The Supreme Court just upheld the Affordable Care Act in a 7-2 decision. There is nothing affordable about this act as insurance premiums keep rising. Yet Democratic pundits keep talking about access to healthcare. There is a better way – National Improved Medicare for All (NIMA). Despite overwhelming public support for Medicare for All, President Biden has backed away from even a public option and has said he would veto Medicare for all. This grim picture puts the US in a situation where some believe the only way to achieve universal healthcare is through a state-based system. This ignores the many pitfalls that state-based healthcare would face.
The first indication that a state-based system is destined to fail is the fact that corporate funded Speaker of the House Nancy Pelosi has recommended it. As she said in a press conference in 2017,
“So I say to people, if you want that, do it in your States. States are laboratories. It can work out. It is the least expensive, least administrative way to go about this, but the comfort level with a broader base of the American people is not there yet. It does not mean it could not be. States are a good place to start.”
In this statement, Pelosi was using the states to deflect from the need for NIMA. A state-based system would not actually be the least expensive, least administrative way to go about this.
Dr. Margaret Flowers has been a longtime advocate for Medicare for All. In 2013 after the ACA passed, she wrote,
“In what is perhaps the greatest corporate scam ever, not only did the health insurance corporations write the federal health law, called the Affordable Care Act (ACA), to enhance their profits, but now they also have the government and non-profit groups doing the work of marketing their shoddy products.”
In an article for Health Over Profit, Margaret Flowers has detailed the barriers to enacting a state-based system. Her well-researched stance is much more realistic than the pandering and deflection of Nancy Pelosi.
The first obstacle to any state-based system comes from federal law. As Dr. Flowers describes,
“A state would have to succeed in obtaining multiple waivers from the federal government and changes to federal laws to enact a state-based program. One federal law, the Employee Retirement and Income Security Act of 1974 (ERISA), which prohibits states from regulating employee benefits, is a major obstacle.”
The ERISA prevents states from interfering with employee benefits, making it impossible to legislate away employer-based health care plans. Any state-based plan would have to include an elaborate work-around to bypass the ERISA. These workarounds not only increase the complexity of the system but also open it to legal challenges. To continue with Flowers’ description, “Any interference in employee benefits can be challenged under ERISA and would result in a lengthy and expensive court battle.” If a state-based plan did pass, there can be no doubt that corporate interests would immediately challenge it in court based on potential ERISA violations.
In addition to working around ERISA, states would also have to deal with federally funded healthcare spending already in place. This includes Medicare, Medicaid, the Veterans Administration, the Indian Health Services, the Federal Employee Health Benefits Program, and Tri-Care. Federal laws prevent spending for these programs from being shifted to the state. Medicaid spending could potentially be passed on to the state through use of a block grant or waivers, but neither option is ideal. Waivers would increase administrative waste as they would require the state to track all Medicaid spending. A block grant would not allow for increased spending during times of recession like the current pandemic, when people are thrown off their employer-based plans and end up having to turn to Medicaid. The existence of these federal programs prevents any state from enacting an actual single-payer program.
The greatest single roadblock to state-based healthcare is the funding issue. This is described by Dr. Flowers, “States also face the hurdle of being required to balance their budgets, a barrier that doesn’t exist at the national level.” As states are currency users, they must find a way to pay for their spending. To pay for their systems, states will be required to either raise taxes, cut spending in other areas, or a combination of the two. Payroll based taxes open the potential for ERISA lawsuits. Regressive taxes that focus on the working class will not be popular at the ballot box and are easily targeted by ad campaigns against state funded healthcare systems. Progressive taxes on the rich or corporations can lead to an exodus from the state and an economic downturn, another fear that is easily preyed upon in attack ads. This capital flight would trigger budget cuts as tax revenues fall and create a veritable race to the bottom as austerity measures are implemented. Any state funded system will be vulnerable to economic down turns that are an inherent part of the capitalist cycle. It was due to the high costs of their system that Vermont’s state-based system failed. While a state with a strong economy like California might be able to afford a state-based system, many rural states would struggle to come up with the funds. A federal system would not face any such obstacles. Congress can spend without being limited by pay-fors or deficits. While Bernie’s plan did include a progressive federal tax, even this would not be necessary as taxes do not fund federal spending. The single most efficient way to provide healthcare for everyone is through a federal single payer system.
Supporting state-based health coverage attempts can be detrimental to the struggle for National Improved Medicare for All. The failure of Vermont’s system has been used in the fight against single payer. State efforts can distract from the real battle, which is on the national level. Dr. Flowers reminds us,
“Imagine if a highly-populated progressive state such as California or New York were to drop out of the national effort for NIMA to focus on their state. This would be a huge loss.”
The drive for healthcare must be for all people, not just on a state level. The people of Alabama and South Carolina deserve universal healthcare as much as do the people of Washington, New York, or California.
In her concluding statement, Dr. Flowers tells us we can win NIMA,
“A study of social movements shows us that we are close to winning NIMA. The power holders will predictably work to throw us off track by sending us down false paths of partial reforms and state-based efforts and lure us into working on elections.”
These distractions must be ignored as the battle continues. In 2016, Dr Flowers said, “Voting for Democrats or Republicans is not going to bring the change that we need.” The fight for universal healthcare is not going to be won without millions of people standing up and demanding it as our right. The fight enters a new phase this summer with the March for Medicare For All which is happening in over 20 cities across the country on July 24. If you are interested in helping, you can sign up to volunteer here.
Further reading:
The Imperative To Achieve National Improved Medicare For All
The Solutions Are Obvious, But It Will Take A Revolution To Win Them
The ACA is the Wrong Direction, Time for Medicare for All – PNHP
Could States Do Single-Payer Health Care?
Which Path to National Improved Medicare for All? – Health Over Profit
Ms. Flowers doesn’t seem to have a full understanding of ERISA or failed to convey it to the author.
Maybe you can expand on this? Everything I researched on ERISA backed up Dr. Flowers.
It is true that state-based single payer faces the obstacles Dr. Flowers mentioned.
However, it is irresponsibly false to suggest that states do not have the means for significant improvement in state regulated health insurance.
The cause of the disease of high healthcare costs is multiple complex admin systems plus an absence of negotiated prescription drug prices.
The solution is to simplify health insurance at the state level, sector by sector.
1. Follow Connecticut’s successful example. For their Medicaid program, CT fired all of their private contractors, rehired a few, and gave those few the same simple admin system. It was an admin-simple self-insured system, aka, an ASO, Administrative Services Only contract. The result was a 14% drop in CT’s medicaid costs plus increased provider participation. Previously, as is the case in all states, private practice physicians cannot afford the billing costs of billing Medicaid, so, they refuse to accept it. After simplifying the payment system, CT’s physicians resumed accepting Medicaid.
2. Clone that ASO admin system, fire the current middle man for public employee health insurance, and swap that high cost insurance company for the low cost of the state designed ASO. This will result in two major sectors of the state, Medicaid and public employees, receiving healthcare under an identical admin system. From the patients pov, both are the same. From the physician and hospitals pov, both offer the same benefit package with the same billing – admin – system.
3. The state then directs their DHS – or, in the case of Hawaii, the Hawaii Health Authority – to create a third ASO clone for Medicare Advantage. Once that is available for Medicare recipients to consider, their physicians will beg them to opt in to the state managed MA bc its admin costs will be freed of the unaffordable burden of MACRA, which is the load stone ruining Medicare since 2015.
4. The state then allows private biz and self employed to buy in to the states Medicaid program. This will be a real public option. It will cost less to administer while offering the same or better benefits than private plans, with zero of the rigged denial of care or other private insurance nonsense. The free market will then divert all businesses into the lowest cost and best deal of Medicaid as a public option. A mandate will not be necessary, and, prohibiting duplicate insurance will not be necessary.
5. The state could, at that point, choose to expand Medicaid further to cover anyone who is still uninsured. To hell with COBRA, let the state offer the newly unemployed a better deal, sliding scale, from free to reasonable.
This scenario does not conflict with ERISA. All the state would be doing is the same thing private insurance companies have been doing; making changes to the admin system by which public employees are insured. Private insurance has on an annual basis made changes to their billing system, going from less complex to more complex. The state will simply reverse that direction, from more complex to less complex. The benefits will remain either the same or improved. Access will be improved, and the total number of providers in the state will bounce back up, because physicians will be able to stay in private practice.
This scenario sets up the dominoes which can cascade towards national acceptance of a national single payer system.
This is not a distraction from advocating for HR1976 Medicare For All. Bernie’s disastrous MFA bill is a distraction due to passage 611b retaining MACRA, and yes all of the lousy public options, such as Senator Schatz’s brain dead Buy-In to Medicaid as-it-currently-exists bill are distractions.
Distractions abound.
State based strategies for demonstrating that less admin equals less cost will build national support for single payer.
I do agree that the state based single payer movement is idealistic because they don’t have a good answer for how they will get the federal 914 waiver for Medicare. And, details matter. The NY Single Payer bill, due to faulty design, would not have produced the advertised savings, so, it would have failed. However, in 2018 Robert Pollin published a UMass study which showed that the CA single payer bill would have saved CA $37 billion per year in reduced admin costs. Of course, that assumes that a president gave the necessary waivers. It is likely the case that Biden will not support state based single payer waivers, so, I recommend abandoning state based single payer in favor of flanking all federal waivers by focusing on replacing the Medicaid, public employee, and MA insurance companies with a simple ASO, and then letting the public buy in to that version of a streamlined Medicaid.
It worked in CT’s Medicaid program.
Please contact me if you’d like data on what CT did.
Some of that data is already published as a file on the FB page Healthcare For All Hawaii.
Dennis B Miller
Medicare For All Hawaii
Lowering prices doesn’t remove the burden from states, it just lowers prices for the states. It’s a way to do it, if you don’t want to work on Free Healthcare for All.
1. Medicare is a federally funded program in existence. Medicare for All – HI is the incorrect term unless you are demanding that HI be included 100% into the medicare federally funded program. It is more accurate to call it Single-Payer Healthcare – HI.
2. Medicaid supplementary program via single-payer healthcare reflect a small percentage of the insured in CT at it covers 800,000 Connecticut citizens (in 2018, 22% of the state population). The CT supplemental Medicaid insurance covers 41% of the bill. The rest of the money comes from the federal government. Basically, it’s a small piece of the expense pie. Medicare coverage is limited at its current state. If the mandate of a single-payer state bill requires more coverage, you are looking at additional costs for the state. https://www.medicaid.gov/medicaid/benefits/mandatory-optional-medicaid-benefits/index.html
3. On top of #2, the state would automatically have to forfeit the Medicaid federal funding (59% of the cost) and Medicare (100% of the cost) for an additional 14% of the population. There is the ACA voucher, sure. But what does that amount to in monetary terms? https://www.statista.com/statistics/238717/health-insurance-status-of-the-total-population-of-connecticut/.
4. 3. On top of #2&3, a Single-Payer state-based would then be asking CT to cover 100% of the health bill for the rest of the CT population not on Medicaid, Medicare, and all previously uninsured (5.9%). Will the savings created from witching to single-payer admin be sufficient to meet all the new insurance coverage needs for the State of CT?
I can go on, but I hope you get the picture. You are looking at a ton of variables here that may, or may not fall into place based on how individual states are doing from year to year, most of which are in the red. If a state has a bad 1-5 year fiscal cycle, who do you think gets screwed first? Maybe they will roll the dice, this year it will be the homeless, next year it will be education.
If you go for #M4A, you have the funding unequivocally worked out for ALL states perpetually through the demand/pressure by the people to have our representative in Congress in the interest and pleasure of the majority. This is why it important to choose each representative wisely.
While I admire Dr. Margaret Flower’s long history of advocating for single payer, many other movement advocates respectfully disagree with opposition to state efforts, often pointing out that the successful effort that resulted in a national system in Canada started small. Further, the waivers that Flowers cites as a stumbling block to state systems would be eliminated by the the State Based Universal Health Care Act of 2021.
Understand that regardless of populist movements best intentions, the lack of care or time to understand how the currency issuer, the Federal Government and cash strapped currency user states across the nation fund their operations has rendered so much of this argument moot. 3 or 4 states may be able to do this with tremendous volatility, 48 others and territories would not be. Sadly, it seems economic illiteracy has the loudest voice right now. That’s a same for NIMA. The rest of the country weeps as people start something that is simply a terrible idea spawned from an abundance of good intentions.
How is it unaffordable for a state to pay less in total healthcare costs than what they are currently paying?
If that were actually the case, states would be cutting taxes rather than raising them to implement their state based programs. The money has to come from somewhere – unlike on the federal level.
Because the current system insurance money pool covers some, not all at a more substantially expansive coverage model. Because you will also have to include current Medicare and Medical recipients in that states with some coverage paid for Federally, now needing to be transferred into a state single-payer scheme that promises or is mandated to provide expanded coverage. All of which must be met regardless of income through taxes that can vary from year to year. Because the mandate that extends this expanded healthcare coverage to anyone in that state, regardless of residency to avail of funds to meet any medical needs allowed by this mandate (not that is a bad thing). I hope that answers your question.
…Because the current system’s insurance money pool will now be mandated to provide expanded healthcare not just among current members/subscribers but ALL of the residents in that state from age zero. Because that coverage that use to require a high deductible threshold requirement will now be part of the expanded healthcare mandated by single-payer legislation.
Dr. Flowers addresses Canada in her article, you can find it here: http://healthoverprofit.org/2018/02/01/which-path-to-national-improved-medicare-for-all/
I don’t see how the State Based Universal Healthcare Act of 2021 is going to fare any better than the State Based Universal Healthcare Act of 2019. The one that had 22 co-sponsors and went nowhere. It appears the 2021 version has 24 co-sponsors and has gone nowhere. If state based systems require passing a Federal act for it to work, then why not just pass Medicare for All at the Federal level?
State-based single-payer for some who can is NOT Medicare for all – The End. If a State-based single-payer really worked and is feasible, it should have already happened right now.
What we do know is that Medicare does work, we have it now. It’s here. Why the argument? Let’s pick one path, we know what it takes to get it passed – MASSIVE PUBLIC PRESSURE. The argument that efforts towards single-payer are counterproductive is valid there is no way to guarantee that the budget of each and every state can maintain a certain lever year-after-year or 5-10 year cycles. This will make the program volatile and still subject to corporations’ fickle relationships from one state to the next. With all due respect, cut the crap – go for #M4A we have other issues facing our country. Anything short of Medicare for ALL is a waste of people’s precious time.
What we know is there will be a march in cities across the country on July 24. Participate.
Millions who want M4A are unaware of what it will look like.
We know all states are different, but all states are currency users, not currency issuers like the federal government.
As Birrion states in this article: In 2016, Dr. Flowers said, “Voting for Democrats or Republicans is not going to bring the change that we need.” The fight for universal healthcare is not going to be won without millions of people standing up and demanding it as our right.
We have to demand, yell, and keep on demanding what people need and deserve the healthcare than can be paid for by the federal government just like they pay for whatever what they choose.
Fantastic article, Birron! Perhaps some states would be able to afford it. I know for sure that mine won’t anytime soon. Sucks for me I guess.
Working toward a state-based program dilutes and dissipates the energy needed to fight for a true national health plan. It’s also misleading… we know most states cannot afford it. Welcome to the race to the bottom.
Dennis Miller, certainly a state can streamline and should streamline their expenses. But your “plan” completely ignores the larger segment of the population that gets their insurance via their employment, or on their own. Those people are still stuck with massive insurance companies gobbling up profits and spending an inordinate amount of time trying to deny care. You are talking apples and oranges, and to pretend that the oranges are apples does not make it so.
We all know that healthcare when done right will ALWAYS run in the Red; that’s why it’s an absolute necessity to fund it with federal dollars. If we are NOT funding healthcare with federal dollars and non-profit health organizations and hospitals maintain a balanced ledger, it means we are NOT meeting the needs of our patients. We are rationing out healthcare.
It also means we are not meeting our original mission, providing healthcare to the Public. We are harming and killing our Public.