Single Payer

 VII. Key Issues: Regulation & Reform >> C. Health Reform >> National Health Reform Plans >> Single Payer (last updated 4.5.17)

Key Questions

What is the Policy Problem?

The U.S. health care system is the most expensive in the world, yet left 47 million uninsured in 2009, is very complicated and has high administrative costs and excess profits. Single payer advocates believe that universal coverage could be achieved far more simply and at a lower cost than today’s system or alternative approaches to reform. See Why US Needs a Single Payer System (PNHP) for details.

What are the Policy Options?

Single payer proposals fall into three major categories:

UK-style National Health System

The National Health Service (NHS) is the name of the public health services of England, Scotland and Wales, and also can refer to services in Northern Ireland. NHS was one of the major social reforms that followed the Second World War, and is based on the core principles of being comprehensive, universal and free at the point of delivery.  UK residents are not charged for most medical treatment, with exceptions such as a fixed charge for prescriptions.

Services. Although treatment on the NHS is free at the point of delivery, there may be other costs (for example, transport to the hospital).

  • GP services: Anyone in England can register and consult with a GP without charge. GPs are self-employed and have contracts with NHS England to provide services for the National Health Service.
  • Hospital treatment: Hospital treatment is free to people classed as ordinarily resident in the UK.
  • Dental services are administered differently.
  • Non-residents are entitled to general practice physicians (GPs) and emergency treatment but not hospital admission.

NHS Governance. The Department of Health published the NHS Constitution in March 2011. The governance structure includes:

  • The NHS Choices Commissioning Board
  • The NHS Choices Operations Board
  • The NHS Choices User Council
  • The NHS Choices Delivery Board
  • The Clinical Information Advisory Group

Funding

The NHS is primarily funded from general taxation and National Insurance contributions. An increase in National Insurance rates in 2001 to boost NHS funding increased the proportion paid for by National Insurance, although general taxation still accounts for around 80 per cent of NHS funding. Since charges for prescriptions, dental treatment and spectacles were introduced in the early 1950s, a small amount of funding has come from patient charges.
National Insurance (NI) is a system of taxes paid by workers and employers. Originally a contributory system of insurance against illness and unemployment, it later also provided retirement pensions and other benefits. National Insurance Contributions (NICs) are paid by employees and employers based on earnings. National Insurance is said to have become more redistributive over time, removing the fixed upper contribution limits, albeit with a much lower rate payable by employees on income above a certain level. In the future, the link between an individual’s contribution record and the remaining contributory benefits could be weakened further.

Canadian-style Single Payer

This approach is best illustrated by the proposal supported by PNHP:

  • Coverage. A single public plan would cover every American for comprehensive medically-necessary care (including long-term care, mental/dental health). Boards of expert and community representatives would assess which services are unnecessary or ineffective, and exclude them from coverage. Private insurance duplicating the public coverage would be proscribed. Patient co-payments and deductibles would be eliminated.
  • Payment for Hospital Services. The NHI would pay each hospital a monthly lump sum to cover all operating expenses – that is, a global budget. The hospital and the NHI would negotiate the amount of this payment annually, based on past expenditures, previous financial and clinical performance, projected changes in levels of services, wages and input costs, and proposed new and innovative programs. Hospitals would not bill for NHI-covered services. Hospitals could not use any of their operating budget for expansion, profit, excessive executives’ incomes, marketing, or major capital purchases or leases. Major capital expenditures would come from the NHI fund, but would be appropriated separately based upon community needs. For-profit hospitals would be converted to not-for-profit status, and their owners compensated for past investment.
  • Payment for Physicians & Outpatient Care. The NHI would include three payment options for physicians and other practitioners: fee-for-service; salaried positions in institutions receiving global budgets; and salaried positions within group practices or HMOs receiving capitation payments. Investor-owned HMOs and group practices would be converted to not-for-profit status. Only institutions that actually deliver care could receive NHI payments, excluding most current HMOs and some practice management firms that contract for services but don’t own or operate any clinical facilities.
  • American Health Security Act of 2013. This single payer proposal introduced by Senator Bernie Sanders (D, VT), provides comprehensive taxpayer-financed health benefits without cost-sharing.

Medicare for All

What Are the Deadweight Losses Associated with Single Payer?

Excess burden is a measure of lost economic output arising from tax-induced disincentives to work, save, or consume.

  • Danzon (1992) estimates the deadweight cost of tax finance in Canada to be at least 17% of claims.
  • Zycher (2007)–based on the most conservative estimate of the social cost of collecting taxes–this study estimates that the excess burden of a universal Medicare program (24-25% of Medicare outlays) would be twice as high as the administrative costs of universal private coverage.

Analysis

Arguments in Favor of Single Payer

Arguments Against Single Payer

Policy Initiatives

Federal Initiatives

Sanders Health Plan

Presidential candidate Bernie Sanders has advocated a Medicare-for-All plan that would provide all Americans with Canadian-style health care (i.e., comprehensive coverage with no copayments or deductibles). There are several competing cost estimates for this plan.

  • Friedman, GeraldUnited States can afford single payer health care program (1.17.16). This 2-page analysis estimated that total U.S. health spending over the decade from 2017-2026 would be $51.5 trillion under the status quo but only $40.9 trillion under the Sanders plan. Achieving this $10.6 trillion in savings would require federal health spending to increase by $13.8 trillion over that period–roughly a 50% increase in federal health expenditures relative to the status quo.
  • Friedman, GeraldWhat would Sanders do? Estimating the economic impact of Sanders programs (1.28.16). This includes a 6-page appendix detailing the costs and savings from the proposed plan. Unlike the earlier analysis, it provides year-by-year accounting of costs and savings as well as much more detailed explanation of assumptions and analysis of potential sources of additional federal revenues required by the plan.
  • Roy, AvikBernie Sanders’ Single-Payer Health Care Plan Would Increase Federal Spending By At Least $28 Trillion. Forbes.com (1.18.16). This analysis demonstrates that the required increase in federal spending would be at least $28 trillion rather than $13.8 trillion because Friedman failed to account for how much health spending current is financed by state and local governments. Rather than give back any savings to taxpayers, state and local governments likely will find other ways to spend those funds.
  • Conover, Christopher. Why Bernie Sanders’ Health Plan Will Cost At Least 40% More Than Advertised. Forbes.com (1.20.16). This analysis shows that taking into account moral hazard losses that were severely underestimated in the Friedman analysis, the actual cost of the Sanders plan would be at least 40% higher: $57.4 trillion rather than $40.9 trillion. This would represent an increase in health spending of 11.5% compared to the status quo.
  • Thorpe, Kenneth. An Analysis of Senator Sanders Single Payer Plan (1.27.16). This analysis shows that the Sanders plan is underfunded by an average of $1.1 trillion a year. It also includes a distributional analysis that concludes 71% of those with private coverage would pay more under the Sanders plan, along with 85% of those on Medicaid and 66% of those on Medicare.

State Initiatives

ColoradoCare

  • Universal Health Care for Colorado. Colorado may become the first state to establish a universal health care system in the U.S. In July, the Secretary of State certified a proposed initiative for the 2016 ballot that would create a universal cooperative plan called ColoradoCare. They have to collect 99,000 valid signatures by October 16 (they are planning to get 120,000)… The ColoradoCare plan is based upon a proposal by State Senator and physician Dr. Irene Aguilar. She was prompted to work towards a state-wide initiative after hearing numerous complaints about the Affordable Care Act (ACA or Obamacare). She says that under the ACA, premiums are too high, some people can’t afford health insurance even with the subsidies and copays, co-insurance and deductibles can be prohibitive for people with chronic diseases… ColoradoCare is possible due to the ‘state opt-out’ Section 1332 clause of ACA which allows a state to create its own system if it is as good as the ACA.” (Boulder Weekly, 8.27.15)
  • Bernie Sanders: Colorado Could “Lead the Nation” with its Universal Healthcare Ballot Measure. “To create ColoradoCare, voters in November would have to amend Colorado’s constitution like they did in 2013 when voters allowed the state to legalize the sale and use of recreational marijuana. The ballot measure comes at a shaky time for Colorado’s current health care system. The state’s only nonprofit health insurance co-op, HealthOP, recently collapsed, becoming the seventh in the nation to do so. The implosion, which HealthOP officials blame on both the feds and state regulators, has left more than 80,000 Coloradans scrambling to find new coverage for 2016. But even if voters pass the ballot measure for universal health care, Colorado would still need a green light from the feds— and the country would have a new president by the time such a system would be able to even assemble. Realistically, the soonest it could happen would likely be January of 2018 under the most optimistic of circumstances. Dealing with whoever is next in the White House would be key.” (Colorado Independent, 10.26.15)
  • According to the New York Times (11.27.15), an initiative to replace the ACA with a government-run health care program that would largely cut private insurers out-qualified for the 2016 ballot this month after supporters submitted over 158,000 signatures. “The new system would be expensive, raising $25 billion a year in revenue from a 6.67 percent payroll tax on employers and a 3.33 percent tax deducted from workers’ paychecks.”
  • Don’t Let ObamaCare’s Failures Snowball Into Single Payer. “Like an avalanche, the Affordable Care Act has swept through the Rocky Mountain State, leaving a trail of destruction in its wake. At the end of 2013, 335,000 cancellation notices went out to customers whose plans were now deemed illegal by federal regulators. Nearly 200,000 cancellations for the same reason will come at the end of this year. As for Colorado HealthOP, the state’s co-op, which was the largest insurer on the ObamaCare exchange, it shut down in October, leaving more than 80,000 members without coverage. Huge premium increases loom for the remaining exchange plans: an average of 11.7%, according to the state’s calculation. It shouldn’t be a surprise that many Coloradans want to abandon ObamaCare and replace it with something new. What’s worrying is that the state’s liberals and progressives have been mobilizing to replace it with a single-payer system, like the ones in Canada or the United Kingdom. Nascimento, Nathan. (Wall Street Journal, 12.11.15)
  • ColoradoCareYES: ColoradoCare Is Better Than the Alternatives. “Comparisons to Canada, the Department of Veterans Affairs and Vermont’s dissimilar programs do not make a valid critique. Coloradans have a chance to change from the current system that was designed under the heavy influence of Washington lobbyists and insurers and replace it with a statewide financing plan operated as a cooperative business, owned by the patients and providers of Colorado. Being outside of partisan politics and operated as a locally owned business, it promises to perform far better than the current mess. This business model would eliminate $6.2 billion of unnecessary administration that gets in between patients and providers. While the choice of private insurance will remain, it is correct to say that there will be little market because all residents will have better than platinum coverage on the exchange. Savings are spent on health care, not administrators, and it still leaves Coloradans paying $4.5 billion less than is currently being spent on health care. Mr. Nascimento did get one thing right. If Colorado succeeds in taking back control of its health care with ColoradoCare, it will be so successful that it will snowball across the country.” Miller, Ivan J. (Wall Street Journal, 12.20.15)
  • Beyond Obamacare: Colorado Considers Single-Payer Model. Under the initiative, funded largely by a 10-percent tax on payroll, Colorado residents would qualify for “comprehensive” health insurance coverage. According to a study from the Colorado Health Institute, ColoradoCare would cover nearly 83 percent of the state’s residents, including those currently enrolled in Medicaid. The rest of the state’s population would receive coverage through Medicare or the Department of Veterans Affairs. In the Centennial State, supporters of the plan are hoping that ColoradoCare will expand access to coverage for its residents. Opponents, meanwhile, are warning that government-run insurance will cause residents and health care providers to flee the state in search of more options and better quality care. ‘ColoradoCare is a higher dosage of the same failed prescription of Obamacare,’ Jonathan Lockwood, executive director of Advancing Colorado, told The Daily Signal. ‘It’s Obamacare that has made ColoradoCare possible.’… a bipartisan campaign called Coloradans for Coloradans and led by state Treasurer Walker Stapleton, a Republican, and former Gov. Bill Ritter, a Democrat, launched in January with the goal of defeating Amendment 69.” (Daily Signal, 4.14.16)
  • Colorado Weighs Replacing Obama’s Health Policy With Universal Coverage. “The state-level effort, which supporters here call the ColoradoCare plan, would do away with deductibles. It would allow patients to choose doctors and specialists without distinguishing between those ‘in network’ and those ‘out of network.’ It would largely be paid for with a tax increase on workers and businesses, and cover everyone in the state. Supporters say most people would end up saving money. Insurance groups, chambers of commerce and conservatives have already lined up in opposition. They say the plan’s details are vague, its size and cost galling. The proposed health system would have a budget bigger than that of Colorado’s entire state government. A new 10 percent tax on payroll and incomes to pay for the system would push Colorado’s tax rates to some of the highest in the nation. The proposal’s chance of success is dubious. Colorado has a mixed record when it comes to ballot measures, though it has passed some notable ones over the years, including marijuana legalization and the Taxpayer Bill of Rights, an anti-tax, anti-spending constitutional amendment.” (New York Times, 4.28.16)
  • Prominent Democratic Consultants Sign Up to Defeat Single Payer in Colorado. Coloradans for Coloradans, an ad-hoc group opposing single payer in Colorado, revealed that it raised $1 million over the first five months of this year. The group was formed to defeat Amendment 69, the ballot measure before voters this year that would change the Colorado constitution and permit a system that would automatically cover every state resident’s health care. The anti-single-payer effort is funded almost entirely by health care industry interests, including $500,000 from Anthem Inc., the state’s largest health insurance provider; $40,000 from Cigna, another large health insurer that is current in talks to merge with Anthem; $75,000 from Davita, the dialysis company; $25,000 from Delta Dental, the largest dental insurer in the state; and $100,000 from SCL Health, the faith-based hospital chain… The filing reveals that the anti-single-payer group has retained the services of Global Strategy Group, a Democratic consulting firm that has served a variety of congressional candidates and is currently advising Priorities USA Action, one of the Super PACs backing Clinton’s bid for the presidency.” (The Intercept, 5.3.16)
  • OK, Single Payer Fans: Here’s your chance to make it happen. “This would be better coverage than under the best ACA policies, if not quite as good as Bernie’s ‘everything covered for everyone at no out of pocket cost!’ ColoradoCare is not without it’s (sic) problems. The lack of any co-pays or deductibles of any sort is concerning for reasons I’ve noted earlier, and there are some other serious issues to be debated and discussed… but the bottom line is that it’s more realistic and far better thought out than Bernie’s national plan is. This is the best opportunity for achieving single payer that you’re likely to see anytime soon. More to the point, it’s actually on the ballot in six months. So if you’re a Colorado resident who’s serious about universal, comprehensive single payer, this is your chance to have it. If you live outside Colorado, this is your chance to help get the ball rolling in one state. Every other state will be watching very closely to see how ColoradoCare turns out… and how it works out if it manages to pass.” Gaba, Charles. (ACASignups, 5.18.16)
  • Colorado Rejects Single Payer Healthcare Insurance. “Colorado voters dealt a blow to single payer health insurance, a controversial ballot initiative that would have provided medical coverage to all state residents through a payroll tax. The idea was backed by progressives, but opposed by the business community, health insurers, Democratic Gov. John Hickenlooper and members of Congress from both parties. About 80 percent of voters cast ballots against the measure, according to a tally Tuesday night by the Denver Post.” (Forbes, 11.9.16)

ColoradoCare Resources

Vermont’s Green Mountain Care

  • Why Single Payer Died in Vermont. “Vermont under Shumlin became the most visible trailblazer. Until Wednesday, when the governor admitted what critics had said all along: He couldn’t pay for it. ‘It is not the right time for Vermont’ to pass a single-payer system, Shumlin acknowledged in a public statement ending his signature initiative. He concluded the 11.5 percent payroll assessments on businesses and sliding premiums up to 9.5 percent of individuals’ income ‘might hurt our economy.’ Vermont’s outcome is a ‘small speed bump,’ said New York Assembly member Richard Gottfried, who’s been pushing single-payer bills for more than 20 years. But opponents says it’s the end of the road. ’If cobalt blue Vermont couldn’t find a way to make single-payer happen, then it’s very unlikely that any other state will,’ said Jack Mozloom, spokesman for the National Federation of Independent Business.” (Politico, 12.20.14)
  • According to Charles Gaba of ACASignups (5.18.16), the funding of the Green Mountain Care proposal was what led to its downfall: “The state also had to align Green Mountain Care with provisions in the Patient Protection and Affordable Care Act, passed by the United States federal government in 2010, which required the creation of a health care exchange in individual states. To launch fully, Green Mountain Care would have had to gain approval from the federal government to use federal health finances to fund the state program. As of April 2014, Vermont had yet to craft a bill that would address the $2 billion in extra spending necessary to fund the single-payer system, and by the end of the year, the state abandoned their plan for universal health care.”

Resources

Best of Web

Organizations

News

  • Waiting Your Turn: 2015 Report, Canada’s Single Payer System. “This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have not improved since last year. Specialist physicians surveyed report a median waiting time of 18.3 weeks between referral from a general practitioner and receipt of treatment—slightly longer than the 18.2 week wait reported in 2014. This year’s wait time is 97% longer than in 1993 when it was just 9.3 weeks. There is a great deal of variation in the total waiting time faced by patients across the provinces… There is also a great deal of variation among specialties. Patients wait longest between a GP referral and orthopaedic surgery (35.7 weeks), while those waiting for radiation oncology begin treatment in 4.1 weeks. The total wait time that patients face can be examined in two consecutive segments. The first segment occurs from referral by a general practitioner to consultation with a specialist. The waiting time in this segment is 8.5 weeks this year, roughly the same as in 2014. This wait time is 130% longer than in 1993, when it was 3.7 weeks. The shortest waits for specialist consultations are in Saskatchewan (6.7 weeks) while the longest occur in Prince Edward Island (28.3 weeks). The second segment occurs from the consultation with a specialist to the point at which the patient receives treatment. The waiting time in this segment is roughly the same as last year, 9.8 weeks. This wait time is 76% longer than in 1993 when it was 5.6 weeks, and almost three weeks longer than what physicians consider to be clinically ‘reasonable.’” (Fraser Institute, 2016)
  • Latest News (via PNHP)

One Response to Single Payer

  1. I suspect that things will not change until the People start to question and challenge the status quo.

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