California scheming - on single-payer health care regulation

Reason, August-Sept, 1994 by Steven Hayward, Michael Lynch

A referendum on single-payer health care

WITH ALL EYES FIXED on the growing deadlock in Washington, D.C., the biggest health-care story of 1994 may be emerging a continent away. In California, a sweeping, Canadian-style "single payer" initiative that gathered more than 1 million signatures has qualified for the November ballot. More breathtaking than anything the Clintons dare propose, the California initiative will be a battleground to test both the "health-care crisis" mentality and the voters' eagerness to have a government takeover of health care.

The initiative's ballot qualification coincided with the launching of a national effort by single-payer advocates that features TV spots and full-page newspaper ads. If this long-shot initiative somehow passes in November, Congress and the president may well change their minds about the political feasibility of a federal takeover of the complete health-care system, without the patina of private insurance. The initiative would abolish private health insurance in California and replace it with a state-run "time tested single payer system" to be known as the "California Health Security System."

It is not necessary to reopen the arguments about the performance of Canada's single-payer system (waiting lists, rationing, fudged cost numbers, and so forth) to get at the defects of this initiative, because the most dramatic feature of the measure is not the single-payer system itself but the creation of an elected state health commissioner with immense, even ominous, powers. To label this prospective officer a"health czar" would be an understatement. The health commissioner would have complete authority, with little legislative oversight, to control the estimated $108-billion budget the system would set up (twice the size of California's present state budget). The health commissioner would be granted "any and all powers necessary to implement this Act."

"These broad powers include," the initiative continues, "the power to set rates and promulgate generally binding regulation on any and all matters relating to the implementation of this Act and its purposes." The commissioner will determine how many doctors there shall be, in what specialties, and where they are located. Section 25275 (b) sets as goals "achieving the number, geographic, discipline and specialty distribution of professional providers...needed by the state" and "adjusting, over a period of years to be determined by the Commissioner, the number, geographic and specialty distribution of professional providers to staff under-served areas and communities."

These and other coercive measures can be enforced through the global budgeting and price-fixing powers of the health commissioner, whose powers over the prospective $108-billion health-care budget would be far greater than the governor's powers over the regular $50-billion state budget. The global budgeting power extends not only to operating expenditures for each category of medical specialty but to capital budgets as well. No medical facility may make a capital improvement or establish a new procedure worth more than $500,000 without approval from the health commissioner. The commissioner would regulate the development and implementation of new technology through these capital controls.

THE HEALTH COMMISSIONER'S OFFICE would be complemented by a phalanx of regional administrators and regional consumer advocates, an expert Health Care Policy Advisory Board, and an ostensibly grass-roots Health Care Consumer Council that would really serve as the political base for the elected commissioner. The system would be funded through a new payroll tax, a personal income-tax surcharge, and a $1.00-a-pack levy on cigarettes. These new taxes would amount to about $48 billion; the balance of the health budget would come from consolidating existing federal and state health programs such as Medicare Part B and Medicaid. Global budgets, price controls, a constitutional declaration that health care is a "right," and a generous list of benefits, including mental-health and drug treatment, are all part of the package.

A consortium of left-leaning organizations, including labor, churches, seniors, nurses, a few doctors and pharmacists, Naderite consumer groups, and even the California Teachers Association, is backing the initiative. Out-of-state money has gone to support the California initiative, including $25,000 from a New York City hospital workers' union. Labor union financial support--estimated at more than $500,000 for the signature-gathering drive--was crucial.

But the prime mover behind the effort is Neighbor-to-Neighbor, a grass-roots activist group formed in the 1980s to agitate about Central America. With the waning of the Cold War and the ferment over Nicaragua and El Salvador subsiding, Neighbor-to-Neighbor needed to find a new issue. It settled on health care. One goal is to reinvigorate the fortunes of a single-payer plan on the national level. "Our hope is to provide ballast to the left of Clinton," says Glen Schneider, executive director of Neighbor-to-Neighbor. "This will be a real wake-up call. This will start a true health-care debate with the real options front and center."