I am all for universal health care coverage, and if there were a path forward that led to a single-payer plan in U.S. I would be all for it. But given the complexity of our current multipayer health care system and the current significant role of the private sector in financing health care, I just don’t see the path. New estimates out from the Census Bureau highlight the fact that 67.5 percent of Americans are covered by private health insurance, including employer-based insurance (55.7 percent). Moving this primarily voluntary employer purchase of health insurance coverage into the public domain financed by new tax revenue — as proposed at the federal level last week by U.S. Sen. Bernie Sanders and Senate Democrats, and as considered individually by some states — doesn’t make much sense to me.
Some additional obstacles for a state-based single-payer health system include the following:
1) The Employee Retirement Income Security Act of 1974 (ERISA) — about 50 percent of all employers self-insure and are regulated under the Federal Employment Income and Retirement Act. States have no regulatory authority over ERISA plans, so single-payer would not include 50 percent of the private market. Convincing self-insured employers to voluntarily participate in a scheme that will significantly increase their tax liability is a tough sell.
2) Medicare and Medicaid are critical components of a single-payer plan. Medicare is a federally funded and administered health program for seniors — states would need waivers from existing program rules to fold these programs, about 50 percent of all health care spending, into a single-payer plan. While waivers are a common tool for state innovation in Medicaid, there is no precedent for waivers from Medicare.
3) The tax exclusion for employer-sponsored health care is about $260 billion annually. Employers are able to provide tax-free health benefits and are a key employee recruitment and retention tool. Removing the tax exclusion has not fared well over the years as employers are reluctant to give up this largely hidden tax benefit.
4) States have to balance their budgets, which for most of them are based on two-year budget cycles. Unlike with the federal government, there is no deficit spending and no accumulated debt. So if there is a downturn in the economy and tax revenue goes down, there may not be enough resources to fully fund a single-payer system without either increasing taxes to raise the revenue needed or to cut programs and services or increasing out-of-pocket spending — not ideal choices for state politicians.
A federal Medicare-for-all program would specifically address issue No. 1 but would still need to overcome the other barriers. Our health care system is based on a voluntary employer-based health care system supplemented by government programs for the poor and elderly. Fundamental overhaul has been tried first with the Clinton health plan of the early 1990s and more recently with President Barack Obama’s Affordable Care Act. At best we’ve been able to achieve incremental reform that makes changes around the edges of our public-private multipayer health care system.
Perhaps the discussion of the single-payer and the frustration of the American population with the complexities and increasing costs of health care will push us toward a compromise of moving toward universal coverage with a focus on the subpopulations in particular need. Some ideas include a target Medicare buy-in for early retirees age 55-64; a Medicaid buy-in for rural sparsely populated areas with lots of small employers and sole proprietors; and fixes to the individual and small-group markets that may include additional public subsidy. Yes — these all require public funding, but a more targeted use of public funds than replacing the entire health care system with a public program.
The U.S. health care system is unique and is based on years of incremental changes as a result of political compromise. Keeping employers and the private sector engaged in health care is a benefit to us all — both in terms of financing but also for innovation in care delivery and advances in clinical medicine. Let’s focus on getting people covered, moving toward our own style of universal coverage leveraging the uniqueness of America’s multipayer health care system.
Lynn A. Blewett is a professor of health policy in the University of Minnesota School of Public Health.