Unbiased Analysis of Today's Healthcare Issues

Can California afford a single payer system?

Written By: Jason Shafrin - Apr• 09•18

There have been a number of moves to try to move California towards a single payer system.  A single-payer bill, Senate Bill 562, was offered up last year.  Some Silicon Valley tech workers are trying to move voters towards a single payer system as well. The question is, can we afford it?

This is the question put forward by Richard Scheffler and co-authors in a recent Health Affairs blog.  They propose 7 initiatives that would save enough money to finance health care for all Californians.  Let’s take each of these in turn.

  1. Increased use of global budgets/integrated care systems.  The key here is not the integrated care systems–as some can be more expensive and others less–but rather the issue of global budgets.  If you cap costs for each health system or pay a flat rate per person, clearly this is a great way to save costs.  This approach, however, is problematic in that often times adoption of innovative but expensive medications are delayed.  Also, if there were universal, but privately provided health insurance, insurers could try to design plans to avoid the sickest patients or intentionally provide low quality care to sick patients.  This is really the only point that matter–would people trade off increasing the number of people insured, with reduced access to medications among the insured, potentially longer wait times for care, and more ‘rationing’.  This is not an easy trade-off to make.
  2. Increased use of palliative care.  This will be difficult to implement.  While I am supportive of palliative care, many patients in the U.S. prefer medical interventions.  Educating patients on the benefits of palliative care are useful, but are Americans really going to change behavior over night?  Or will this end up denying very sick, chronically ill patients they care they request.  Further, the cost savings here are small, only about 5% of the costs savings from initiative #1.
  3. Increased use of patient-centered medical homes (PCMHs). There is some evidence that PCMH’s improve health and save money.  The question, is how much money?  The answer likely is not much.  One study found that PCMH’s saved about $10 per patient per monthA systematic literature review found that PCMH’s reduced ED visits, but had not change on hospitalizations or overall cost.  I would suspect that elite PCMHs are able to improve quality and reduce cost but for the average PCMH this is not the case.
  4. increased rates of physical activity.  Fantastic idea.  Low cost from the payer perspective. It is somewhat costly–in time, but not necessarily money–from the patients perspective.  However, there have been so many initiatives to imporve physicial activity, it is not clear that any promised behavioral change towards more healthy habits would happen in practice.
  5. Increased use of nurse practitioners and physician assistants.  This is a good idea.  This approach would sacrifice quality for cost. However, if NPs and PAs can supplement physicians and provide patients with more time, it could be quality enhancing.
  6. Reductions in healthcare associated infections.  Clearly a good idea, but the question is through what mechanism would this occur (that has not yet been tried) that would result in significant cost savings.
  7. Reductions in pre-term births.  To repeat #6, this is clearly a good idea, but the question is through what mechanism would this occur (that has not yet been tried) that would result in significant cost savings.

In short, while the proposal has some wise recommendations, these recommendations are largely known by providers so the key is implementation.  In practice, affording a single payer system likely would come down to a grand bargain where Californians would need to be willing to trade their current health insurance system for one where expenditures operate under a global budget.  Done right, global budgets could improve efficiency and expand access to all.  Done wrong, the sickest patients my have reduced access to care, physician wait times may increase, and patient choice may dwindle.

There is a whole separate issue of how single payer would operate.  Would the state pay private insurers to implement this?  Would the California Medicaid program administer all health insurance in California? How much regulation of prices and scope of work would California have.   These questions would need to be resolved as well, but are solvable.  The fundamental issue is whether Californians would accept more “rationing” by their health insurance to expand coverage.  Only time will tell on this issue.

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