Democratic-Run States Are Experimenting With Healthcare, and It's Not Looking Good

major G.O.B. Bluth vibes
major G.O.B. Bluth vibes
Photo: Getty

Slick California governor and ex-husband to the current girlfriend of the dumbest of the president’s sons Gavin Newsom is hitting the road to sell his healthcare plan, according to the LA Times. This will be a tough sell, because the plan is very bad.


In order to expand insurance subsidies on the exchange, allowing households earning up to $150,000 as a family of four to access them, Newsom wants to fine the uninsured. Sound familiar?

Yes, Newsom is taking perhaps the worst and least popular part of the Affordable Care Act and trying it again, in California, a state with among the highest income inequality in the nation and the highest poverty rate. That’s right: California, not Mississippi or West Virginia or Alabama, has the highest poverty rate in America, when you take cost of living into account.


One obvious flaw with Newsom’s plan: If the plan works and more people get health insurance, that will reduce the pool of people who are paying the fines that fund the subsidies. So who funds it the next year? If everyone who is uninsured signs up for subsidized healthcare, there’s no one to fine for not having insurance anymore, and the money to pay for those subsidies is gone.

More importantly, the idea of fining the uninsured for not having insurance, as if it’s some kind of personal flaw, is ridiculous and not in the least progressive. Most of California’s uninsured are not rich, and certainly not in the income bracket that would be helped by the expanded subsidies (households who earn between $48,560 and $72,840 for a single person). 61 percent of uninsured Californians have household income below $50,000—and would thus already qualify for subsidies. Only 15 percent are in the $50,000 to $75,000 range targeted by these subsidies. Nationally, only 18 percent of people who are uninsured have incomes above 400 percent of the federal poverty line.

Let’s imagine you’re a 29 year old single person earning $72,000 right now in Los Angeles. Even though you earn that much, you don’t have employer-based health insurance. After tax, you have about $4,238 per month. Your apartment costs $2,371, so you’re down to $1867. You have about $400 a month in student loans, so you’ve got about $1,400. Then there’s food, the cost of your car, your phone, utilities—do you even have any money left, now? Owning a car alone could eat up most of that. What about if you want to take your girlfriend to dinner, or your mom has surgery and needs help while she recovers? What if you total your car? What if you wanted to ever save enough money to have a child?

Currently, according to the California exchange, the cheapest silver plan available to you, if you intend to use your plan a medium amount, is $317 a month. If this person doesn’t buy health insurance, is it because they are a Naughty Individual who deserves to be fined for not doing so? Or is it that just living in California right now is insanely expensive?


In other Newsom healthcare own-goal news, the Sacramento Bee reported last week that he wants to raid funding for STDs and measles in order to pay for expanding the state’s Medicaid program to undocumented immigrants, which is a great goal that doesn’t need to be reached by defunding other vital services. You can just see the Republican TV ads now: “Governor Immigrant-Fucker Wants Your Baby to Get Measles So Illegals Can Have Free Healthcare.”

Another state-level plan recently introduced, in Washington state, shows the risks of pursuing a public option. Opponents of Medicare for All love to talk about cases like Vermont, where plans for single-payer were dropped because of cost, even though there are many reasons why state-based single-payer programs have a much bigger uphill battle than a federal one would, such as that states can’t run budget deficits like the federal government can. But that logic should apply to state-based public options, too—and Washington’s would be a poor model for the rest of the country.


The basic premise of the public option is that it would be able to negotiate better rates for payments to doctors, and could therefore charge lower premiums. But according to Politico, premiums for the public option in Washington would only be 5-10 percent lower than current premiums. This is the equivalent of paying $12-25 less on a $250 monthly premium, or the cost of about one dinner at IHOP. The plan is “targeted at people in the individual market who aren’t covered by workplace or other government health plans,” also known as ‘not very many people at all.’ It’s not clear how this would help people with shitty employer-sponsored insurance with high deductibles, for example. Oh, and those shitty private insurers would also be the ones running the plans.

The bill put reimbursement rates for providers—that is, how much the public plan will pay doctors—at 160 percent of Medicare rates, which is very high but still lower than the absurd rates paid by private insurance to hospitals, which is nationally an average of 200 percent of Medicare rates but goes as high as 350 percent, according to the Congressional Budget Office. Politico reported that in Washington, private plans pay 175 percent of Medicare rates, meaning the state is getting just a 15 percent discount.


But even that negotiated rate might not be high enough—the bill allows providers to charge more “if they can’t build an adequate network under that pricing,” according to Politico, meaning the plan could cost even more, since premiums will be determined by spending. The bill doesn’t require providers to participate in the plan, meaning you could end up with a situation where the most sought-after doctors refuse to take poorer patients with government plans—which is something that happens right now under the current system. A recent study in Health Services Research found that private hospitals strategically turn away ambulances with poorer patients because they make less money on them.

This is all a long way of saying what Medicare for All advocates have been saying about a public option all along: That it maintains all the inefficiencies and price-gouging of our current system, doesn’t reduce costs for patients or the government significantly, and doesn’t improve access to or quality of care.


State governments have limited options for improving healthcare, which is a nationwide problem that needs nationwide solutions. Any decent Democrat should be anxious to do whatever they can to improve their citizens’ access to healthcare. But what they do decide to do must reflect, at minimum, the basic shape of what should happen to healthcare: Making it more equitable, lowering or eliminating drug costs, free plans instead of complicated subsidies and income brackets.

These plans are not going to be popular—Newsom’s plan is about as insane a political own-goal as I could imagine, but Washington’s public option is so timid that it won’t exactly send people running to vote Democratic, either. If you want to improve people’s healthcare, and you want them to believe that you want to do that, you have to offer something real. You have to target the real enemies—the rich and the healthcare industry. Don’t target the people already struggling to afford healthcare, or work overtime to allow private insurers to profit off public plans.

Splinter politics writer.

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