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Gov. Newsom's Goal Is Single-Payer Health Care -- But Don't Hold Your Breath

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Our new governor Gavin Newsom announced a group of executive orders and proposals this week. His office described the package as an effort "to move California closer to the goal of health care for all."

If approved by the state legislature, this could push the state closer to universal coverage, but his larger goal of developing a single-payer system is still far from reality -- especially while Donald Trump occupies the White House.

"Universal coverage" basically means everyone has health insurance. "Single payer" is a type of universal coverage in which the government pays most health care costs and private health insurance plays no role, or a very small one.

Anthony Wright, executive director of the advocacy group Health Access and a big advocate of moving to a single-payer system, applauded the governor's actions.

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"He has both embraced the vision of getting to universal coverage and taking tangible concrete steps to do so in year one," said Wright.


Expand Medi-Cal

The number of Californians without health insurance has fallen under the Affordable Care Act from 17 percent of the population in 2013 to 7 percent in 2017. The largest group of uninsured are people in the country illegally.

Newsom wants to expand Medi-Cal eligibility to young adults who qualify up to age 26, regardless of their immigration status. California already does this up to age 19. Newsom will ask the legislature to approve $260 million a year to do this.

Critics say the state shouldn't provide free or subsidized health insurance to people in the U.S. illegally, but with Democrats holding a supermajority in both houses of the state legislature and a governor actively pushing the idea, this proposal would seem to stand a good chance of becoming reality.

Newsom considers this Medi-Cal expansion a first step. On the campaign trail, he supported covering all Californians who qualify for Medi-Cal regardless of their age or immigration status. If that happens, it could cost $3 billion a year.

Creating an individual mandate for California

Newsom wants to require everyone in the state to have health insurance, and to be subject to a fine if they don't. If the legislature buys into the idea, it would reinstate the defunct Obamacare mandate, but only for California. Congress killed the fines associated with that requirement when it passed the federal tax overhaul in 2017.

There are about 3 million Californians who don't have health insurance. Analysts have estimated the loss of the federal mandate could make that number grow to 4 million.

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New help paying the monthly premium

Any money the state collects in fines from Californians who don't have health insurance would go to help more people pay for their monthly premiums. Right now, nine in 10 people who buy insurance on Covered California receive federal subsidies. Newsom says he'll propose the state budget include funding to cover subsidies for middle-class people who make too much to qualify for that help from the feds.

Federal subsidies help individuals who make up to $48,000 a year or families of four who make up to $98,000 a year. If the legislature approves the governor's proposal, the state will raise those ceilings to $73,000 for individuals and $150,000 for a family of four. This plan could cost the state about $500 million a year.

Dr. Geoffrey Joyce is a health economist and the director of Health Policy at the USC Schaeffer Center. He says this move could go far to help consumers in the state. Still, he warns about spending.

"[Newsom's] basically inheriting a nice budget surplus from Jerry Brown, but we all know how quickly California's budget surpluses and deficits can change," said Joyce. "He should not be overly ambitious and basically spend so [much] that once the next recession hits we're in big, big trouble."

A plan to address drug prices

While the proposals we've talked about so far will need legislative approval, Newsom is also making some moves on his own. He signed an executive order that takes aim at drug prices. The state Department of Health Care Services will now negotiate drug prices for all 13 million people on Medi-Cal. Until now, much of that has been done by multiple insurers working independently of each other.

Newsom also ordered CalPERS, state prisons and the department of veterans affairs to band together to negotiate drug prices as a group. Newsom wants to find ways to get local governments and private businesses to join with them in negotiating prices.

The governor says leveraging a larger group to negotiate drug prices will help bring drug costs down for more Californians. He's probably right, but by how much?

"I think there's some leverage to maybe create some savings, but it wouldn't be dramatic," said Joyce.

Large-scale negotiations over drug pricing are already underway, he points out. And while drug costs get most of the attention, other parts of the health care industry, like hospital stays, are more costly, said Joyce.

Asking Trump to help California move to single payer

Newsom sent a letter to President Trump and Congressional leaders asking them to create a new type of waiver from federal law that would let California "begin transformative reforms that provide the path to a single-payer health care system" without losing federal funding.

The governor's request seems to be an effort to signal his political support of single payer more than anything else.

A push in 2017 and 2018 to move to single payer in California died in part because legislators reasoned the state would never get the federal waivers it would need to use Medicaid dollars for such a system. Seema Verma, Trump's administrator of the Centers for Medicare and Medicaid Services, has said she will never approve a waiver to help a state create single-payer health care.

So for California to start any serious push towards single payer, there will have to be a president who backs the idea.

Newsom also signed an executive order to create an office of Surgeon General for the state. This person will address the root causes of serious health conditions and help address health inequity as early as possible in people's lives. It's still unclear how this will differ from roles that already exist, like the director of the state's department of public health.

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