June 21, 2017

Why Conservatives Can Cheer California's Single-Payer Health Care Bill

Robert Graboyes

Senior Research Fellow

Let’s hear one cheer – not two, not three – for the California Legislature.

Its members are considering a single-payer health care system with annual costs that would considerably exceed the state’s entire current budget. But legislators deserve that one cheer, for the fact that the state is launching its own reform efforts rather than waiting for the federal government.

Much of the public, and most of the media, have pinned their hopes on Congress, the president, and a host of federal agencies to solve all problems related to health care. In 2010, Democrats passed the Affordable Care Act (ACA), and most problems that it sought to address remain – in some respects worse than ever.

In 2017, Congressional Republicans are crafting the American Health Care Act (AHCA) to repeal and replace certain provisions of the ACA, but that effort, too, is fraught with problems.

Some in California are determined to seize the initiative and break free of federal health care policy. The California proposal would radically transform the state’s health care system by bringing all Californians – including present-day Medicare recipients and undocumented immigrants – into a new state-run mechanism.

If enacted, such a law would likely shake California worse than the San Andreas Fault and tip the state into the fiscal abyss. But bully for them for plodding ahead on their own.

That’s the beauty of federalism – states as “laboratories of democracy,” in the words of Justice Louis Brandeis. California’s efforts are a powerful reminder that states have considerable leeway over how health care is provided and paid for within their borders.

Unfortunately, California is making the same error that both parties have made at the federal level – focusing on how we pay for existing modes of care rather than on developing better, less expensive care.

For more than a century, state governments have enacted laws and regulations that have negatively impacted the ability of varied professionals to provide care and patient access. Rather than obsess over who should pay for a fixed set of resources, policymakers should audit their states’ laws and regulations to identify barriers to supply and innovation. Then, they can take a hammer to those barriers.

We can suggest a place to start those audits. The Healthcare Openness and Access Project (HOAP), a product of the Mercatus Center at George Mason University, provides state-by-state measures of the flexibility patients and providers have in managing health and health care.

HOAP is a database of each state’s standings across several dozen health care variables related to telemedicine, medical liability law, access to pharmaceuticals, variability of medical business structures, use of non-physician providers, and more. Using these data, HOAP ranks the 50 states and the District of Columbia in terms of openness and access. (There are also rankings on narrower areas of care.)

The overall ranking – the HOAP index – is not a definitive comparison of states, but rather a tool to spark discussion and encourage policymakers to evaluate their states’ policies and learn from each other.

California, for example, ranks 34th among the 51 jurisdictions. The state scores high on HOAP’s measures of access to pharmaceuticals and public health, and scores low on business structure flexibility and taxation.

Relative to other states, California has room for improvement in these latter areas without jeopardizing patient safety.

Nationwide, the big challenge in health care is not how to structure the insurance system, but rather how to get more care and better care using fewer dollars. To a large extent, this means lightening the doctor’s calendar by shifting some of the burden of care to non-physician providers, to intelligent machines, and to patients themselves.

It is in these areas that states have the most leeway through legal and regulatory reforms.

Rather than blowing their state’s budgets, as California’s single-payer dream would likely do, policymakers can chip away at the myriad factors hobbling their state’s capacity to deliver safe, economical care.

Still, California, we cheer your dive into federalism.