California: Crud. All-Payer bill dies before I even got around to writing about it.

About a month and a half ago, state legislators in California introduced a bold new "All-Payer" healthcare bill which, had it become law, would have regulated the actual price of various types of medical procedures. As Sarah Kliff explained in Vox at the time:

California is exploring a bold and controversial new plan to rein in health care spending by letting the state government set medical prices.

...Still, California’s new proposal is worth examining as one that steps closer to single-payer — but doesn’t go quite all the way. It’s one plausible step a state could take without any assistance from the Trump administration, as we see more blue states looking for ways to shape the future of their own health care systems.

”I think we have appreciated how much we’ve been able to do with transparency and data, and how much we’ve been able to collect, but we reached the point where we felt like we had to tackle the issue of prices head on,” says Sara Flocks, policy coordinator for the California Labor Federation, which is backing the proposal.

The California proposal would give a new state board authority to regulate the prices that health insurance plans charge for anything from a doctor visit to a knee replacement. It would use Medicare prices as a baseline, setting prices as a percentage of what the federal program that covers elderly Americans currently charges.

This system would be similar — but not quite the same — to something we usually call all-payer rate setting, where the government doesn’t run all the health care insurance plans but does tightly regulate the prices they charge.

All-payer rate setting essentially shares the same goals of single-payer: It aims to increase efficiency and reduce insurer overhead in the health care system. Single-payer does this by eliminating private plans for one government plan. All-payer rate setting gets there by setting one price that every health insurer pays for any given medical procedure.

The bill was modeled in part on an existing law in Maryland, which only applies to hospital services at the moment, though there's been a lot of effort to expand it across other healthcare service providers as well.

I never got around to writing anything about the California bill due simply to being swamped with other stories...but as it turns out, this became a moot issue a few days ago:

Bill to create health care price controls in California dies

A proposal to create government price controls in California for surgeries, hospital stays, doctor visits and other health care services died Friday when it failed to clear a key committee, but the author says he plans to bring it back next year.

The measure was a longshot from the beginning, but it drew national attention from health care policy observers. Hospitals, doctors and other influential health care providers lobbied intensely against the bill, which they said would lead to longer waits for medical care.

The bill has helped to change the national debate over health care costs and brought a wide variety of health care interests to the table, said Assemblyman Ash Kalra, a San Jose Democrat who wrote the bill.

"This is the type of attention and investment we need to find a solution to the skyrocketing costs of health care," Kalra said.

As noted in the article, at the very least, the short-lived CA All-Payer bill has helped remind people that for all of the private insurance industry's sins (and lord knows there's plenty of them), at the end of the day, they're still primarily a middleman between the patient and the healthcare providers...the doctors, hospitals, clinics, pharmaceutical companies, medical device makers and so forth. The insurance carriers certainly take their slice of the pie...but they aren't the only ones helping decide how large the pie itself is.

I should also note that the failure of this bill to pass in California (where Democrats hold a supermajority in the state Senate, a near supermajority in the state Assembly and the Governor's office) once again underscores how incredibly difficult it is to make major healthcare policy changes in the United States.

Here's the thing: One of, if not the biggest argument in favor of moving towards a single-payer system is almost always the massive cost savings which doing so supposedly brings...and it's true that just about every other nation with any type of universal coverage system (whether single payer or otherwise...and very few countries actually have true "single payer" systems)...also has an average per capital healthcare cost that's half as much or less than the United States.

However, while some of that savings is due to removing the profit motive for insurance carriers, economy of scale, reduction of paperwork/red tape and so forth, the truth is that much of the savings is due to different types of price controls on the actual cost of healthcare services. Medicare doesn't cost 20% less than private insurance just due to being "more efficient", it does so because it pays doctors and hospitals about 20% less than private insurance does. Medicaid, by the same token, costs about half as much for similar services because, again, it only pays service providers about half as much...which is also a large part of the reason that some doctors refuse to accept Medicaid patients at all. This isn't rocket science, really.

The bottom line is that any serious Single Payer effort wouldn't just involve taking on the GOP and the health insurance lobby...it would also have to tackle the hospital lobby, the AMA and PhRMA as well, all at once.

Again: I'm not saying that doing so is doomed to failure...I just want people to have a clear understanding of just how powerful and widespread the forces they'd be going up against would be.