California Single-Payer Bill Looks Backward, Not Towards A New Era of Patient Choice

(A version of this Health Alert was published by the Orange County Register.)

Here we go again. The California state legislature is considering yet another bill to impose a so-called single-payer, government monopoly, health care system. This has long been an obsession of the militant California Nurses Union, because a health system under total government control would suit the narrow interests of union leaders. They would accrue power similar to that wielded by other public-sector unions and might even be able to negotiate contracts similar to those enjoyed by state and local employees, which are driving public finances across the state into the ditch.

However, a government take-over would not be good for Californian patients. The single-payer ideology overwhelmed Canadian health care decades ago, where militant unions invest significant resources in preventing reforms patients need to improve their access to health services. Our Northern neighbors suffer unacceptable delays in getting medically necessary treatment. According to a 2016 study by The Fraser Institute, it took an average of 20 weeks for a patient to receive treatment from a specialist after referral by a primary-care doctor. This has deteriorated significantly from 9.3 weeks in 1993, the first year the study was published. The worst delay is for neurosurgery, for which the average wait was 46.9 weeks last year.

And those waiting times are after a patient’s primary-care doctor refers her to a specialist. However, about one in seven Canadians does not even have a family doctor! Access to lifesaving medicines is similarly poor. According to a recently published study conducted by researchers at the University of Pittsburgh, the U.S. Food and Drug Administration approved 45 anticancer drugs from 2009 through 2013, while only 34 were approved in Canada. While Medicare covered all 45 drugs, government programs in Canada covered only 15.

California’s single-payer advocates argue government monopoly would be “Medicare for all,” but that is not the case. Medicare beneficiaries do not (yet) suffer limited access to specialists because it is paid for by working-age people who finance Medicare’s spending on people aged 65 and older. As the baby boomers retire, this financing mechanism will fail and more Americans will recognize the need for significant reforms to Medicare.

Medicare Part D, which covers prescription drugs, is offered by private insurers which submit bids to the federal government for the privilege of offering the benefit to Medicare beneficiaries. This element of competition protects seniors from direct government rationing of innovative new medicines. It would disappear under California’s single-payer proposal.

Economic growth in California would also suffer, because investment in medical innovation flees when government rations patients’ access to new therapies. According to another Fraser Institute study, investment in pharmaceutical research and development in Canada shrank 20 percent between 2001 and 2015. In California, on the other hand, the life sciences industry has grown so dramatically it employs more workers than traditional California industries such as aerospace, electronic-equipment manufacturing, or telecommunications, according to a 2014 report by PriceWaterhouseCoopers. Many of these high-paying jobs would disappear if California adopted a single-payer system.

A single-payer health system would not look like “Medicare for all,” but Medi-Cal, the state’s welfare program for low-income residents’ health care. A 2013 study found only 54 percent of office-based physicians accepted Medi-Cal patients. Another found only 36 percent of psychiatrists would accept Medi-Cal patients.

Rewarding failure, Obamacare increased federal funds to enroll newly eligible people in state Medicaid programs, which has resulted in almost one third of California’s 39 million people becoming dependent on Medi-Cal. The number increased from 7.8 million in 2013 to 12.1 million last November. However, the federal handouts are not free. In his 2016-2017 budget, Governor Brown asked for an eight percent increase in Medi-Cal funding from 2015-2016. This $19.1 billion would cover a caseload now estimated at 13.5 million people.

This bloated Medi-Cal program is living on borrowed time. The new President and Congress have pledged to repeal and replace Obamacare with a health reform that will give states more flexibility in how they deliver Medicaid to low-income households. 

This will include a cut in federal payments, but also unprecedented options to explore better ways to deliver care to the least advantaged patients with less bureaucracy. One example is Health Opportunity Accounts, which would allow Medi-Cal patients themselves to decide which health services should be paid for.

Instead of wasting time fantasizing about imposing a single-payer government monopoly over Californians’ access to health care, California’s politicians should look forward to taking advantage of these new ways to deliver care within reasonable budget constraints.