Single Payer Healthcare: Beyond the Rhetoric

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Every presidential candidate gives mention to single payer healthcare, but do physicians really know the pros and cons? Here’s a quick review.

Throughout the presidential primary season this past year, there was considerable debate over the concept of single-payer healthcare among the candidates Bernie Sanders, Hillary Clinton, and even Donald Trump.

While the single-payer concept is widely discussed, there is often confusion – even among physicians – about what it is, what pros and cons are, and whether they is any real chance of the U.S. adopting it in either the short- or long-term.

“Single payer health care” simply means that all medical bills get paid from a single government-run pool of money. In single-payer health care, all providers are paid the same rates, and all citizens receive the same health benefits, regardless of their ability to pay. Examples of single-payer healthcare include the United Kingdom’s (UK) National Health Service (NHS), Australia’s Medicare, Canada’s Medicare, and Taiwan’s National Health Insurance. However, across the world, single-payer healthcare systems are administered in slightly different ways. In Canada, for example, the government contracts with private organizations while in the UK’s NHS, the government itself owns healthcare facilities and directly employs providers.

On its face, there are several benefits to a single payer approach. First and foremost is the administrative simplification that single-payer might bring. Administrative costs in the U.S. are staggering and account for about 25% of healthcare costs, compared to 12% in Canada. Certainly a considerable portion of these costs could disappear with a single payer and simplified billing procedures. In the near-term on the current trajectory, America’s planned move to complex payment models such as accountable care organizations, bundled payments, and capitation are likely to increase administrative costs.

Single-payer would also likely reduce costs in other ways. A major factor driving high healthcare prices in the U.S. are its super-high prices. Moving to single-payer would place considerable downward pressure on service prices – such as doctors’ visits and the cost of goods such as pharmaceuticals and devices. This is because the single government payer would have great leverage to negotiate lower rates. Take, for example, the medication esomeprazole (Nexium), the brand name proton-pump inhibitor. In the U.S., the average monthly cost is $305 compared to $30 in Canada [1].

Downward price pressures would certainly translate to both lower income and lower profits across providers and suppliers in the healthcare system. Historically, the American Medical Association has not endorsed single-payer healthcare [2], not to mention strong opposition from the drug and device industry. And finally, for patients, single payer healthcare essentially eliminates the problem of the uninsured. Importantly, people are treated equally so social and economic status does not impact access to health care.

Yet there are many potential downsides to single payer systems. Importantly, single payer would dramatically increase government controls and increase the size of the government. While government is clearly necessary to administer many public goods such as defense and infrastructure, there is concern that government control might lead to mismanagement and misallocation of resources in healthcare, reducing the quality of care over time. With less incentive for private industry to fill market needs because of lower profits and increased regulation, this could result in major slowdowns in innovation, fewer new technologies to treat patients and improvements in healthcare delivery.

For example, a recent report found that Canada ranked last in 11 OECD countries when it came to the time required to wait for an appointment with a family physician [3]. Waiting times for specialists in Canada average more than 18 weeks. These waiting times have been associated with higher mortality rates, with females being most affected with an increase in 3 deaths per 100,000 population due to waiting times alone in a recent report from the Frasier Institute [4].

There is also concern about the disruption to the economy that single payer would bring. Lower administrative costs would result in a major shrinkage of the insurance industry and other parts of the healthcare industry, which currently makes up more than 17% of the U.S. economy. This would result in the loss of jobs for many Americans. With less money in healthcare, this could also reduce the quality of workers who choose to pursue healthcare careers, particularly given sky-high costs of medical education in the United States compared to other countries. Finally, there are concerns that single payer would further support the concept of the welfare state, where people would have less incentive to work with greater support from the government for their basic needs.

The more important question is whether single-payer is even possible given the way the political system is set up in the United States. In the U.S., politicians must continuously raise money from campaign donors in order to stay in office and, in turn, become beholden to those donors. Donors who have a lot to lose with a move to single-payer have and would lobby vigorously to avoid disrupting the status quo and their business models. Ever year since 2002, the United States National Health Care Act, which would establish a single payer system in the United States has been introduced by John Conyers (D-MI). However, the bill has never been advanced. In addition, several state proposals have been put forward, but all have ultimately failed. The closest state to advance the idea was Vermont’s Green Mountain Health Care (GMC), which was passed in 2011. GMC was not a strict single-payer system because it still allowed private insurers to operate in the states. However, ultimately Vermont’s plans were abandoned in December 2014, with concerns over costs being too high and tax increases.

Ultimately, don’t hold your breath waiting for the United States to implement single payer healthcare. While there are clearly potential benefits, the United States will not adopt single payer without a dramatic change in the way that political campaigns are funded.

Despite this, there are reasons to be hopeful that U.S. healthcare policy will work to achieve some of the same goals – specifically lower healthcare costs and higher rates of insurance – in other ways. The Affordable Care Act (ACA) of 2010, for example, has many provisions that have reduced the numbers of uninsured in other ways, such as through Medicaid expansion and insurance exchanges. Provisions in both the ACA and the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 will also test and implement new ways to pay and measure quality of care for providers that may also place similar downward pressure on costs, while leaving intact the capitalism in American healthcare.

However, the long-term ability of these laws to impact care quality and outcomes, and overall costs still remains an open question.


REFERENCES

  1. http://usuncut.com/news/us-drug-prices-in-the-us-are-literally-insane-when-compared-to-other-nations/
  2. http://pnhp.org/blog/2008/10/31/ama-position-on-single-payer/
  3. http://www.huffingtonpost.ca/2014/01/20/doctor-wait-time-canada_n_4631118.html
  4. https://www.fraserinstitute.org/sites/default/files/effect-of-wait-times-on-mortality-in-canada.pdf

ABOUT THE AUTHOR

HEALTH POLICY SECTION EDITOR Dr. Pines is a practicing emergency physician and a Professor of Emergency Medicine and Health Policy at the George Washington University.

4 Comments

  1. Art Fougner MD on

    If Single-Payor were so great, why did Sen. Sanders’ home state of Vermont ultimately decide against it?

  2. A single state, especially a small one like Vermont, can never realize the kind of scale efficiencies that would occur with single-payer on a federal level. Plus, the Vermont plan had a lot of exceptions. On a federal level, the infrastructure already exists: Medicare. All that would need to be done administratively is allow people of all ages into the Medicare program. There would be no start-up costs such as Vermont was facing to create a new system from scratch.
    The political opposition is stoked by the lobbyists for the insurance companies and the pharmaceutical companies. Everyone loves Medicare now. Voters would love it even more if everyone were covered. But the insurance lobby doesn’t want to let them find out.

  3. Boatswain2PA on

    To say that a single payer system would allow “and all citizens receive the same health benefits, regardless of their ability to pay” is disinegenuous at best. What a single payer system would do is set a basement level of health benefits available to everyone. The wealthy here, just like the wealthy in more socialist countries that already have single payer systems, would avoid this bottom-dollar healthcare and seek out boutique health care. Look what the Premier of Newfoundland (that would be Newfoundland CANADA who has the socialist healthcare system that American liberals salivate over) went for his cardiac procedure: http://www.medpagetoday.com/cardiology/acutecoronarysyndrome/18279

    But as the author said, we already HAVE a basement-level healthcare system in the United States called Medicare. And, being government run, it’s not only incredibly expensive, but it doesn’t give very good coverage and results in lengthy waiting times and poor specialist availability in much of the country. Yeah…let’s force everyone into THAT program.

    Finally, MPIUS suggests that the Vermont experiment failed because it wasn’t big enough. This is much the same argument that leftists/liberals/socialists always use when reflecting on failed socialist programs/governments; namely that “it wasn’t big enough” or that “we didn’t have the right people running it.”

    And that leads us to the single biggest problem with America’s slide toward socialism…it will always be run by people who need more power, more authority, and more of our money. This centralization of power, authority, and money leads to corruption, inefficiencies, and then failure.

    Better to let people enter into contracts with various insurance companies and/or pay for their own medical costs. Open up HSA’s to everyone. Remove the regulations that make insurance exhorbitantly expensive and limits competition.

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