This is the second of four posts on the health care issue. For an overview of the various posts click here.
There are two basic problems with enacting a single payer system in Pennsylvania. The first is that it is pretty much politically impossible this year. The second is that for constitutional and other reasons, a single payer system enacted in Pennsylvania won’t be as progressive as we would like it to be.
Let me start with the first problem, briefly sketch the second one, and then come back to the first.
Politics
Supporters of Health Care for All tell us that paying for a single payer system would require a doubling of the state income tax from roughly three to roughly six percent and the imposition of a 10% payroll tax on all wages.
I have been lobbying the General Assembly on various issues for five years now, starting with the effort of the Pennsylvania Transit Coalition to secure dedicated funding for public transit and continuing with the campaign to raise the Minimum Wage. And all my experience—and that the folks I’ve worked with on both issues, including Lance Haver, John Dodds of PUP, and John Myerson of the UFCW—suggests that there is no way we are going to enact single payer this year.
The Senate, after all, is controlled 30-20 by Republicans. And they Republicans have consistently denounced any and all proposals for taxation.
The House is barely controlled by the Democrats. Some of those Democrats are fairly conservative or, at the very least, come from conservative districts. And that makes them wary of voting for tax increases. Others are freshman who have recently won in Republican districts and are likely to face strong Republican challengers determined to take the seat back for the GOP. They, too, are wary of voting for tax increases. And the Democratic Leadership in the House, which has a bare one vote majority—and can’t always count on all its members to toe the party line—doesn’t want to push freshman Democrats or Democrats in conservative district to vote in ways that put their seats in danger.
If you want to see how hard it is to raise taxes in the political climate in Harrisburg, just remember that we never succeeded in raising taxes for legislation that, by subsidizing public transit and providing funding for roads and bridges, would benefit almost everyone in the state. Instead, we raised tolls on the Turnpike and imposed taxes on Interstate 80. There are not enough roads to toll in Pennsylvania to pay for single payer health care.
It is going to be difficult enough to keep Democrats in the House together in support of the 3% fair share assessment for businesses don’t provide health insurance to their employees—and to pass that measure in the Senate. In my judgment, doubling the state income tax and enacting a 10% payroll tax is simply impossible.
Policy
But suppose it were possible. Would that give us an ideal health insurance system?
For two reasons, I don’t think so.
The Burden of Flat Taxes
The main problem is that the constitution of our commonwealth prohibits progressive taxation. And a proportionate tax has a much greater impact on the lives of poor and working class Pennsylvanians than on the rich. When the government takes ten percent of the income of a family with in income of 40,000, the $4,000 they pay in taxes is a harsh imposition on their daily lives. When it takes ten percent of the income of a family with an income of 400,000, the 40,000 they pay in taxes is felt in their Merrill Lynch balance. That is why progressive taxation, with higher rates for the rich and lower rates for the poor, is much fairer than our flat tax.
Thus, for many working people who don’t have health insurance now, the large tax increases necessary to pay for single payer will take a very large chunk of their income. That is especially the case if one remembers that payroll taxes are usually held by economists to come out of wages, as opposed, to business profits. For a family of four at 200% of the poverty line, about $40,000, a 10% payroll tax and 3% income tax would cost them $5200. That’s a substantial reduction in their income. Of course, for that money, the family would receive comprehensive health insurance. But, while health insurance is a critically important good, it is not the only critically important good. We don’t want to force working class families to skimp on food or to lose their homes because of the new taxes required by single payer health insurance.
A single payer health care system institution by the federal government, on the other hand, would be paid for by progressive taxation and could easily be paid for be reversing George W. Bush’s cuts on the rich. That would be a much better way of instituting single payer.
The Difficult Transition to Single Payer
While there is a serious problem for workers who don’t have health care now, the problem in some ways is worse for workers who do have health partly paid for by their employers, which includes most unionized workers. Under single payer, insurance plan paid for by employers and employees will go away. But health insurance is a significant percentage of the benefit received by most unionized and many other workers. So, in return for paying an addition 3% tax on their income, these workers will be losing all the health insurance benefits they have bargained for over the years. And, don’t forget, health insurance benefits are not taxable. So the value of what these workers lose is even greater than what their employers pay for health insurance. So how in the world is this a good deal for them?
Of course, in a perfectly competitive world, what workers receive in health insurance benefits would be returned to them in the form of increased wages, (although since health insurance comes out of pre-tax dollars and wages are taxed, workers would still lose). I would expect that eventually most of what employers pay for health care reform will ultimately go back to the workers. That is what would happen where the labor market is competitive. But, in the more oligopolistic sectors of the economy, where health insurance is more common, this might not happen quickly. And, to some extent, how quickly it happened would depend on collective bargaining, at least where unions exist. However, given the weakened state of the labor movement, labor leaders are not rushing to open up the bargain they made on health care long ago. Things would be different, however, if the labor movement were stronger, if a Democratic President were to have a chance to appoint the members of the NLRB and work with a Democratic Congress to enact new laws to strengthening the bargaining position of workers. If single payer were adopted by the federal government, then federal labor law could be changed to provide some rules that would protect workers in the transition from employer based to tax based health insurance. Federal labor law most likely would allow states to adopt the same rules. And even if Pennsylvania could adopt such rules—note that the supporters of Health Care for All don’t propose any—they might put us at a competitive disadvantage with other states.
Although I have not seen any supporter of single payer come out and say this explicitly, I assume that one reason they propose a 10% payroll tax is to recapture some of the money employers now spend on health insurance. But there is no reason to think that 10% is the right amount in every case. If an employer now spends more than 10% of wages on health insurance, then the employees in that business could well lose some part of their compensation. If, on the other hand, the employer now spends less than 10% of wages on health insurance, then some part of the 10% payroll tax is likely to be passed on two their employees.
Once again, a transition to single payer would be much fairer and easier to accomplish if we did not have to rely on payroll taxes to pay for it and if those taxes could be progressive. But that is not an option in Pennsylvania right now.
Politics Again
The two problems with single payer health insurance in Pennsylvania to which I’ve just pointed explains the lack of support for single payer among labor unions in Pennsylvania. And, again, it is not that labor unions oppose single payer. They just don’t think we can do it well right now in one state. And it is especially hard in this state.
Of course, the lack of support for single payer among labor unions also dooms the plan. With the support of labor, it is sometimes possible to get progressive action out of our General Assembly. Without it, and without a massive mobilization of other progressive groups—it is just impossible.
Can We Will Single Payer Into Existence?
The single payer advocates respond to these arguments mostly by saying that single payer would benefit more people than RxPA, that it would create a more rational health insurance system, and that if everyone who really wants single payer would get behind the plan, it would pass.
It is true that single payer would benefit not just the uninsured but the underinsured. It is true that it would reduce administrative costs substantially. It is true that those cost savings, the elimination of co-payments, and the creation of a comprehensive benefit package means that a single payer program would probably benefit more people than it hurts, even if it would do so in uneven and not entirely fair ways.
Rational Public Policy Doesn’t Automatically Have Political Support
But just because a public policy is rational, doesn’t mean it can be brought into being. The belief the we can will single payer into existence by just telling everyone why it is so good is the reason single payer its supporters spend so much time attacking those of us who support RxPA. The single payer folks keep saying that we haven’t been able to get single payer enacted because we progressives have not been forceful enough and have not stood our ground.
It is not just a lack of will that stands in the way
It should be obvious to those who have followed my career that I believe tilting at windmills has a place in politics. But the single payer supporters are engaging in wishful thinking. Even if single payer is far better than RxPA—and remember there are some real problems with enacting single payer in one state—it also faces far more opposition than RxPA. The health insurance companies will fight tooth and nail to save their lucrative business in Pennsylvania. (RxPA limits that business and heavily regulates insurance companies but provides does provide an administrative role for them in CAP, which gives them business they might not otherwise have.) So will the pharmaceutical companies who will lose out when they have to bargain with a single payer agency. And so will all those wealthy, and in many cases not so wealthy individuals, who will oppose a doubling of their taxes. They will have enormous resources at their disposal. And the truth is that we don’t have the same resources.
The Problem of Progressive Organizing
It is not a failure of liberal will that stops single payer—and has stopped other health care proposals—but real, powerful interests. Yes, if everyone with a progressive bent in the state understood why single payer was best and was willing to work for it, we would win. But those of us who have been doing politics for a long time—and have sometimes been successful at it on issue campaigns—know how hard it is to get progressives and potential progressive to act together. In a world where most people spend a lot more time reading the sports pages and the comics than the news pages—and in which the news pages are pretty thin—informing all our potential allies about single payer is practically impossible. Building a mass movement for change in a geographically large state with an enormous population is incredibly difficult, time consuming, and costly work. And it is harder when the leaders of our effort—even the Governor if he were to join the force of single payers—simply can’t command the attention of the new media for long.
And that, by the way, is another reason single payer is more likely to be enacted by the federal government. As political scientists have long pointed out, progressive movements often start in local and state politics. But they reach their culmination in national politics, because it is, somewhat paradoxically, easier for those with few resources to concentrate whatever resources they have to bear in national politics, especially since that is where Americans direct whatever attention they give to politics.
The Trouble With Legislators
That a growing number of state representatives have endorsed single payer, doesn’t really make much difference. In politics, what matters is not what politicians say but what they do. It is easy to sign a petition or sponsor a piece of legislation especially when you think that you will never have to vote on that legislation. It is hard to hold hearings, lobby colleagues, make deals and, in general expend political capital, when you think legislation is going nowhere. That is why the best thing we can do is get behind legislation that Democratic Leaders in Harrisburg, and especially those in the House of Representatives, are willing to work for because they think it has a chance of being enacted.
That is what the community and labor leaders fighting for RxPA plan to do. And they have a track record of success in Harrisburg. I’m afraid that those who are fighting for single payer insurance, can’t say the same thing.
So what should we do?
I’m not telling advocates of single payer to come over and join the fight for RxPA right now. Partly this is because all the judgments that go into the political feasibility of each proposal are difficult and uncertain. Partly this is because any advocacy for improved health insurance in Pennsylvania will help the fight for RxPA. And partly this is because I’ve found some of the single payer advocates deeply resistant to thinking strategically. When supporters of single payer write “I hear the voice of my Lord who has compelled me to hear the voices of those in need. Make no mistake, to my dying breath, Single-Payer will be my cause,” I don’t see the point of carrying on a strategic argument. It is better for them to keep working on what they believe in
But I hope that those who do want to think strategically will work for RxPA. And even more, if we can get some traction for RxPA I hope that none of the supporter of single payer will work against RxPA. That is, unfortunately, not so far-fetched. Two weeks ago Dennis Kucinich voted against SCHIP—the federal program that helps states provide health care to uninsured children—because he believes that the bill wasn’t good enough. Supporters of single payer have been arguing, wrongly in my view, that enacting RxPA would block single payer. (As I shall soon explain, there is a natural progressive from RxPA to single payer.) If progressive legislators in Pennsylvania believe this, then we will lose our best chance in many years to insure at least half, and probably far more than half, of the uninsured adults in Pennsylvania. That, to me, is the height of political immorality.
I’m all for tilting at windmills when the only thing at stake is my own political career and reputation. I’m not going to tilt at windmills when I have a chance to help bring heath insurance to hundreds of thousands of people who don’t have it now.