Medicare does not have the authority to give federal Medicare dollars to the state as a block grant. Single payer advocates have opposed passing a federal law that would allow this, due to concern that it would dismantle the Medicare Program state-by-state and allow some states to use the law to further privatize Medicare through vouchers.
Some state advocates have considered applying for a new state healthcare plan to be considered a Medicare Advantage plan. These are private plans offered under Medicare. If such a waiver were granted, the state still could not force seniors to choose the state plan, so it would only capture some of the Medicare recipients in the state.
There is a similar situation with the health plans for federal employees. It would require a change in federal law to shift the FEHBP to the state. Perhaps a state could apply to be considered a choice for federal employees but even if it succeeded, it could not compel federal employees to choose their plan. Tri-Care is a program run by the Department of Defense that would also continue to operate outside the new state system. And the VA and IHS would operate independently as well.
It is possible, although this has not been tried yet, that a state could become an intermediary between providers in the state and the various federal programs such that claims would be submitted to the state and the state would collect the payment from the federal program to pay the provider. This would add more administrative complexity and cost to the state program, and providers would still have to interact with the individual plans for authorization of care.
2. Medicaid -- Medicaid is a federal program for people with low incomes administered at the state level. A state would have to apply for a waiver to incorporate Medicaid into its new state program. There is greater flexibility for a state to do this than there is for Medicare. States would still have to track how many people qualify for Medicaid to be reimbursed for them by the federal government, another administrative task that adds cost, or would need to ask for a block grant. Single payer advocates have opposed turning Medicaid into a block grant program because that would limit funds during periods of recession when more people qualify for Medicaid. A block grant would not expand as the need expanded. Currently, all states except Connecticut use a mix of private insurance Managed Care Organizations (MCO's) for Medicaid patients. To streamline its Medicaid system, a state would need to get rid of its multiple Medicaid MCO's.
3. Employer Health Plans -- Employee benefits are protected under a federal law, the Employee Retirement Income Security Act of 1974 (ERISA). While states have the authority to regulate health insurers that operate in their state, they do not have authority to regulate plans offered by businesses that self-insure, which is 60 percent of businesses that provide health benefits. Any interference in employee benefits can be challenged under ERISA and would result in a lengthy and expensive court battle.
California and New York are trying to circumvent ERISA by stating explicitly that their state program "does not create any employment benefit, nor does it require, prohibit, or limit the providing of any employment benefit." However, a state system would be challenged under ERISA, and recent ERISA challenges have not been favorable. A case between the state of Vermont and Liberty Mutual, which operates as an ERISA plan, went to the US Supreme Court in 2016 and was decided against the state. The case involved a law requiring insurers to report claims data. Even though the Vermont law did not specifically target ERISA plans, it was determined to be preempted by ERISA because it had a "connection" to the ERISA plan. Another impermissible "connection" would occur if "economic effects of the state law force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers." A state law requiring businesses to pay a payroll tax would likely be viewed as restricting choice.
States can strive for universal coverage, but calling plans single payer is incorrect
For many decades, states have introduced and passed laws aimed at achieving universal health care coverage. None has yet succeeded in being universal or sustainable, but these are admirable efforts that have increased access to care, at least temporarily. It is possible for a state, using the roadmap outlined by Public Citizen, to move towards universal coverage. It is not possible to achieve a pure single payer system at the state level and so states forego the significant savings of a single payer system.
In the drive towards universal health care, states might consider working to get rid of private Medicaid MCOs as Connecticut did so that more Medicaid dollars are available to cover more people and/or more care. Oklahoma had a similar program that was successful. Part of the success of these programs is providing case management for people with significant health needs to avoid preventable emergency room visits and hospitalizations.
Given that states are not able to achieve pure single payer systems, states take a risk when they label themselves single payer or Medicare for All. While it is understandable that these terms are popular and that most advocates for health reform support single payer, and so are inspired to work for it, it is misleading and could harm national efforts.
For example, Vermont passed a law in 2010 requiring the state to develop a plan for universal healthcare coverage. That law allowed the state to contract Dr. William Hsaio, who assisted in the design of the Taiwanese single payer healthcare system in the 1990s, to design their system. Vermont's system was not a single payer system, yet it was consistently called single payer by the Governor, advocates and the media. It failed, and its failure was blamed on its high cost.
Similarly, Colorado attempted universal healthcare coverage in 2016 through the creation of a state-wide publicly-financed healthcare cooperative: "ColoradoCare would have replaced most private health insurance and taken over the state's Medicaid program for the poor and people with disabilities, starting in 2019. The ballot initiative did not seek to replace Medicare benefits or current health coverage for veterans, military personnel and civilian defense employees."
The Colorado plan was called single payer, even though it wasn't, and its defeat was marked in the media as a second defeat for single payer health care. Prominent Democrats opposed ColoradoCare. Some progressive groups in Colorado also declined to support it, saying that single payer can only be done at the national level. It is hard to argue with them when they are correct. It undermines our legitimacy if single payer advocates are on the inaccurate side of that argument.
Do state efforts help or hinder national efforts?
Advocates for "single payer" at the state level often say that state efforts will help national efforts. Some advocates work for reform at the state level because they believe the public will be more inspired to fight for change at the local than at the national level.
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