There appears to be growing momentum on the left for a move toward single-payer health care. Sen. Elizabeth Warren (D-MA) declared that while President Barack Obama took an important first step, “Now it’s time for the next step. And the next step is single payer.” Sen. Bernie Sanders (I-VT) recently filed his single-payer legislation in the US Senate, with the support of 15 Democratic co-sponsors. A similar proposal has support from some Democrats in the US House of Representatives. In some cases, more progressive members of the party are targeting Democrats who do not openly support single payer. We are also seeing increasing public support for single-payer proposals.
Does that mean that single payer is becoming a main tenet of the Democratic platform? Probably not. Could a single-payer system be enacted in the current political climate? Absolutely not. Could we take some baby steps toward single payer in the not so distant future? Maybe.
The Essence Of Single-Payer Health Care
To break this down a bit, let’s clarify a few points about what single payer actually means and offer a bit of insight into how much these details matter. If you were to look up definitions for single-payer health care, you will get some variations on a theme. In general, these are the most common features:
- Comprehensive universal coverage—in other words, everyone in a given region is covered by the same health plan with the same core set of services.
- Funding for that core set of services comes from a single public fund.
- That single public fund is typically generated through taxation.
- The single payer administers the program by paying providers for health care services from that single public fund.
- The single-payer entity may be the federal government, the state, a province, or even a quasi-governmental agency.
There are some additional features that vary across several single-payer systems:
- The health care delivery system can be private, public, or a mix of both. That means health care providers, such as hospitals and doctors, may be employed by private organizations or by a public agency.
- Private insurance may provide supplemental coverage to the public health plan. However, as the role of private insurance increases, these health care systems tend to look more like multipayer systems.
The Canadian health care system is often the poster child for a single-payer model, with the provinces and territories serving as the administrative entity paying private providers from the public fund. In contrast, England has the National Health Service, which acts as a single payer, but many providers are employed directly by the government—something that is not a required feature of single-payer health care systems.
How About Universal Health Coverage?
Often times, we hear the terms “universal health coverage” and “single payer” used interchangeably. This is misleading. Universal health coverage literally means that everyone is covered. According to the World Health Organization, universal health coverage must meet three criteria: equity in access to health services, quality that improves health, and protection against financial risk. In contrast, single payer presumes universal health coverage but also provides insight into specific financing, administration, and delivery characteristics—specifications that are notably absent from the term universal health coverage.
The Affordable Care Act was striving toward near universal health coverage, with a complex public and private financing scheme. In other words, you could envision a system similar to ours in which everyone has coverage, but that does not make it single payer. In fact, you can look to Switzerland to see how it has achieved universal health coverage through an individual mandate and a highly regulated private health insurance system. While many have compared Switzerland’s system to Obamacare, it has some notable differences in its financing structure. (Importantly, Switzerland also spends relatively more on health care per capita compared to other similar European countries—albeit, still significantly less than the United States.)
What Makes Single Payer Different?
There is a difference between single payer in concept and single payer in reality. There is no health care system in the world that truly has one single fund, with one single payer that covers everything related to health care services. There are flavors of single-payer systems that vary across dimensions of financing, administration, benefits, and delivery.
At the core of a single-payer health care system is how universal health coverage is financed. In other words, where does the money come from to pay providers to enable you to get access to health care services? In the purest form, there would be a single public fund, generated from tax revenue, which pays health care providers directly, with no out-of-pocket spending by consumers. In most cases, this would be the government as the single payer. In this scenario, you pay your taxes (much like we already do to fund Medicare Part A), and in turn you get to show up at a health care provider and receive services. Meanwhile the single payer (often a government entity) pays the provider on your behalf.
Along with financing, you have to think about who administers the system. In other words, how does the tax revenue make its way to the providers?
When asked the proverbial question, “if you like your health insurance, can you keep it?” Senator Sanders replied: “No, if you have a Medicare for all, there’ll be one insurance company in America. It’s not a question. Nobody in America likes their insurance company. What people like … is their doctor. They like their hospital. They like their nurses.”
People also tend to like the status quo. While some may quibble with the sentiment, the point here is: What is the role for private insurance in a single-payer system? The question of whether private insurance companies would still exist is important because this determines what exactly is meant by Medicare for all. Put another way, what Sanders is describing is not simply taking the current US Medicare program as we know it and enrolling everyone in it. Why not? While Medicare effectively provides universal health coverage for those ages 65 and older, it is not a single-payer system. Medicare does have significant financing through taxation (from individuals and employers), but the way that money flows to providers is not through a single entity.
Depending on which part of Medicare you are talking about (A, B, C, or D), you may be describing a program administered by the federal government or private insurance companies. Specifically, if you look at traditional Medicare, which includes Parts A and B and covers hospital and physician services, it is administered by the federal government. That means, as a consumer, you are pretty much dealing with Medicare directly. In contrast, you may instead choose to enroll in Medicare Advantage (Part C). In this scenario you are actually choosing a private health insurance plan (for example, Aetna, Humana, Blue Cross, and so forth) that will cover all your Medicare benefits. The federal government pays a private insurance company, and in turn, it must cover all the same services as Parts A and B, and often a little more (for example, dental and vision) in exchange for the additional premium you pay to the plan.
In 2017, one-third of beneficiaries receive Medicare benefits through Medicare Advantage. Similarly, Medicare Part D, which covers outpatient prescription drugs, is also administered by private insurance companies. One of the arguments you often hear in support of single payer is cost savings from eliminating administrative expenses associated with providers that bill multiple insurance companies, as well as the administrative expenses on behalf of those multiple insurance companies. Even if we entirely financed our health care system through taxation and made it universal, but in turn chose to administer it through multiple private insurance companies, many of the health care administration costs would not go away. Some refer to this as a multipayer model since multiple entities are actually reimbursing providers for services. In this way, Medicare Parts A and B are closer to a true single-payer system, and Parts C and D are not.
While the single payer is often a government entity, it can take many forms. In England, the single payer is the National Health Service. In Canada, you actually get your insurance card from one of the 13 provinces or territories.
Even in a single-payer government-financed system in which there are no (or low) out-of-pocket expenses, we would also have to decide on a clear list of benefits for the public plan. In Canada, each province must cover a certain core set of benefits, most of them free, and provinces can independently decide if they want to cover more.
Obamacare’s essential health benefits have been hotly debated as part of the recent repeal and replace discussion, and it would be no less controversial in a single-payer system. Single-payer critics often describe this as an example of government rationing of care. But guess what, we already ration care in the United States. We just do it based on price, ability to pay, type of employment, and the color of your skin. In contrast, in countries where the government ensures universal health coverage, that rationing is centralized, both in terms of what is covered and when you can get it. This approach is often achieved with the help of waitlists—a symbol of equitable distribution of resources or government interference in individual decision making, depending on one’s perspective.
Relatedly, we would need to decide whether individuals can purchase private insurance to supplement the public plan and how that private insurance interacts with the public coverage. Countries do this differently, again with different implications for equity. Many Canadians purchase supplemental coverage. However, in Canada, individuals are only able to purchase private insurance for benefits that are not covered by the public plan—this includes benefits such as dental care, prescription drugs, and vision. In contrast, in England individuals can purchase private insurance to supplement all of the benefits offered and often use this private coverage to jump to the front of the line and avoid longer wait times. Again, you see that even with a single-payer system at the core, administrative complexity can re-emerge around private supplemental insurance coverage.
Financing takes care of where the money comes from, but delivery accounts for who is providing care. In the United States currently, the majority of health care providers—both individual physicians and nurses as well as institutions such as hospitals and outpatient clinics—are private, meaning they are not employed or owned by a government entity. There are certainly exceptions—the Veterans Administration for example—but by in large, our health care system relies on private providers. Again, looking to our neighbors to the north, they primarily have private providers as well. In contrast, most hospitals in England are run by the National Health Service. Typically, proposals for single-payer systems in the United States suggest adopting a model more similar to Canada, where the majority of providers maintain their independence.
How Does Single Payer Fare on Costs?
Some economists assert that a single-payer approach will definitely lower overall health care costs, largely due to reducing administrative costs and profit, and creating efficiencies associated with centralized administration. Moreover, even with a mostly private health care delivery system, there are significant cost advantages of a single-payer approach. However, going from the current complex and expensive health care system to single payer is not by itself going to solve the cost problem. Specifically, there would need to be a larger role for the government in price controls, including setting prices for reimbursement rates, even implementing annual budgets for hospitals to keep costs under control. This would be a significant political and practical departure from the current status of private payer-provider negotiations that result in significant variation in prices paid.
You may have heard analysts suggest that there is enough money in the system already to cover everyone—you would effectively be moving the money flowing into the system from the current mixed financing schemes (for example, employers, employees, beneficiaries, and government) to taxation. The challenge remains, how do you get from here to there? You cannot flip a switch and implement single payer overnight. So, there will need to be an influx of revenue to start. Initial costs—particularly higher taxes—continue to be a concern for states seeking to pass or implement a single-payer approach, as we have seen most recently in California, Colorado, and Vermont. Similarly, an analysis of the financial feasibility of then-candidate for president Bernie Sander’s proposal for a national single-payer system further highlights this challenge, suggesting that the proposed tax increases would not be enough to fully finance the plan. Importantly, all of these financing estimates depend on the assumptions made about how the redistribution of health care financing will play out as well as concurrent government price controls, reimbursement rates, and utilization trends in the new system—all of which are at best unknowable and at worst highly political.
Where Does This Leave Us?
A single-payer health care system in the United States could eliminate the private health insurance system as we know it, squeeze costs out of the system by reducing administrative expenses and instituting global budgets, and provide universal coverage, while at the same time maintaining the independence of providers. However, it is worth noting, one person’s waste is another person’s job. Not surprisingly, significant political barriers to transitioning to such a system remain—the persuasive rhetoric to generate fear of government-run health care, the power of the health insurance lobby, and opposition by some health care providers groups—further reducing the likelihood of a feasible single-payer proposal any time soon.
In the meantime, more incremental strategies such as adding a public option to state health insurance exchanges, lowering the age of eligibility for the current Medicare program, or enabling people to buy in to Medicare may make for less contentious proposals. However, they will not confer the cost saving advantages of a truly single-payer system.
Signe Peterson Flieger has a career development professorship funded by Tufts Health Plan.