What is single-payer health reform?

Universal coverage for all medically necessary care – health care that’s publicly financed but largely privately delivered.

In the U.S. context, “single payer” usually refers to “single-payer national health insurance,” a nonprofit system in which everyone is covered under a single public or quasi-public plan that pays for care, but the delivery of care remains largely in private hands.

Under a single-payer system, every resident of the U.S. would be covered from birth to death for all medically necessary care, including doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs. Patients would no longer face financial barriers to care such as premiums, copays and deductibles, all of which would be abolished. Coverage would be portable – e.g. no longer tied to employment or to an insurer’s network of providers – and truly universal.

Patients would have free choice of doctor and hospital. The restrictive networks associated with today’s private insurance companies would be eliminated.

Doctors would regain autonomy over patient care, no longer micromanaged by private insurers or burdened by costly paperwork.

The single-payer system’s overarching aim is to provide comprehensive health coverage to everyone in the country, and to do so equitably, efficiently and at lower cost to individuals and the nation.

Key features of a single-payer program are concisely enumerated here. For a recent, detailed description of such plan, see the Physicians’ Proposal for Single-Payer Health Reform published in the American Journal of Public Health.

How can we afford it?

By slashing administrative waste, retaining current public funding of care, and introducing modest new progressive taxes.

The system would be funded in part by the savings obtained from replacing today’s welter of inefficient, profit-oriented, private insurance companies – and the system-wide administrative waste they generate – with a single streamlined, nonprofit public payer. Such savings, estimated in 2017 to be about $500 billion annually, would be redirected to patient care.

Existing tax revenue would fund much of the system. According to a 2016 study in the American Journal of Public Health, tax-funded expenditures already account for about two-thirds of U.S. health spending. That revenue would be retained and supplemented by modest new taxes based on ability to pay, taxes that would typically be fully offset by the elimination of today’s premiums and out-of-pocket expenses for care. The vast majority of U.S. households – one study says 95 percent – would come out financially ahead.

The system would also reap savings from its powerful bargaining clout, e.g. its ability to negotiate with drug and medical supply companies for lower prices.

It would also save money by giving hospitals annual lump-sum (“global”) budgets to run their operations, rather than have them bill for every Band-Aid, and by regulating hospitals’ capital expenditures (new buildings, major equipment) on the basis of community need. All hospitals would be required to transition to nonprofit status, another source of the system’s savings.

Over the past several decades, more than two dozen independent analyses of federal and state single-payer legislation by agencies such as the Congressional Budget Office, the General Accountability Office, the Lewin Group, and Mathematica Policy Research Group have found that the administrative savings and other efficiencies of a single-payer program would provide more than enough resources to provide first-dollar coverage to everyone in the country with no increase in overall U.S. health spending.

Will a single-payer system work?

Other countries show it works well. Our own Medicare program is instructive.

Yes. Single-payer programs in other nations such as Canada, Taiwan, and Australia show that it’s possible to provide high-quality care for everyone at about half the cost, per capita, that the U.S. is spending now. Medical outcomes in such systems are generally as good if not better than those with private insurance in the U.S., and everyone is covered.

Our traditional Medicare program, which provides coverage for our nation’s seniors and the severely disabled, operates with low overhead, about 2 percent, in comparison with private insurers’ average overhead of about 12-14 percent. And Medicare enjoys very strong public approval ratings. That said, today’s Medicare suffers from serious deficiencies such as high cost sharing and gaps in coverage. And because it operates alongside many other insurance plans, hospitals and other providers have to maintain their complex and expensive cost tracking and billing systems. A single-payer national health insurance program would correct those deficiencies, creating, in effect, an improved version of Medicare for all.

Do U.S. doctors support this concept?

Surveys show most doctors would welcome it.

Yes. Doctors are increasingly fed up with the bureaucratic hassles, paperwork and meddling imposed on them by today’s private-insurance-based system. They want to regain autonomy over patient care – to do what they were trained to do. They are also acutely aware of the human suffering caused by the lack of access to care under our existing arrangements.

National and state surveys of physician attitudes have shown a marked shift over the past few decades toward support for a single-payer plan.

A national survey published in Annals of Internal Medicine in 2008 showed that 59 percent of U.S. physicians support national health insurance, an increase of 10 percentage points from five years before.

In August 2017, a survey conducted by Merritt, Hawkins and Associates, a physician recruiting firm, found that 56 percent of U.S. physicians either strongly support or somewhat support a single-payer system.

Is this program ‘socialized medicine’?

No. It’s closer to Canada’s system than the U.K.’s.

In socialized medicine systems, hospitals are owned by the government and doctors are salaried public employees. Although socialized medicine has worked well for our Veterans Administration, and for countries that have single-payer “national health services” like England, Sweden and Spain, that way of organizing care is not the same as what we are talking about here.

Canada is often cited as an example of a country with single-payer health insurance. Canada’s federal and provincial governments handle the system’s financing, but care is delivered mainly through doctors in private practice and privately owned hospitals.

In many ways our traditional Medicare program, which is a form of social insurance, bears a resemblance to single-payer national health insurance.

Is there support for this approach in Congress?

Support in the House and Senate is at an all-time high.

The Medicare for All Act of 2019, H.R. 1384, is currently in Congress. The bill would establish an American single-payer health insurance system, publicly financed and privately delivered, that builds on the existing Medicare program. H.R. 1384 was introduced by Rep. Pramila Jayapal and more than 100 co-sponsors in February of 2019. Its predecessor, H.R. 676, was co-sponsored by a majority of the House Democratic caucus in the previous (115th) Congress.

Polls over the past two decades show that about two-thirds of the U.S. population supports this approach.

On the Senate side, Sen. Bernie Sanders has introduced the Medicare for All Act of 2019, S. 1129, which had 14 original co-sponsors. PNHP has welcomed Sanders’ bill, but notes it could be strengthened in several important ways.

Won’t we be letting politicians run the health system?

No. Health professionals will be at the center of a publicly accountable, nonprofit system.

In a single-payer system, medical decisions will be made by doctors and patients together, without insurance company interference – the way they should be.

Right now, many health decisions are made by corporate executives behind closed doors, and their primary interest is in maximizing their company’s profit, not providing care. Their behavior is unaccountable to the public.

In contrast, in a public and nonprofit single-payer system, patients will have top priority and the public will have a say in how the program’s run. The single-payer bills in Congress have explicit provisions for public accountability and transparency in the management of the system. Persons who violate the public’s trust will be held to account.

Won’t single payer result in rationing and long waiting lines?

Not with good management and our nation’s abundant medical resources.

No. It will eliminate the rationing going on today. The U.S. already rations care based on ability to pay: if you can afford care, you get it; if you can’t, you don’t.

In 2017, an estimated 30,000 unnecessary, preventable deaths were linked to lack of health insurance. Many more people skipped treatments that their insurance company refused to cover. Those are forms of rationing.

A single-payer system will ensure that everyone has access to a single tier of high-quality care, based on medical need, not ability to pay.

Long wait times for non-urgent procedures in some countries, e.g. hip replacements in Canada, are often cited by opponents of single-payer reform as an inevitable consequence of universal, publicly financed health systems. They are not. Wait times are a function of a health system’s capacity and its ability to monitor and manage patient flow. In recent years Canada has shortened wait times for non-urgent procedures by using better queuing techniques. In the case of urgent care, wait times have never been an issue. Moreover, we spend twice as much per person as Canada does, enough to assure that we wouldn’t have waits in our single payer system.

Won’t a publicly financed system stifle medical research?

No. Most groundbreaking research is publicly funded already.

Most breakthrough research is already publicly financed through the National Institutes of Health (NIH). According to the NIH website, as of 2017 at least 94 NIH-supported researchers in medicine have been sole or shared recipients of 49 Nobel Prizes.

Many of the most important advances in medicine have come from single-payer nations. Often, private firms enter the picture only after the public has paid for the development and clinical trials of new treatments. The HIV drug AZT is one example.

On average, pharmaceutical drug companies spend two and half times as much of their revenue on marketing and administration as they do on research and development. Negotiating lower prices will permit all Americans to have access to needed drugs without hurting research.

What will happen to malpractice costs under single payer?

They will fall dramatically.

First, about half of all malpractice awards go to pay present and future medical costs (e.g. for infants born with serious disabilities). Single-payer national health insurance will eliminate the need for these awards. Second, many claims arise from a lack of communication between doctor and patient (e.g. in the Emergency Department). Miscommunication/mistakes are heightened under the present system because physicians don’t have continuity with their patients (to know their prior medical history, establish therapeutic trust, etc.) and patients aren’t allowed to choose and keep the doctors and other caregivers they know and trust (due to insurance arrangements). For these and other reasons, malpractice costs in three nations with single payer are much lower than in the United States, and we would expect them to fall dramatically here.

Won’t our aging population bankrupt the system?

The experience of other nations show this fear is unfounded.

Studies show that the aging of the population is responsible for only a small fraction of our rising health care costs. Moreover, European nations and Japan have much higher percentages of elderly citizens than the U.S. does, yet their health systems remain stable with much lower health spending. The lesson is that national health insurance is a critical component of long-term cost control. In addition to freeing up resources by eliminating private insurance waste, single payer encourages prevention through universal access and supporting less costly home-based long-term care rather than institutionalization.

What will happen to all of the people who do billing or work for insurance companies?

PNHP has worked with labor unions and others to develop plans for a jobs conversion program.

The new system will still need some people to administer claims. Administration will shrink, however, eliminating the need for many insurance workers, as well as administrative staff in hospitals, clinics and nursing homes. More health care providers, especially in the fields of long-term care, home health care, and public health, will be needed, and many insurance clerks can be retrained to enter these fields. Many people now working in the insurance industry are, in fact, already health professionals (e.g. nurses) who will be able to find work in the health care field again. But many insurance and health administrative workers will need a job retraining and placement program. We anticipate that such a program would cost about $20 billion, a small fraction of the administrative savings from the transition to national health insurance.

PNHP has worked with labor unions and others to develop plans for a jobs conversion program with would protect the incomes of displaced clerical workers until they were re-trained and transitioned to other jobs. Both H.R. 1384 and S. 1129 allocate funds for this purpose.

How will single payer impact the business community?

Single payer will eliminate the costly distraction of administering health benefits.

The ability of U.S. businesses to accurately budget for their employees’ health care expenses is critical, but nearly impossible in today’s environment. Costs are subject to steep, unpredictable increases, and are unevenly and unfairly distributed. Companies that provide generous benefits, and those with older or sicker workers face crippling costs, while others evade their responsibility to chip in, leaving their employees with no or inadequate coverage.

In contrast, nations that manage health care expenses in a single risk pool provide their businesses with much greater financial predictability, and costs are distributed more fairly. Thanks to a single-payer system’s ability to reduce needless uncertainty and variation in one part of the budget, a company will be able to allocate more resources toward activities that directly enhance its central business mission and its ability to compete in the global marketplace.

The complexity of our nation’s current health insurance arrangements has created a uniquely American industry of consultants and advisers who assist companies in annual renegotiations with insurers and other firms, in redesigning benefits plans, in communicating such plans to employees, and more. These activities amount to a costly diversion of both time and money from a company’s central goals. Warren Buffett has said health care costs hurt businesses more than corporate taxes do, and calls medical costs “the tapeworm of American economic competitiveness.” An improved Medicare for all will eliminate this business distraction and enable human resource departments to refocus on more strategically valuable roles within their companies.

What about ‘Obamacare’?

The Affordable Care Act, despite its gains, leaves tens of millions uninsured and underinsured.

The Affordable Care Act expanded coverage to about 20 million Americans by requiring people to buy private insurance policies (partially subsidizing those policies with government payments to private insurers) and by expanding Medicaid. It roughly halved the number of uninsured and curbed some of the private insurance industry’s worst practices.

Even so, as of 2017, about 28 million people remain uninsured, and an estimated 31 million would still be uninsured in 2027 if the ACA remained in place, according to the Congressional Budget Office. Tens of millions more are underinsured (an estimated 41 million in 2016), with skimpy policies and high deductibles, and would face financial disaster should they fall seriously ill. Even those with “good coverage” are vulnerable to financial stress and medical bankruptcy.

The ACA preserves our fragmented financing system, and has actually increased the administrative bloat in the system, diverting dollars from needed medical care.

Meanwhile, the private insurers continue to strip down policies, maintain restrictive networks, and deny care. They also continue their efforts to privatize and wring profits out of the historically public Medicare and Medicaid programs.

In short, the ACA tinkered around the edges of our existing dysfunctional arrangements, but it hasn’t fundamentally fixed the problem.

What about adding a ‘public option’ or ‘Medicare buy-in’ to the ACA?

Patchwork measures won’t fix a structurally flawed private-insurance-based system.

A government-sponsored “public option” in the ACA’s marketplaces will not fix the health care system for two reasons.

First, a public option would leave today’s multiple payers in place, merely adding one more payer to our already fragmented system. It would thereby forgo at least four-fifths of the administrative savings available through a single payer. It would do nothing to streamline the administrative tasks (and costs) of hospitals, physician offices, and nursing homes, which would still contend with multiple payers and hence still need the complex cost-tracking and billing apparatus that drives up administrative costs.

Second, a quarter-century of experience with public/private competition in the Medicare program (traditional Medicare vs. private Medicare Advantage plans) demonstrates that the private insurers will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry-picked healthier seniors and have exploited regional health spending differences to their advantage.

Thus, under the ACA, relying as it does on the participation of large, for-profit insurers, a public option would not lean toward single payer, but toward the segregation of patients, with profitable ones in private plans and the unprofitable ones concentrated in the public plan, dooming the latter to failure.

As for a “Medicare buy-in” that would lower the age of eligibility for Medicare to 55, for example, such a buy-in would only work if enrollment were mandatory. Otherwise it would become the place where all the sickest patients get dumped. That might be OK for the sick enrollees, since Medicare is better and more secure than private coverage, but it would drive total health care costs (and premiums) up, not down.

Our current “system” is structurally flawed; patching it up is not a real solution.

Is achieving single payer ‘unrealistic’?

Many landmark reforms were deemed unrealistic – until they were enacted.

Some say the goal of establishing a single-payer system in the U.S. is “unrealistic” or “politically infeasible.” While it’s true that single-payer health reform faces formidable opposition – especially from the private insurance industry, Big Pharma, and other for-profit interests in health care, along with their allies in government – there is no reason why a well-informed and organized public, including the medical profession, cannot prevail over these vested interests.

We should not sell the American people short. At earlier points in U.S. history, the abolition of slavery and the attainment of women’s suffrage were considered unrealistic, and yet the movements to achieve these goals were ultimately victorious.

On a practical level, our existing Medicare program – one that doctors, hospitals and other providers are very familiar with – provides a readymade framework for building a universal, single-payer system. This existing infrastructure will help smooth the transition.

What is truly “unrealistic” is believing that we can provide universal and affordable health care, and control costs, in a system dominated by private insurers and Big Pharma.