State must lead the way
David Lazarus
Sunday, January 18, 2004
©2004 San Francisco Chronicle
More than 43 million Americans may now be uninsured, but no one expects a
national health care system similar to Canada’s to be adopted any time soon.
The obstacles, not least the fierce opposition of the $300 billion insurance industry, make such an enormous change politically untenable.
If universal coverage is to come to the United States, most experts agree, it will be introduced gradually, state by state. And California is positioning itself to be among the first out of the gate with a workable plan.
A statewide universal health care bill, introduced by Sen. Sheila Kuehl, D-Santa Monica, was approved by the Senate last summer. It will be taken up by the Assembly this year.
No one, not even Kuehl herself, expects such groundbreaking legislation to become law in the near future. But a few years down the road, as California
businesses increasingly plead for help in coping with runaway health care
costs, the bill’s chances could improve significantly.
“The more employers are burdened with providing health care for society, the
more they’ll be looking at this kind of system,” Kuehl predicted.
“Chances are slim the bill will get passed this year. But maybe four years from now, with a five-year transition period — that’s very possible.”
Businesses, pension funds and other insurance providers have grappled with
annual double-digit increases in insurance premiums for the past four years.
About 70,000 supermarket workers are on strike in Southern California because their employers want to raise health care costs. Nearly 100,000 workers at the telecom giant SBC, to cite just one other example, say they’ll walk off the job if medical costs are increased when their contract expires in April.
Meanwhile, the influential Institute of Medicine in Washington estimates that 18,000 adults die each year because they don’t have insurance.
The institute, which advises the federal government on health matters, issued an unprecedented call last week for universal health care but offered no guidance about how it could be achieved.
In Canada, a so-called single-payer system has been in place nationally since 1971. Taxpayer funds are allocated in lump-sum payments to hospitals, which have wide discretion as to how resources are used. Any citizen can receive treatment from any doctor at any hospital.
“It took one Canadian province, Saskatchewan, to show it could be done in the 1940s,” noted Kevin Grumbach, chairman of UCSF Medical School’s Department of Family and Community Medicine and a long-time backer of universal health care. “Then it caught on province by province.”
Kuehl’s bill, SB921, would create a single-payer system in California. It probably would be funded by a payroll tax that would replace current employer medical contributions and an income tax that would replace employee premiums, co-pays and other out-of-pocket expenses.
Kuehl said she’s also exploring having a statewide single-payer insurance system embrace a portion of workers’ compensation as well — an issue of particular interest to California businesses long accustomed to some of the highest workers’ comp costs in the nation.
“I read about all the strikes and labor problems, and I grind my teeth,” said Dan Hodges, chairman of Health Care for All-California, an advocacy group. “All this could be solved by SB921.”
One key issue for the legislation is how a California single-payer system would accommodate the various federal programs, including Medicare and Medicaid, which are a part of the health care landscape. Federal funding comprised about half of nearly $163 billion spent on health care in the state last year.
“There are a number of steps along the way that would have to be solved,” Kuehl acknowledged, adding that it remains unknown whether federal authorities would allow California to serve as a conduit for Medicare funds.
In any case, a Canadian-style single-payer system is not the only approach on the table to bring health coverage to the estimated 7 million Californians now lacking insurance.
Bruce Bodaken, chairman and chief executive of Blue Shield of California, advocates rejiggering the current insurance system so that everyone in the
state is covered. Among other things, he proposes requiring anyone who can
afford health insurance to buy it, and subsidizing those who can’t.
“The most practical way to achieve universal coverage is to build on the existing system but make sure everyone’s paying their fair share,” Bodaken said.
He added that his plan would have a better shot at passage than the single-payer system advocated by Kuehl, which would all but decimate private health insurers. “The political future of single-payer is no slam dunk,” Bodaken said.
The problem with the Blue Shield approach is that, while it guarantees insurers more customers, it doesn’t address inefficiencies now pushing health care costs higher.
A pair of Harvard Medical School researchers determined last week that $45
billion of the $163 billion spent on health care in California last year was eaten up by administrative expenses.
With a single-payer system in place, the researchers found, California health care spending would be reduced by almost $34 billion — enough to cover every uninsured person in the state and improve treatment for others.
In 2002, the California Health and Human Services Agency asked the Lewin Group, a prominent health care consulting firm, to evaluate nine different
proposals for expanding coverage in the state. The proposals included reforms similar to Bodaken’s plan along with establishment of a single-payer system.
The Lewin Group concluded that only a single-payer system would guarantee
universal coverage and control future costs, while also reducing health care
spending by as much as $7.6 billion per year through economies of scale.
Other states, including Massachusetts and Maine, are exploring single- payer
systems, but California is furthest along in terms of legislative activity and financial analysis. An in-depth analysis of Kuehl’s SB921 was begun by health care specialists last week as part of preparations for an Assembly vote.
The question at this point is not whether such a system would work in the state (or nationwide, for that matter). The question now is whether the political will can be found to push ahead with fundamental change that would benefit millions of California residents and thousands of businesses.
UCSF’s Grumbach says the time will come when taxpayer-backed universal coverage is seen as the only true solution to the state’s health care woes. It won’t be tomorrow, though, or the day after.
“It could take 10 years,” Grumbach said. “But the current system is so bloody awful and so many people are suffering, something eventually has to happen.”