Why States Cannot Implement a Single-Payer Health Care System

By Dr. Merrill Matthews  Institute for Policy Innovation. A single-payer health care system has become all the rage among far-left Democrats. Expect virtually every 2020 Democratic presidential hopeful to support Bernie Sanders-type Medicare for all" legislation. And while the drive is focused mostly at the federal level far-left states are making their own push. For example California Healthline reports that donations are pouring into the California governors race. Both Newsom Californias Democratic lieutenant governor and Chiang the state treasurer support the concept of single-payer which would offer universal coverage to Californians likely at a significant cost to the state." The problem is that implementing a single-payer system at the state level is practically speaking impossiblethanks to our federalist system. The goal is to cover everyone no exceptions. For example Vermont Governor Peter Shumlin boasted that his states now-defunct single-payer legislation would cover all 620000 Vermonters. The problem for state-based single-payer efforts is the federal government is already heavily involved in providing and regulating health insurance. And federal law trumps (pun intended) state law. There are nearly 57 million Americans on Medicare about 17 percent of the U.S. population. Medicare is a federal program; states have no say in it. So a state might offer single-payer coverage to its seniors and disabled but the state cant change or take away their Medicareand politicians who tried would likely be looking for a new profession after the next election. And who would pay for it? Retired seniors and the disabled on Medicare dont want to pay more on top of what theyre already paying in Parts B and D premiums. Thus the single-payer dream gets whittled down to those under age 65 who arent disabled. Thats not real single-payer. And then theres employer-based coverage. About half of the 160 million workers with employer coverage are in self-insured plans"i.e. the company pays their employees claims rather than health insurers. Those plans are governed by federal law. States have long tried to force self-insured employers to cover specific providers or medical conditions but the U.S. Supreme Court shut them down. States can micromanage group employer plans that rely on health insurers but not self-insured plans. States certainly could tax employers and individuals to pay for a single-payer system and they could allowor forceindividuals with employer coverage to join the single-payer plan. But how many employees of major California-based companies such as Apple Google eBay and Hewlett Packard would be willing to trade their excellent employer-based insurance for coverage managed by politicians in Sacramento? And why would any politician even try to make that switcheroo since that employer-provided coverage isnt costing the state a dime? Thus the good news is that states can rattle the single-payer saber but they cant do much about it. The bad news is that Democrats in Washington can. Todays PolicyByte was written by Dr. Merrill Matthews resident scholar with the Institute for Policy Innovation.