There’s been some chatter lately among liberals that the 2020 Democratic presidential nominee will likely run on a platform that includes a commitment to single payer health insurance. While that would be appealing to a lot of people for a whole host of reasons, it doesn’t take into consideration the ongoing challenge of actually putting forth a reasonable plan.
Vermont was the first state to try to put together a single payer system. They found that it would cost $2 billion a year in a state whose annual budget is $2.7 billion. That would equal an 11.5% income tax on all residents. So ultimately Governor Shumlin, who made single payer a centerpiece of his election campaign, had to drop the idea altogether.
Next came the presidential campaign of Bernie Sanders. He laid out a plan for a national single payer system that he claimed would cost $13.8 trillion. But an analysis by the Urban Institute’s Health Policy Center determined that it would cost more than twice that much—approximately $32 trillion. Sanders included plans to raise roughly $15 trillion in revenue, far short of what would be required.
Many proponents of single payer shifted their focus to the work that is being done on a proposal in California. It is often suggested that the problems in Vermont were related to the fact that it is so small and that would be mitigated in the the nation’s most populous state. But according to a report in the Sacramento Bee, the same challenge is emerging as they apply the numbers to their proposal.
It would cost $400 billion per year to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday.
California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations committee found. The estimate assumes the state would retain the existing $200 billion in local, state and federal funding it currently receives to offset the total $400 billion price tag.
As was the case in Vermont, that $200 billion per year is roughly equivalent to the state’s entire annual budget.
But here’s where it gets both more promising and more challenging.
Employers currently spend between $100 billion to $150 billion per year, which could be available to help offset total costs, according to the analysis. Under that scenario, total new spending to implement would be between $50 billion and $100 billion per year.
Fifty to one hundred billion per year is still a huge number. But its better than the original $200 billion. There’s a catch though. Because some employers are generous and pick up a big portion of health insurance for their employees while others don’t pay anything, an overall tax would create big winners as well as losers. That would not only lead to a lot of chaos in the employment market, it would set off a backlash to the whole idea of single payer.
This points to the two issues that need to be addressed in order to make a single payer system viable. First of all, while such a system would save administrative costs, that isn’t enough to make it affordable. We have to grapple with the fact that the problems associated with health care in this country are not solely because of private insurance companies. There are also huge problems embedded within the system of providers. In order to make single payer affordable, those must be tackled as well—which is not something that most Americans are interested in doing.
Secondly, there is the problem of moving from the hodgepodge system of payments by employers, individuals and government programs that we currently have to an equitable distribution among everyone for single payer. Since neither Vermont nor Sanders was able to tackle the first problem, no one has even suggested a viable plan for dealing with the second. Based on the price tag in California, it doesn’t look promising there either.
Unless/until Democrats can come up with a solution to these problems, it would not be wise for a presidential nominee to run on a commitment to single payer.
