Title: Exploring Single-Payer Alternatives for Health Care Reform
Year: 2016
Authors: Jodi L. Liu
Institution: Pardee RAND graduate school
Funding Source: N/A
Plan Analyzed: S. 1782 / H.R. 1200
Percent Change in National Health Expenditure under M4A (1-year): -5% (2017)
Percent Change in National Health Expenditure under M4A (10-year): NS
Increase in Federal health expenditures: $446 billion (2017)

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Exploring Single-Payer Alternatives for Health Care Reform

Study Abstract:

The Affordable Care Act (ACA) has reduced the number of uninsured and established new cost containment initiatives. However, interest in more comprehensive health care reform such as a single-payer system has persisted. Definitions of single-payer systems are heterogeneous, and estimates of the effects on spending vary. The objectives of this dissertation were to understand single-payer proposals and to estimate health care spending under single-payer alternatives in the United States. Single-payer proposals are wide-ranging reform efforts spanning financing and delivery, but vary in the provisions. I modeled two sets of national scenarios – one labeled comprehensive and the other catastrophic – and compared insurance coverage and spending relative to the ACA in 2017. First, I estimated the effects of utilization and financing changes, and then I added the effects of “other savings and costs” relating to administration, drug and provider prices, and implementation. Due to coverage of all legal residents and low cost sharing, and prior to adjusting for other savings and costs, the comprehensive scenario increased national health care expenditures by $435 billion and federal expenditures by $1 trillion relative to the ACA. The range of the net effect of the other savings and costs in the literature was $1.5 trillion in savings to $140 billion in costs, with a mean estimate of $556 billion in savings. If this mean estimate was applied to the comprehensive scenario, national expenditures would be $121 billion lower but federal expenditures would still be $446 billion higher relative to the ACA. The catastrophic scenario also covered all legal residents but increased overall cost sharing, resulting in a reduction in national expenditures by $211 billion and federal expenditures by $40 billion even before adjusting for other savings and costs. Average household spending on health care in both sets of scenarios could be more progressive by income than spending under the ACA. I also developed an interactive, web-based cost tool that allows the savings and cost assumptions to be adjusted by any user. As the debate on how to finance health care for all Americans continues, this study provides increased transparency about economic evaluations of health care reform.

Overview:

• This comprehensive 2016 paper served as Jodi Liu’s dissertation, which utilizes a microsimulation model to account for costs/savings and individual level variation
• The paper contains four main chapters:
  • Chapter 1: A review of types of health care systems, single-payer systems worldwide, and brief overview of single-payer health care reform in the United States
  • Chapter 2: Definitions of single-payer health care systems and a survey of single-payer proposals
  • Chapter 3: Estimates of health insurance coverage and spending under single-payer scenarios
    • Liu looks at 2 policy scenarios: Comprehensive (comprehensive benefits without cost-sharing) and Catastrophic (coverage only against large financial loss)
    • Comp-Base Scenario – Single-payer bill as written: 98% Actuarial value (2% OOP for individuals)
    • Comp-Low AV Scenario – a 78% AV plan (22% OOP for individuals)
    • Comp-High Tax Scenario – 98% AV, but income tax adjusted upward to match federal expenditure under ACA
  • Chapter 4: Description of a cost tool that could be used to understand assumptions (not available)