Single Payer, Meet All Payer: The Surprising State That Is Quietly Revolutionizing Health Care

One unheralded reason for Trumpcare’s many difficulties was a sea change in public opinion. A new Associated Press poll finds that 62 percent now agree the federal government has a responsibility to provide health coverage to all Americans, up from 52 percent in March. Republicans looking to take away coverage ran headlong into this wave of support for a bigger governmental role in health care.

“Once you get something for pre-existing conditions, etc., etc. — once you get something, it’s awfully tough to take it away,” President Trump concluded.

Indeed, when Kansas Republican Jerry Moran issued the statement that effectively killed the bill’s hopes, his opposition was described in the press as having come from a conservative direction. And while it was cloaked in right-wing rhetoric around choice, the politics of the statement leaned decidedly left. “We must now start fresh with an open legislative process to develop innovative solutions that provide greater personal choice, protections for pre-existing conditions, increased access and lower overall costs for Kansans,” said Moran, fully aware that protections for pre-existing conditions, couples with lower overall costs, require a robust government intervention in health care.

Capitalizing on the new politics, progressive groups have distributed a “People’s Platform” that includes a Medicare-for-All single-payer system. And in state capitols, activists have demanded single payer, hoping a demonstration project proving the concept will catch fire, the way a universal system in Saskatchewan in the 1940s migrated to the rest of Canada.

The movement has won some incremental victories, but has yet to get over the top. Vermont passed the framework legislatively and then abandoned it. Colorado’s quiet effort was crushed at the ballot box. California has spent 25 years trying to pass something without success, and this year’s effort is stalled. A Medicaid buy-in bill in Nevada this year drew a veto from its Republican governor. New York’s odd conservative control of the Senate seems to foreclose a solution there in the near term.

There is one state, however, where a combination of fewer institutional barriers and existing health care structures could make health-care-for-all an achievable reality: Maryland.

It will take a grassroots groundswell and electoral victories, especially in next year’s governor’s race. One prominent gubernatorial candidate, former NAACP president Ben Jealous, has ardently endorsed single payer. “We have the opportunity in this state to make sure that we don’t have any more neighbors burying loved ones because they didn’t have access to health care,” Jealous said at an event where Sen. Bernie Sanders endorsed him for governor.

If elected, Jealous would face fewer procedural obstacles than those that have dogged California in its long battle to establish a single-payer system. While Maryland, like California, has robust Democratic supermajorities in the legislature, there is no two-thirds requirement to raise taxes, and no budgeting straitjacket mandating certain percentages of state spending to education or other priorities.

And while states do need federal waivers to incorporate programs like Medicare into a state-run program, Maryland is the only state to already hold a Medicare waiver. It enables a unique system known as all-payer rate setting, which serves as the basis for universal health care in several industrialized nations. In other words, while other states would have to begin from scratch to overhaul their health care systems, Maryland has a head start.

Maryland is the only state in America where all hospitals must charge the same rate for services to patients, regardless of what insurance they carry. There’s some variance between hospitals, but every patient in a particular hospital pays the same. Other states experience huge, seemingly random differences in hospital costs, depending on the insurer (or lack thereof).

Maryland’s Health Services Cost Review Commission has set hospital reimbursement rates for over 40 years. The state obtained a federal waiver to include Medicaid and Medicare in its all-payer system, with the goal of keeping cost increases below Medicare growth. And it’s worked, creating the lowest rate of growth in hospital costs in America.

In 2014, to prevent hospitals from making up profit margins through volume, Maryland tweaked the system, adding global budgeting. “The traditional way it worked, every hospital got a rate card,” said Joshua Sharfstein, an associate dean at Johns Hopkins’s Bloomberg School of Public Health, and a former head of Maryland’s Health Department. “Now you get a number, which is the total revenue for the year.”

Because the global budget doesn’t change based on the number of admissions, this creates hospital incentives toward better outcomes. “It makes the health system focused on keeping people healthy rather than just treating illnesses,” said Vincent DeMarco, president of the Maryland Citizen’s Health Initiative, a state advocacy group. That includes increased preventive treatment, using case managers to connect patients to primary care, eliminating unnecessary tests, and encouraging good health outside the hospital walls.

Three years into global budgeting, the state is “meeting or exceeding” its goals, according to a January Health Affairs study. Hospital revenue growth is well below counterparts nationwide, or the growth of Maryland’s economy. Plus, state hospitals have saved $429 million for Medicare, more in three years than it targeted for five. Most important, every state hospital (all of which are nonprofit) and every insurer in Maryland are on board with the system.

If a centralized rate-setter bands every insurer together to negotiate prices, all payer can functionally act like single payer in terms of bringing down costs. All payer reduces hospital and insurer overhead, since billing costs are known in advance. And because the Affordable Care Act caps the amounts insurers can take in as profits, lower hospital costs should flow back to the individual in the form of smaller premiums.

This is why five countries — France, Germany, Japan, Switzerland, and The Netherlands — use all-payer rate setting as the basis for their universal health care systems. These countries have been found to control costs far better than America’s fragmented system.

The system only applies to hospital payments, not primary care doctors or clinicians. However, last year Maryland submitted a “progression plan” to the Center for Medicare and Medicaid Services, with the goal of expanding the system by January 2019. That would line up with the swearing in of Maryland’s next governor.

Other states have looked to Maryland as a model. Pennsylvania has adopted global budgeting for rural hospitals. And in the wake of its single-payer failure, Vermont moved to an all-payer accountable care organization, where providers are paid based on health outcomes for the population. “In some ways it’s more radical [than single payer] if you’re able to get the incentives right,” said Joshua Sharfstein. But the true test of Maryland-style all payer is whether it can support universal coverage for every resident.

Maryland has a discouraging history with single payer. Health Care is a Human Right Maryland, an affiliate of Physicians for a National Health Program, did push a bill for several years in the state legislature. “In 2012, we had the bill in the House of Delegates, we lined up what we thought were enough votes in committee,” said Dr. Eric Naumberg, a member of the group’s leadership council. “But the leadership said you can’t bring this to the floor, and then we had seven votes instead of 12.”

Naumberg’s group has since focused on rallying support at the national level. “There are a lot of roadblocks set up for state single payer,” he said, including waivers necessary to incorporate Medicare and Medicaid and potential challenges under federal law regarding employer-based coverage.

Indeed, local politicians aren’t getting pushed yet. “I am not hearing a groundswell of support for a single-payer system or radically re-doing what we currently do,” said Shelly Hettleman, a member of the House of Delegates from Baltimore. “My constituents want to fix the system rather than totally reinvent it.”

However, with Maryland’s novel all-payer structure, you could potentially reinvent health care outcomes by merely tweaking the system. For example, expanding all payer across the health care system, along with tight regulation of insurers to keep premiums low, could mimic some benefits of single payer. Even Vincent DeMarco, who flat-out rejected the notion of state-level single payer, agreed. “If we can do that, we can achieve the same goals in a way that’s doable,” DeMarco said.

Maryland has a relatively low number of uninsured, about 6.7 percent of the population as of 2015. With a cost control mechanism already in place, getting them covered could prove cheaper and easier than other states. “I think you can combine alternative payment approaches with single payer, but you don’t hear about that much,” said Joshua Sharfstein.

Dan Morhaim, a House of Delegates member and an emergency room physician, suggested that the state could offer a benefit package he likened to tiers of coverage in education. “There’s public school, and if you are well-off you pay more to get tutored or go to private school. And you try to bring up that floor broadly and consistently.”

It would obviously still be a huge lift. Entrenched interests still see their survival attached to the status quo. While all hospitals in Maryland are not-for-profit (which is no guarantee against profit-taking), insurers, drug companies, and doctors not currently under price regulation can be expected to put up a fight. And with state balanced budget requirements, you would have to finance a state-run health plan, opening up the tax wars even though individual out-of-pocket costs could drop.

Two things work in Maryland’s favor. First, there’s the renewed support for single payer generally, particularly among progressive activists. Morhaim said that a recent op-ed he wrote for the Baltimore Sun about de-linking health insurance from employment got a wider response than he’s ever seen. “My email box flooded,” Morhaim said.

Second, there’s the promise of the Ben Jealous campaign. He can be expected to put single payer at the top of his agenda for the next year, to a public growing more open to the idea. And Jealous is not a novice at getting the seemingly unattainable done in Maryland politics, mounting lobbying campaigns that helped legalize same-sex marriage, abolish the death penalty, and pass a state version of the DREAM Act. “We are not here simply to elect me governor,” Jealous said at a recent speech. “You do not elect politicians to make change happen, you elect politicians to make it a little easier for a movement to make change happen.”

Jealous’ boldness has already moved Democratic primary opponents in his direction, of which there could be as many as seven. Alec Ross, a Hillary Clinton adviser during the 2016 campaign, who has a controversial plan to have investors loan working mothers money for child care, says he supports a state-based public option. Liberal State Sen. Rich Madaleno endorsed a public option as well, and has said he would “treat health care as a human right.”

Madaleno’s website rejects the idea that states can manage a single-payer plan alone. “One of the cornerstones of single-payer is that the government can negotiate and enforce prices. States can’t do that, only the national government,” it reads. But Maryland actually does precisely this kind of negotiation for hospitals, and could expand it.

Jealous’s nomination, followed up by the defeat of incumbent Republican Larry Hogan in November, would at least put single payer on the agenda in a state with a lot of relative advantages to getting it done. He would have a lot of policy support, with a deep well of knowledge in leadership roles at nonprofit hospitals, as well as from the many members of the part-time legislature who work in the health care system when not in session.

Would Maryland politicians be willing to fight for single payer? “I think the political system would be willing to take that on if the person who argued for it won the election,” Morhaim said. “It’s up to the voters.”

Top photo: Ben Jealous, former president and CEO of the NAACP, announces his bid to be the Democratic party’s nominee to challenge Republican Gov. Larry Hogan on May 31, 2017, in West Baltimore.