Money and Politics: Challenges of Voting on a Single-payer System

Money and Politics: Challenges of Voting on a Single-payer System

Colorado will need to navigate a possible divisive political environment while securing the necessary funds—including a proposed 10% payroll tax hike.

Coloradoans are gearing up to vote on what may become a historic state law if passed—a ballot initiative for a state-run, single-payer health care system. Under the proposed model, people will no longer pay for their care through insurance premiums, co-pays, and deductibles. Rather, compa­nies and workers would pay a proposed 10% payroll tax hike.

 The “State Health Care System” initiative received the required number of signatures to be placed on the 2016 ballot, and now, the people of Colorado will decide if their state will become the first in the na­tion to implement a single-payer health care model.

Under the model, known as ColoradoCare, people can still choose their own health care providers but they will no longer pay for their care using premiums, co-pays, and deductibles.

 Instead, the state will pick up the tab using monies raised from a proposed 10% payroll tax hike (6.67% paid by the employer and 3.33% by the employee) that is projected to cover the program’s estimated $25 billion annual cost.

Similar to Social Security, income taxable for premiums will be capped above a certain level—$350,000 for individuals and $450,000 for people filing jointly. For people under Medicare, ColoradoCare will be a supplemental plan and apply to become a Medicare Advantage Plan.

 Raising sufficient monies to fund ColoradoCare will be a major hurdle to its adoption and success—a problem that Vermont was faced with while attempt­ing to enact a single-payer system.

Despite a governor who initially supported a single-payer health care system in Vermont, which was enacted legislatively in 2014, implementation was eventually dropped in part because of the perceived problem of raising sufficient revenues to fund the program.

However, tied tightly to the obstacle of funding was, for some, the greater challenge of a divisive political environment that disallowed a clear mandate from the people of Vermont to implement such a program.

 “In reality, the Vermont plan was abandoned because of legitimate political considerations,” said John McDonough, DrPH, MPA, professor of the practice of public health, director of the center for executive and continuing professional education, Harvard T.H. Chan School of Public Health, in a recent commentary (McDonough, JE. The Demised of Vermont’s Single-Payer Plan. N Engl J Med. 2015;372:1584-1585).

Although Dr McDonough said several stud­ies showed the Vermont program was economi­cally feasible, he stressed that the citizens of Vermont were divided in their approval of the program, and as such, asking the legislature to approve a tax hike to fund it was politically untenable.

How much ideology and politics will play into the passage of the Colorado initiative will be revealed in the voting booths in 2016. “Ultimately, it will be up to voters to decide on the merits of this initiative,” said Marc Williams, public information officer, Colorado Department of Health Care Policy and Financing, in Denver.

Mr Williams said that the department welcomes the robust conversation about the future of health care in Colorado that the initiative helps to inspire. He emphasized that Colorado has already made great strides over the last several years in expanding access to affordable, quality health care, while also driving innovations and cost savings for taxpayers. “Our reforms are just beginning to bear fruit and it would be premature to dramatically remake our health care system at this time,” Mr Williams said.

For Susan Dentzer, senior policy adviser to the Robert Wood John­son Foundation, Washington, DC, ideology, politics, or a desire for potentially more cost-effective health systems will likely encourage some states to develop alternatives— including single-payer—under the provision in the Affordable Care Act (ACA) that permits states to seek waiv­ers from the structure set up by the law.

Through Section 1332 of the ACA, “states can potentially opt out of the entire core structure of the ACA as long as they meet the goals of the ACA and apply to the Centers for Medicare & Medicaid Services (CMS) to ap­prove the new approach,” she said. In turn, they can still receive the total amount of the subsidies that the state and its residents would have received under the ACA, including premium tax credits that now go to support eligible people who buy private health insurance.

Vermont has already applied for a 1332 waiver to create an "all-payer" system in which monies from Medicare, Medicaid, and other pay­ers would flow through the same pipeline into the state's health care system, she said. If the Colorado initiative passes, that state could be the first to use this provision to move to a statewide single-payer system. Ms Dentzer also notes that some observers predict that "red" states like Texas may also apply for the Section 1332 waiver. She stressed, however, that they still would have to meet the goals of the law, including covering a comparable number of people in the state as would be covered under the basic protections of the ACA.

Under the Colorado initiative, application for Section 1332 waivers will be done by a 15-member Interim Board initially appointed by legislative leaders and the governor that will be responsible for, among other things, working with state and federal agencies, coordinating with providers, and establish­ing rules of transparency for all meetings, records, and operations of ColoradoCare. If the initiative passes, residents will elect 3 Trustees from each of the 7 Colorado districts (for a total of 21 Trustees) to handle a myriad of responsibilities needed to carry out ColoradoCare, such as establishing purchasing authority for medical equipment and pharmaceuticals, as well as ensuring appropriate oversight and manage­ment of financial and privacy issues.

A recent report titled “Executive Summary of Economic Analysis of the ColoradoCare Proposal Ad­dendum with 2019 projections,” released by the Colorado Foun­dation for Universal Health Care, compared expenses for the current system vs ColoradoCare with projections through the year 2019 (Colorado Foundation for Universal Health Care; prepared by Ivan J. Miller, PhD. Executive Summary of Economic Analysis of the ColoradoCare Proposal Addendum with 2019 projections. August 3, 2015. coloradocareyes.com. Accessed December 14, 2015).

This addendum analysis converts Colorado Health Expenditures to Coloradans’ health care premiums and out-of-pocket expenses combined (Premiums + OOP), and compares the current system with ColoradoCare.

According to the report, in the year 2019, Coloradoans would spend $24.9 billion in premiums under the current system and $24.7 billion under ColoradoCare. Similarly, out-of-pocket expenses and pay for premiums + OOP expenses would be less under ColoradoCare than the current system in 2019.

As of now, no one knows what will happen in Colorado, but the fact that a single-payer health care system initiative is on the ballot in 2016 suggests that states, along with the nation, are looking perhaps a bit more seriously at ways to address what everyone knows is true—that the costs of health care in this country are untenable and changes are needed.

Impact of ColoradoCare: Savingsfor Providers

The Colorado Foundation for Universal Health Care published an Economic Analysis of the ColoradoCare Proposal in April 2015, which included projections for the year 2016. A more recent addendum published in August of 2015, Executive Summary of Economic Analysis of the ColoradoCare Proposal Addendum with 2019 projections, highlighted the potential impact ColoradoCare could have on coverage, as well as providers and health care professionals.

Among the findings:

• Administrative expenses can be reduced by $6.2 billion by removing redundant insurance-industry administration and by decreasing bureaucracy and paperwork in providers’ offices.

• Bulk purchasing market power can help reduce the costs for durable medical equipment and pharmaceuticals by $1.2 billion.

• Fraud could be reduced by $0.6 billion by utilizing a unified billing system.

• By using a unified system supporting innovation, practical efficiencies, and integrated health delivery savings are projected to increase over time.

• Providers would receive prompt, adequate payment for every patient.

•The billing system would be simplified.

• There would be improved access for patients, especially in rural areas.

Colorado Foundation for Universal Health Care; prepared by Ivan J. Miller, PhD. Executive Summary of Economic Analysis of the ColoradoCare Proposal Addendum with 2019 projections. August 3, 2015. coloradocareyes.com. Accessed December 14, 2015.