How New Health Care Reforms Make Single Payer Less Likely

There are those who view the Patient Protection and Affordable Care Act, the health care reform legislation signed into law by President Barack Obama, as the first step toward a complete government takeover of America’s health care system. While I don’t agree with their arguments, they do have a case to make. That is:

  • because the reforms fail to restrain the out-of-control growth of medical costs, insurance premiums will continue to rise
  • because the reforms place constraints on health insurance companies, the private sector will be squeezed between increases in the underlying cost of care and their ability to charge adequate premiums to cover those costs
  • meanwhile the government-run health insurance exchanges, to be operational by 2014, which is also when Medicaid is set to dramatically expand, increases the percentage of health care coverage provided or made accessible by governments

Throw in a few other provisions (elements of the reform some say will undermine Medicare Advantage, the new taxes imposed on health insurance carriers and others), season to taste with paranoia and the belief that the recently passed health care reforms is merely the first steps down a path leading to a single payer system gains significant heft.

Given this scenario, one might expect folks on the left to be gleeful with the reforms. Many liberals publicly and fervently support a government-run health plan that would completely remove private health insurance companies from the marketplace. If they believed what emerged from Washington moved that goal closer, you’d expect them to celebrate, at least a little.

If so, the folks at Consumer Watchdog failed to get the memo. This group, led by Jerry Flanagan, considers health insurance companies to be the manifestation of evil in our plane of reality. OK, I’m paraphrasing here, but you get the idea. They are unabashed advocates of a single payer system for California and the nation.

On April 8th, wrote a letter to President Obama, Secretary of Health and Human Services Kathleen Sebelius, and members of Congress identifying what it calls loopholes in the newly enacted health care reform bill. (Consumer Watchdog Letter on Health Care Reform Loopholes). Among the group’s concerns is that the minimum benefit requirements to be proposed by HHS will preempt stronger minimum benefit standards at the state level, that its approach to Medicare Advantage could “push traditional Medicare into an economic death spiral,” that the law fails to attack recent price hikes by pharmaceutical companies, and that carriers will continue to be permitted to rescind coverage for intentional misrepresentation, without creating new regulatory oversight to ensure that exception is not abused by health plans.

Most interesting, however, is Consumer Watchdog’s fear that the new health care reform bill will prevent states from adopting a single payer system at least until 2017. Under the heading “States Rights to Innovate,” the letter states, “Under the current law, states must wait until 2017 for waivers from the federal government to use federal Medicaid, Medicare, tax subsidies
and other funds to support state alternatives to the private insurance market, whether that
be by adopting a state single-payer model or a state ‘public option.’”

Since states can’t divert funds from existing public programs to new government programs, the new health care reform law blocks initiatives to create single payer systems at the state level. In fact, the new reforms block states from creating a health plan to compete with private carriers (unless it can do so without federal funds, tax subsidies and the like).

I suppose what this proves is there is a balance in the universe. The same legislation some fear will inevitably lead to a single payer system is the same legislation that prevents states from creating a single payer system.

Of course some will argue that this simply delays the coming of a single payer system to 2017. However, think about the recent reform package. The Patient Protection and Affordable Care Act. It was passed by the slimmest of margins and only after intense debate and adroit legislative maneuvering. It’s passage was possible only because Democrats occupy the White House and have substantial majorities in both chambers of Congress. Yet the legislation has no public option and is built around private health insurance. Nonetheless it is criticized as “socialism” by some and a “government takeover” by others.

Does anyone realistically believe the country is going to move further to the left in future elections? That’s one of the reasons the Administration pushed so hard to pass health care reform in 2009. The party occupying the White House nearly always loses seats in mid-term elections. They knew the Democratic majorities resulting from the 2006 and 2008 elections were the high watermark for Democrats in Congress. Long before the tea party started brewing the Administration understood the 2010 elections would reduce their working majorities in Congress. Why would anyone think future Congresses would be even more liberal than this one?

That’s why Consumer Watchdog is concerned about the new health care reform package. It prevents them from moving forward with a state public option or single payer system until 2017. And by then, given the pendulum that is American politics, the odds of a government takeover of health care is likely to be slimmer than it is today.

12 thoughts on “How New Health Care Reforms Make Single Payer Less Likely

  1. I’m not an oil compnay executive,a defense contractor,a billionaire or
    millionaire. I used to rely on an hourly wage. Now,I can’t find a job.
    The economic mess,is not the fault of the current administration. It is the aftershock of the Bush Administration. While the democrats could be wrong about the approach to health care reform,I know what kind of a health coverage plan I will have with the republicans-none. Maybe I’ll get lucky,and land a position for minimum wage at the local WalMart. If the republicans have their way,that minimum wage will be greatly reduced. Our government can spend billions to cause rigormortis,and dismember people. At the same time,they want to block accessibilty to health care.
    If Satan exists,he is the one who appreciates them the most.

    • Wow! you honestly blame all of the country’s problems on Bush. I dont care for him, but atleast I’m objective. By the way, Wal-Mart isnt a minimium wage job and I’m pretty sure you weren’t riding high three years ago. PS our govt doesnt “block” accessibility to health care. That’s the same as saying because I dont buy you food I’m starving you.

  2. Alan
    Your comments are excellent, and well-informed. I have an alternate view of the impact of health care reform on movement toward a single-payer system. As insurance company rates are squeezed, it’s conceivable they will be forced toward prevailing Medicare rates. Similarly, the government-run health insurance exchanges could peg their rates to medicare levels. We won’t call this a single-payer system, but I see the potential of moving to a single rate-schedule system. This does not portend well for hospital providers (full disclosure: my career has been spent as a hospital/healthcare system CFO), since Medicare reimbursement has historically been so low as to require more (arguably) fair reimbursement from other payers. Just one man’s view.
    Regards,
    Arnie

  3. Interesting points. This piece of legislation will have limited affect on lowering rates. We will however see rates increase due to the amount of unhealthy people coming on to a plan. Massachusetts is a perfect example of what will happen on a national level.

    • That’s right, Chris. They’ll also increase due to new taxes on carriers, pharmaceutical companies and medical device manufacturers (those taxes will be passed along in higher prices for drugs and devices). Another cost driver: the fact that the penalty for failing to obtain coverage is relatively weak, especially initially, meaning healthy people will have a financial incentive to hold off on getting coverage until they need it: a classic recipe for adverse selection. Limiting the differential between the youngest and oldest insureds will raise rates for young folks. And restrictions on benefit designs will eliminate low cost plans (albeit by increasing benefits). So there’s no doubt prices will rise. Some fear lawmakers will blame insurance plans for this inevitable result (and no doubt some politicians will). But the more insightful among legislators will realize something needs to be done to address the cost of medical care itself.

      No one can predict how it will turn out, but one thing is certain: the health care reform debate is far from over.

  4. Alan,

    Is anything in this bill that seriously confronts the sources driving the increasing cost of healthcare?

    • Hello Rick. There are provisions in the legislation aimed at addressing medical costs. These are mostly pilot projects, studies, and the like. The tax on Cadillac health plans is also viewed by many as something that could bring down overall costs. Clearly, the new legislation is mostly about insurance and marketing reforms, but there are many who believe it lays the groundwork for attacking medical costs in the future.
      Hope this helps.
      Alan

    • Hi everyone!

      There are incentives for wellness programs. While they will not influence the immediate impact of reform, hopefully, they will help long term. Lifestyle is a very significant contriubtor to the rising cost of healthcare. So while wellness programs may not be the complete answer, they are clearly a step in the right direction.

      Additionally, I like the premium surcharge for smokers. They seem to be singificantly higher than in the existing marketplace. Cost changes behavior.

  5. I’m sure the new health reform will also create different job and services. some will suffer but everyone needs to review their products. you do set some good points in your blog. alot more people will benefit but there will always be problems

  6. Alan,

    I would defer to your knowledge and expertise (compared to mine) any day of the week. I do disagree with some of the points you’ve made in this entry, but don’t have time to comment today.

    I’m writing because I just read a very worrisome analysis of the new law written by Rep. Paul Ryan, for whom I have much respect. I’m posting the link and would love for you to comment. http://www.house.gov/budget_republicans/press/2010/hc-ed-final-7apr10.pdf

    I’m hoping you’d be willing to reply to some of his points in a future entry to your blog.

    Thanks,

    Gary

  7. The bottom line, will it still be the same great product to sell as until now? Or ……..

  8. Alan, Thank you for being the voice of reason is the storm of health care reform! If the right and the left both hate the reform it means that what we ended up with on the final vote is somewhere in the middle. This reform won’t cure every problem that we have in the health care delivery system, but it will help with some of them. Instead of fighting against what has already happened, I think we would all be better served to watch to see what the final result of the legislation is as we get closer to 2014, and then try to guide future legislation to help address the issues that were left behind with these bills. Everyone needs to remember, we will still have a job to do – how we will do it is still in question – but if we are flexible, then we can still go to work every day and help our clients to get the health care that they need. At the end of the day – isn’t that what our main focus SHOULD be?

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