is bad economics and why Whole Washington (or any other state-based single-payer system) will harm the overall movement for a real, national, healthcare for all system at the federal level, please take the time to watch this video by Real Progress in Action founder, Steven Grumbine, regarding the topic of Medicare For All, and the confines of a currency-user in funding social programs. The video also addresses some of the bad-faith smears and concern-trolling that those who understand MMT have faced as they have tried to steer our movement away from the iceberg of another failed state-based experiment.
5 thoughts on “Issues Related to State-Based ‘Single-Payer’ Healthcare”
Fantastic article. You really killed it with this one, Artemis!
Tax evasion is a problem for the federal government. Most people I’ve talked to about paying taxes, are somewhat proud to help, with their taxes, to pay for schools, roads, infrastructure, social services and many other things they see as necessary. Now that we understand federal spending and taxing, I can see the problem of tax evasion developing into a huge problem for the government. If people can’t believe their taxes go to help their communities, why continue to pay them? If the Federal Government can create as much money as it wants, why does it need mine? And so on. I believe this is why so many ppl who know better, like Senator Sanders, stick to the rhetoric we are used to.
Something that didn’t make it into this article is the fact that, historically, you need about 38 states to pass a policy for it to become federal policy. Only about 3 states have the economics to pull off state based faux-single-payer for any period of time. We need a different strategy, we need to force Congress’ hand.
Although I have to agree that obtaining a fair and just healthcare system that is able to show results much more comparable to the rest of the advanced countries in the world would be much easier to accomplish at the federal level, unfortunately, we do not have a nation of elected leaders who are willing to do what is necessary to achieve National Expanded and Improved Medicare for all. So are we to just sit by and accept this? No, we do not need to! If we truly must function as a household at the state level then would it not make sense for us to embrace a less expensive way of delivering care to our state’s residents? If we had an intermediary who was adding wasted costs to our ability to shop for our healthcare would it not make sense to find an intermediary who would charge less. Who would be truly a non profit entity? Yes, there are hurdles we will have to overcome but they are certainly not insurmountable. And it would be a glorious day when a fair and just healthcare system is available to the entire nation. We in Washington are working to break the seal that the for profit insurance industry continues to tighten on the cookie jar that contains our healthcare dollars and give them back to our state’s residents.
Also a few errors I saw in your article:
Canada’s healthcare system is called Medicare.
And all states who have accepted Medicaid expansion already manage the Federal dollars provided to the states to support. The nice thing about this is that those states who have accepted the Medicaid expansion already have the systems in place to manage a state run healthcare system.
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