Pollitically Thinking: Trouble lies ahead for single-payer
Health care will be a major issue in the election for governor. Peter Shumlin says on his website that “if I am elected governor, creating a single-payer plan will be my top priority. It will be a very difficult task. There are many forces arrayed against a single-payer plan. … It will take very strong, committed leadership to get this job done.”
Even if Shumlin were able to build a consensus for single payer among the Legislature, health-care advocates, business, unions, and the health-care industry, waivers of two federal laws would be required in order to make a single-payer plan work.
The first is the Patient Protection and Affordable Care Act, the health-care bill passed by Congress earlier this year. This law requires that every state establish, by Jan. 1, 2014, an “American Health Benefit Exchange” and a “Small Business Health Options Program Exchange” through which state residents and small businesses could purchase insurance for themselves or their employees. These exchanges would be run by state governments. The health plans would be offered by private insurance companies, with federal subsidies available.
A long-standing legal doctrine known as pre-emption would make it impossible for a state to operate a single-payer plan along with the exchanges. Pre-emption means that when a federal law conflicts with a state law, the state law is void. A state single-payer system would conflict with private insurance companies’ ability to offer policies through the exchanges. The insurance companies would file a federal lawsuit, and the single-payer system would be ruled unconstitutional under the pre-emption doctrine.
The health-care bill does provide a pathway for states to have the exchange requirements waived, but not until 2017. In order to get a waiver, which would allow a state to operate a single-payer plan, the state would have to demonstrate to the federal government that its plan was at least as comprehensive and affordable as the plans offered through the exchanges, and that it would not require greater federal subsidies than the exchanges.
Sen. Bernard Sanders has introduced legislation that would change the date for the start of the waiver program from 2017 to 2014. However, the chances of this bill being passed by the current Congress before it adjourns are slight, and even less so in the next Congress if the Republicans win a majority in the House and make gains in the Senate.
The second federal law that poses impediments to a single-payer plan is the 1974 Employee Retirement and Income Security Act, known as ERISA, which prevents states from enacting legislation “related to” employee benefits plans. Under ERISA, group health insurance plans offered by employers to their workers and retirees are subject to federal, not state, regulation. On its face, ERISA would appear to prevent a state from enacting a single-payer plan that would replace employer-provided plans.
Some health-care experts believe that states can craft single-payer plans that would not violate ERISA, provided the benefits in the single-payer plan are at least equivalent to the benefits in the employer plans. If a single-payer plan were modeled on Medicare, its benefits would be lower than those in typical employer plans, which usually have lower deductibles and co-pays, and much lower out-of-pocket costs for prescription drugs, than Medicare. If a state were to design a single-payer plan with more generous benefits than Medicare, such a plan might be hard to reconcile with the health-care law’s requirement that a single-payer plan cannot require federal subsidies higher than those for the exchanges.
Eric L. Davis is professor emeritus of political science at Middlebury College.