I-1600 is a giant step forward for Washington, and for the United States.
It is disappointing to read Andrej Markovčič’s attack on I-1600. It is clear that he never read the material available describing the program, including my report on its financing. Not only does his piece show a serious misunderstanding of the proposed program, but it shows a readiness to make the “best the enemy of the good.” Judged as it should be, on its merits for the people of Washington State, I-1600 would be a major advance. And judged as it should be, for the national movement, it would also be a great step forward towards establishing quality, universal healthcare in America.
Markovcic’s makes five criticisms of I-1600, all either misguided of mistaken.
- Structural Constraints: Yes, the Washington health plan will face cyclical challenges different than those faced by a national program funded by the Federal Government; but Markovcic misstates the nature of the problem because he misunderstands the nature of the program. By providing tax-financed healthcare free for all residents of Washington, virtually everyone in Washington will be enrolled in the Whole Washington Health Trust. There will be no “wave of people signing up for this state plan” with an economic downturn because everyone will be in the plan already. Furthermore, because the program is tax-financed, Markovcic’s concerns about a drop in investment income are completely off-base. There is no investment income in the state financing plan; nothing to be lost in a business downturn.
This is not to dismiss cyclical factors. Markovcic is right, of course, that the state cannot print money and the health plan financing program would face a challenging situation in an economic downturn. This is no different than the challenges facing state-financed programs for education, road repair, public safety, etc. In all cases, the state needs to arrange for savings during business-cycle expansions to cover declining tax revenues in the downturn. That is why the proposed financing plan includes a surplus.
Markovcic also misunderstands the savings to be achieved through the plan. He never mentions the largest areas of savings, through administrative efficiency. He is also wrong in his suggestion that Washington could not capture the anticipated savings from drug purchasing. It is completely irrelevant that Federal law prevents Medicare from negotiating drug prices; there is no restriction on the states nor on state-funded Medicaid, nor on other agencies of the Federal government from negotiating drug prices. Indeed, the VA gets prices about 41% lower than the rest of us pay. No one expects pharmaceutical companies to roll over; that is why we need a state plan to get the scale needed to bargain effectively. While no individual insurance company is large enough to bargain effectively, the state of Washington is the size of the VA; why shouldn’t Washington try to capture savings like those achieved by the VA by negotiating prices?
Markovcic is also wrong that we need new legislation to gain federal cooperation. The federal government has given over 100 waivers to states for their Medicaid programs, waivers granted for changes less extensive and less constructive than what we are seeking. the Centers for Medicare and Medicaid Services (CMS) also has an established program (Medicare Part C) for the provision of Medicare services outside of traditional Medicare. The Washington state plan would simply apply to be covered within that program, and for those Medicare enrollees who choose not to be formally enrolled, the state plan would simply bill CMS for their medical services.
- Markovcic criticizes I-1600 because it is not a national plan. This is irrelevant. I have been campaigning for a national program for 40 years and continue to work for it. But we can walk and chew gum at the same time, especially since establishing a state program in Washington will be a model for the rest of the United States, demonstrating that single payer can work.
- Markovcic is wrong that I-1600 will not cover everyone in Washington. The only people left out would be people who refuse to use its services, just like what would occur under HR676.
- Incredibly, Markovcic criticizes I-1600 for having taxes on income, capital gains, and payroll as if these are to be equated with cost-sharing at point of service. As the author of financing plans for HR 676 and for Senator Sanders’ presidential campaign, let me explain that “cost sharing” refers to charges imposed on patients receiving services, while “taxes” are paid by the sick and well alike. Furthermore, the financing plan for I-1600 is quite progressive, including the premiums which he mistakenly calls “means tested.” By excluding the poor and providing exemptions for low incomes, these too are a form of progressive income-based taxation.
- Markovcic is wrong that the bill does not provide for transitional support for displaced workers. It does. He would know this if he had done his homework and read the plan or my report on it.
Finally, Markovcic warns that the insurance industry will fight I-1600 “tooth and nail.” As a DSA member since its origins as DSOC with Michael Harrington, I am disappointed that a self-proclaimed socialist would be scared of a fight with the insurance industry. The opposition of the insurance industry should be taken as validation that this is indeed a fight worth having, a step on the long march towards a fair economy and a healthy America.
Professor of Economics
University of Massachusetts at Amherst
Amherst, MA 01003