Monday, November 7, 2016

Colorado, Please Don't Pass the Single-Payer Healthcare Amendment

I'm finding this election cycle to not only be unusual because of the presidential election, but also because of some of the peculiar ballots that states are proposing. One that caught my eye was Amendment 69: Colorado Creation of the ColoradoCare System. Essentially, ColoradoCare would be America's first implementation of a single-payer healthcare system. The ColoradoCare YES campaign published a 43-page publication here that outlines how it would work. The ColoradoCare system would aim to comprehensively cover all state residents, including pharmaceuticals, hospital visits, medical equipment, mental health services, and chronic disease management. This universal healthcare would be paid for by the Coloradan taxpayers by an additional 10 percent income tax in which two thirds of the burden would fall on the employer for payroll income. For proponents, Colorado would set the example of how single-payer healthcare could look across the rest of the country.

I don't have a problem with single-payer healthcare solely because it does not make for good economic theory. After looking at Bernie Sanders' single-payer proposal along with three case studies earlier this year, I found that in practice, single-payer healthcare increases costs, increases waiting times, stymies healthcare research and development, and has the real possibility of rationing healthcare. Even the liberal state of Vermont, home of Bernie Sanders, could not even pass single-payer healthcare, in large part due to high costs. In spite of mainstream economic theory and the failures of current single-payer healthcare systems, perhaps ColoradoCare would be different. While looking at the past does have predictive power, it doesn't necessarily dictate the future. Perhaps the Coloradan plan will be different from other attempts at successfully implementing single-payer healthcare.

Back in August, the non-partisan Colorado Health Institute (CHI) released its independent financial analysis of ColoradoCare. You know something is awry when both proponents and opponents laud the study. The "good news, bad news" portion is best summarized in the analysis' conclusion (CHI, p. 14). The good news is that ColoradoCare would provide universal healthcare without increasing healthcare spending in the economy. The bad news is that it would lack the revenue to sustain itself (see chart below).

The inability to afford single-payer healthcare is unsurprising. It is a system where you provide excessively comprehensive coverage, have the intended goal of not turning anyone down, and do not provide the ability for people to have awareness of healthcare costs, all of which increase costs. Because of these unaffordable costs, the CHI provides options for covering the deficit, including cutting benefits, raising taxes, reducing provider rates, and shutting down ColoradoCare. As this article from Bloomberg points out, have fun trying to raise taxes when you just increased taxes by a ridiculous amount. Since you have made the citizens of Colorado dependent on ColoradoCare, it would also be difficult to cut benefits. Local provider groups (e.g., hospitals, doctors) can be gouged, but they're politically well-connected. Going after out-of-state providers would disincentivize them from coming to Colorado in the first place. That would lead repealing the Amendment, which would not politically be an easy task, either. Also, it would be even more complicated to implement on a state level because during times of recession, states are even more pressed to balance the budget, which means that if single-payer were a reality, it would put significant pressure on other programs.

But let's delve a little deeper because creating budget deficits is not the Amendment's only issue:
  1. Remember the income tax increase I mentioned earlier, the one that would make Colorado have the highest state income tax in the country? That additional income tax would bring in $38 billion, which is larger than the current $27 billion state budget. That would mean that single-payer healthcare would more than double the budget. 
  2. There would be a 21-member Board of Trustees that would not have oversight, and would have the authority to increase taxes as frequently as annually because the Board would be able to circumvent the state legislature and the Taxpayer Bill of Rights (TABOR). Although the Amendment states some general categories of what is to be covered, the Amendment does not lay out any specifics. What exactly is covered would be at total discretion of the Board. Do you really want your personal, private healthcare decisions, not to mention price control for healthcare-related prices, to be at the whim of a Board of Trustees? 
  3. Medicare, TRICARE, and federally regulated plans would still be in effect, and will actually be  a secondary fund source for ColoradoCare. For those on federally-run healthcare programs, ColoradoCare would be a secondary payer, which means that potential administrative benefits under a true single-payer healthcare program would not be realized
  4. Why does this need to be an amendment in the state constitution? In the likelihood of failure, it would be difficult to undo ColoradoCare. 
If passed, Colorado would be the guinea pigs for an initiative that is both unclear with specific coverage and has been untested in the United States. With what we do know, the Amendment would run up significant deficits in Colorado, and would be unsustainable in Colorado. While proponents laud the universal coverage that would come with ColoradoCare, universal coverage does little to no good if ColoradoCare cannot sustain funding to provide all that healthcare. When all is said and done, ColoradoCare is another example of the false promises that come with the single-payer healthcare system. Fortunately, I'm not too worried because the latest polling shows that Coloradans are not in favor of Amendment 69. However, I will conclude with this: If you live in Colorado and care about the future of Colorado, vote No on Amendment 69 this November.

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