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The State-Based Universal Health Care Act of 2023 (SBUHCA)

On Nov. 8, 2023, Rep. Ro Khanna introduced SBUHCA (HR 6270). This act will allow states to receive federal funding for their own universal health care initiatives. Currently, there are multiple federal laws that prevent states from pooling private and federal funds into a single program. SBUHCA will make state-based universal health care a reality!

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The Details

The value of One Payer or Simplified Payment System as a universal health care financing format:

The unique value of One Payer (OP) is a dramatic reduction in billing and collection costs (B&C). By reducing B&C from 30% to 10% of total healthcare spending, OP diverts enough money from billing to clinical care to provide better care (more benefits) to more people (greater coverage) for less money and do so without reducing net provider income. 

No other financing format in the US offers this advantage.

We know OP provides better care to more people for less money because:

  • Working OP examples in other nations do so.

  • Working OP examples in our nation (e.g., employer self-funded plans) do so.

  • 40 studies of proposed state-based OP plans in the US corroborate this.

SBUHCA requires any state-based plan to have benefits equal to or greater than already guaranteed under the ACA.  

Empower states to take the lead.

The US is unlikely to enact a national OP program immediately. However, states are prevented from taking the initiative by federal laws.

State-based one-payer plans (SB-OP) require a state to collect federal, state, and private healthcare spending into a single pool. A designated state agency then pays all providers for all patients. Hence the term “One Payer”: Providers receive payment from a single payer.

This simplified B&C pays for itself.

However, multiple federal laws regarding healthcare spending prevent states from pooling federal and private funds into a single state-administered agency. This was not a deliberate plot against SB-OP but reflects the uncoordinated growth of many federal programs and laws.

 Allows groups of states to come together for joint plans.

Here are federal programs that need coordination in an SB-OP plan:

  • Medicaid: Originally a “widows and orphans” healthcare plan, Medicaid requires states to obtain waivers before they spend money for anyone else. No state has yet received or even applied for a waiver allowing federal Medicaid funds to be spent for all patients in the state. It is unclear if such a waiver complies with Medicaid statute. In Oregon, 25% of the population is covered by Medicaid.

  • Medicare: SBUHCA makes it simpler for state plans to include Medicare funds.

Medicare is a highly complex, convoluted, and rapidly changing program with high compliance and documentation costs covering only seniors. No state has yet received a waiver allowing Medicare funds to cover every patient in the state. It is unclear if such a waiver complies with Medicare statute. 18.7% of the population is covered by Medicare. 

  • ERISA: This federal law prevents states from tampering with employer healthcare benefits. There are no waivers in ERISA. Federal courts are inconsistent in what they consider illegal state tampering with employer healthcare benefits. In Oregon, 30% of the population is covered by employer-sponsored insurance (ESI) and, therefore, might be governed by federal law, not state law (“pre-empted”).

  • Other federal healthcare programs: Federal law also governs healthcare spending by federal employers participating in Federal Employee Healthcare Plans (FEHP) and TRICARE. There are no provisions in either program for waivers. These plans cover less than 2% of the Oregon population.

  • IRS: For federal income tax purposes, the IRS treats spending on healthcare differently from other spending. Additionally, the IRS treats healthcare spending by employers differently from healthcare spending by individuals.

What needs to be done to permit State-Based One Payer universal health plans?

Creating an SB-OP plan needs appropriate waivers from all programs. An SB-OP that worked around these programs without appropriate waivers would suffer higher administrative costs (because it would be multi-payer, not one-payer) and might not provide better care to more people for less money.

Even if administrative waivers could be obtained from the appropriate federal agencies, such waivers have the following disadvantages:

  • They are time-limited. 

  • They are revocable.

  • They might not be renewed when different political parties take federal office.

How does congressional SBUHCA legislation address SB-OP proposals?

All required waivers and exemptions are contained in one act of Congress, directed to each appropriate federal office for prompt action.

The required waivers do not sunset. They are valid as long as the state demonstrates continued compliance with essential requirements:

  • Coverage of at least 95% of the state population.

  • All patients previously covered by the federal program continue to enjoy benefits at least as comprehensive as the original program.

  • Federal debt does not increase.

Summary: 

SBUHCA legally authorizes a simplified process that permits and enables states to legally fund all needed health care through a single funding mechanism: One-payer. SBUHCA makes equitable, high-quality healthcare guaranteed for everyone. 

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