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California Seeks Federal Waivers for Unified Health Care Financing

In October, California enacted SB 770, establishing a formal process to explore federal waivers necessary for state-level “unified financing”. Insurers vehemently opposed it, and some single payer advocates bemoaned the lack of a single payer plan. This is a potent mechanism to advance single payer, the gold standard in unified financing.

November 11, 2023

California Senate Bill 770 Health care: unified health care financing
Signed into law By Gov. Gavin Newsom
October 7, 2023
[HJM bolding)

1000 (i) … the Legislature endorses a health care system with unified financing, such as a single-payer health care system, to provide accessible, affordable, equitable, and high-quality health care for all Californians.

1001. The Secretary of the California Health and Human Services Agency shall research, develop, and pursue discussions of a waiver framework in consultation with the federal government with the objective of creating a health care system that incorporates the following features and objectives:

(a) A comprehensive package of medical, behavioral health, pharmaceutical, dental, and vision benefits, which includes primary, preventive, and wellness care services.

(b) A package of long-term care supports and services, including measures to support health and well-being while Californians age.

(c) Services that will not vary by age, employment status, disability status, income, immigration status, or other characteristics.

(d) The identification of disparities among Medicare, Medi-Cal, employer-sponsored insurance, and individual market coverage, with the goal to eliminate those disparities to the greatest extent possible in the new system.

(e) The elimination of the adverse impacts within the health care system of attempts to avoid covering the sick or providing the benefits patients need.

(f) The absence of cost sharing for essential services and treatments covered under the program, including primary, preventive, and wellness care services. …

(h) A program to implement a just transition for members of the health industry workforce whose jobs may be disrupted.

(i) Assurances that no individual will pay more than a specified percentage of their income on a progressive sliding scale for the cost of financing the health system.

(j) Unified financing that delivers health care more effectively, efficiently, and equitably.

(k) Cost-effectiveness by systemwide pooled purchasing to negotiate rates with providers.

(l) Freedom for patients to choose providers and for primary care providers to choose practice models.

(m) Greater investments in public health, primary care, and health equity efforts to address the social determinants of health through an improved mix of health care and human services. …

(s) Methods of payment, delivery, and oversight implemented under the unified health care financing system that will continue to allow California the ability to receive the full benefit of federal expenditures and tax credits that currently underwrite the full scope of health services.

1002. (a) (1) Stakeholder engagement shall include representatives of consumers, patients, and community-based health care service providers, community organizations, health care professionals, labor unions, employers, and health policy experts, as well as representatives of government agencies and philanthropic organizations focused on health care.

Kaiser Permanente Voice
(not online, but can sign up 
here)
Nov 8, 2023
Teresa Stark, Vice President
California Government Relations

Universal coverage and affordability: The legislature and governor advanced a modest proposal to have the state explore what steps at the federal level would be required to implement a single-payer health care system in California. Such a system would be costly, disruptive, and detrimental to Kaiser Permanente and our members. While this bill was not ideal, it could help answer some important questions about whether the federal government fundamentally would or could ever take some of the quite radical actions likely needed to move single-payer forward in California. In 2024, we will continue to stress to the legislature how critical it is to refocus on achieving universal, affordable coverage for all Californians through more sensible means and address the root causes of high health care costs, like prescription drug prices and lack of well-integrated and coordinated care, free of harmful financial incentives.

Comment by: Jim Kahn

California SB 770, now law, requires the State to convene discussions with the federal government on waivers required to deliver “unified financing” of health care in the state. This represents a practical step in pursuit of the recommendations of the Healthy California for All Commission, which in turn was Governor Gavin Newsom’s first major step in pursuit of his campaign pledge for single payer.

SB 770 is not a single payer plan. CalCare AB 1400 was a single payer plan, and failed to pass out of the Assembly (very disappointing). But SB 770 is a huge opportunity to move toward single payer, by seriously pursuing the details necessary to design a technically and politically feasible plan. A review of its provisions highlights how closely aligned it (and the Commission report) is with single payer. Note for example comprehensive, consistent benefits across the population, long-term care, protection from financial burdens, and freedom to choose providers. Note too that “insurers” are not among the stakeholders to be consulted. I confess I’m not a huge fan of item 1001 (d), since the cited programs shouldn’t exist in a single payer system, but eliminating insurance-related disparities is a goal I heartily endorse.

The Voice excerpt reiterates Kaiser management’s longstanding opposition to single payer. It’s unsurprising, since insurers (and Kaiser is in part an insurer) have lined up against SB 770. But they have key facts wrong. They’re right that single payer would be “disruptive” – that’s what our fragmented insurance system needs. They’re wrong that it would be costly; indeed, the Commission like all previous studies found tens to hundreds of billions in savings over 10 years. And they’re wrong about effects on Kaiser as a health care delivery system – it could prosper, which is exactly what its members want and deserve.

SB 700 passed despite loud controversy among single payer advocates. Now is the time to take the process seriously, assuring excellent technical work, discussions, and stakeholder input. So much is at stake; so much is possible.

About the Commentator, Jim Kahn

Avatar photo

Jim (James G.) Kahn, MD, MPH (editor) is an Emeritus Professor of Health Policy, Epidemiology, and Global Health at the University of California, San Francisco. His work focuses on the cost and effectiveness of prevention and treatment interventions in low and middle income countries, and on single payer economics in the U.S. He has studied, advocated, and educated on single payer since the 1994 campaign for Prop 186 in California, including two years as chair of Physicians for a National Health Program California.

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