In my state of California, the California Universal Healthcare Act has once again been introduced in the state senate as SB810. This represents the third time around for this bill, the last two times (as SB840) it passed the assembly and senate and was vetoed by the governor.
This legislation is considered to be the gold standard for universal healthcare law. This diary entry starts with the concept of universal single-payer healthcare and ends with the specifics of the CUHA, and for those wishing to understand and appreciate the issue of healthcare financing to be better able to speak about it I think it is well worth the read.
WHAT IS UNIVERSAL SINGLE-PAYER HEALTHCARE?
Concepts
Publicly Funded - Privately Delivered
Single-payer is a way of financing, that is, paying for, our healthcare using a single agency to pay all healthcare bills. "Universal" simply means everybody has their healthcare costs covered by a single comprehensive plan that is publicly funded and privately delivered.
The delivery of healthcare is essentially unaffected by the single-payer agency, that is, healthcare providers remain public or private, non-profit or for-profit as they choose. However, potential improvements to the delivery of healthcare are greatly enhanced when the financing is done through a single-payer agency.
Everyone Contributes – Everyone Benefits
In most single-payer plans, the funding source is from some combination of individual taxpayers and businesses. In our country, the difference between the increase in taxes and the elimination of premiums, co-payments and deductibles, will result in a substantial savings for both individuals and businesses.
In single-payer plans, the savings come from two primary sources. First, bureaucracy and overhead are eliminated or greatly reduced. Second, the buying power of every healthcare dollar is immensely enhanced by leveraging the bulk-buying power of the single-payer agency for durable medical equipment and pharmaceuticals, and its negotiating power with healthcare providers.
In single-payer, everyone contributes and everyone benefits; in this way the individual is responsible for contributing towards the cost of healthcare, and the community ensures that no one is left without healthcare coverage. Our healthcare needs are no longer plagued by restrictions on access to providers, missed employment opportunities, or insecurity about our healthcare costs for any reason.
In single-payer, everyone is in and no one is out. Bankruptcies due to medical bills no longer occur. Policing the system to see who qualifies for what plan is no longer necessary. Healthcare coverage no longer depends on who your employer is – nor whether you are even employed – COBRA continuation coverage after loss of employment is a relic. Screening for pre-existing conditions no longer applies. All of these factors represent overall reductions in the cost of our healthcare which are not even captured by the current cost accounting.
Essential Requirements
Two conditions must be met for a single-payer healthcare financing system to realize its maximum benefit. The first is that the single-payer menu of healthcare consumables must be comprehensive. This means that all necessary medical procedures, rehabilitation, vision care, dental care, hearing care, mental care, a comprehensive drug benefit, and so on must be fully covered by the single-payer plan.
The second condition is that the single-payer system must be adequately financed. This does not mean that financing the plan will overburden its beneficiaries. In fact, our country currently spends more on healthcare in tax dollars alone than most other industrialized countries with comprehensive universal single-payer plans. Our private out-of-pocket and employer spending is another 40% above what we fund through taxation. Taking this immense sum of money and redirecting it into a single-payer plan, we can provide comprehensive quality care for everyone for less than the current total we now spend.
In single-payer financing plans the necessity for private health insurance plans is completely eliminated. Private insurance plans may still be used to cover elective medical procedures or anything that is left out of the single-payer menu – which should be virtually nothing.
In Specifics – Senate Bill 810
What does the single-payer plan cover?
SB810 covers the following:
inpatient and outpatient services by:
health facilities (hospitals, clinics, etc.)
physicians
licensed health care professionals
diagnostic imaging
laboratory services
durable medical equipment including:
prosthetics
eyeglasses
hearing aids
rehabilitative care
emergency or necessary transportation
language interpretation
immunizations
preventive care
health education
hospice care
home health care
prescription drugs
mental health care
dentistry
podiatry
chiropractic
acupuncture
religious healing that is protected under federal or state statutes
blood products
emergency care
vision care
adult day care
case management
substance abuse treatment
dialysis
up to 100 days in a skilled nursing facility
In summary, anything that you could possibly purchase private insurance for, and then some. If the budget permits, the commissioner may add benefits above those required by the bill.
What is not covered by SB810:
skilled nursing care (a Medicare-defined service which entails skilled daily attention leading toward physical improvement) beyond 100 days
long term care or custodial nursing home care
cosmetic procedures with no medical indication
private hospital rooms with no medical indication
care by unlicensed providers
procedures or medications with no proven medical value
out of state care after an absence from California of 90 days
How is the single-payer coverage paid for?
For SB810, there will be a companion bill introduced which deals with the specifics of how to finance the plan. In general, all of the federal block grants for Medicare, Medicaid (Medi-Cal), the State Children's Health Insurance Program, and any other federal monies will go into the fund. Additional revenues are collected through taxes.
To determine the proper tax structure, SB810 establishes a Premium Commission that will include health economists, legislators, and representatives of business, labor, non-profit organizations advocating sustainable funding and universal health care, and state officers for the Franchise Tax Board, Board of Equalization, the Employment Development Department, the Health and Human Services Agency, the Department of Finance, the Legislative Analyst, the Controller, the Treasurer, and the Lieutenant Governor. The Commission is mandated to recommend a tax structure that is adequate for the system, varies with income, is affordable for all, and does not greatly increase the monies paid by any particular segment of the economy such as employers, individuals, and the government.
In general, there will likely be some amount of employer tax and some amount of income tax for individuals. The total tax will not be onerous. Between the additional taxation and the elimination of insurance premiums, co-payments, and deductibles, the vast majority of Californians will save money. Employers that currently offer any significant amount of healthcare benefit will also most likely save money.
How is the single-payer agency managed?
SB810 establishes public accountability through the California Universal Healthcare Agency, headed by the Universal Healthcare Commissioner, who will administer the California Universal Healthcare System. The Commissioner is appointed by the governor, subject to Senate confirmation. The commissioner cannot be an employee of a for-profit insurance, pharmaceutical, or medical equipment company for two years before and two years after serving.
The commissioner appoints regional directors and officers of the system including the Deputy Commissioner, the Director of the Universal Healthcare Fund, the Patient Advocate, the Chief Medical Officer, the Director of Health Planning, the Director of the Partnerships for Health, and the Director of the Payments Board. These officers and directors, along with the state public health officer, constitute the Universal Healthcare Policy Board. The Governor, the Senate Committee on Rules, and the Speaker of the Assembly appoint a Public Advisory Committee to give expert input to the policy board with members representing physicians, psychiatrists, nurses, public and private hospitals, integrated health care systems, dentists, health practitioners, pharmacists, mental health providers, consumers, large and small businesses, and labor. Meetings are open to the public. One member of the Public Advisory Committee shall serve on the Universal Healthcare Policy Board.
An Inspector General from the Attorney General’s office investigates fraud, mismanagement, and other illegal or improper activity. The Patient Advocate responds to complaints and advocates for the public who use the healthcare system. An Independent Medical Review System provides examinations of disputed healthcare services.
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I hope this serves as a useful reference manual for those interested in healthcare reform, which is hopefully all of us!