Evaluation of Single-Payer Healthcare System

A single-payer healthcare system is a model financed primarily by taxes and managed by one entity such as a government, providing essential health care to all citizens throughout their life (Hsaio et al., 2011). A single-payer health insurance system is financed by taxes so that individuals and citizens of the country do not pay extra costs when seeking essential care. While the Affordable Care Act has allowed millions of Americans to become insured, it is not a single-payer healthcare system as millions of Americans remain uninsured (Rosella et al., 2018).

The United States currently does not have a single-payer health system, although the single-payer health insurance referred to as “Medicare for all” is a hotly debated concept of health insurance that could potentially provide universal medical coverage for all residents of the U.S. It is also important to note that the terms Universal Health Coverage and Single-Payer Healthcare are not necessarily synonymous.

Universal Health Coverage refers to all residents possessing health coverage, but does not limit the source of this coverage to be from a single source. An example of this is Japan’s Universal Statutory Health Insurance System (SHIS), which is a multi-payer health care system that is also universal (Rosella et al., 2018).  Conversely, single-payer health coverage may be considered universal health insurance, but is limited to one payer.

Examples of countries with single-payer universal models of health care include New Zealand, Canada, the United Kingdom, and Australia – each operating with their own unique structure depending on the unique needs of its citizens and the resources available to it. For example, in Canada each province has a governmental program to provide healthcare through arrangements with healthcare providers, but does not own the healthcare providers .  On the other hand, the U.K. government owns and runs national healthcare providers. A single payer health care system does not necessarily guarantee that all medical needs are covered, with the possibility of exclusions and co-pays depending on the structure of the system (Hsaio et al., 2011).

For example, the healthcare system in Canada does not include dental or vision coverage for adults, which require supplemental health insurance plans and employee health benefits, while the U.K. requires co-pays for certain drug prescriptions outside a hospital. The popularity of a single-payer health system appears to be soaring. A Reuters poll taken in 2018 suggested that 70% of respondents were in favor of “Medicare for All” in the U.S. Nevertheless, fully understanding the costs and benefits of implementing a single-payer system is complex, with compelling arguments on both sides of the debate.

One of the most prevalent arguments in favor of a single-payer system is the significant reduction in the overall cost of providing healthcare, primarily through an improvement in resource allocation (Petrou et al., 2018). The current fragmented system of healthcare is burdened with profound administrative expenses that divert resources into activities such as administration, marketing, and underwriting, which do not improve health outcomes. In fact, current estimates suggest that one-quarter to one-third of total healthcare costs are driven by insurance company overheads and the administrative costs embedded in clinical settings (Egilman et al., 2018). In contrast, only two percent of Medicare’s expenditures are related to non-clinical expenses. The Physicians for a National Health Program estimate that $500 billion could be saved from a reduction in administrative waste, which could be redirected towards providing healthcare to the population rather than being wasted in bureaucracy  (Egilman et al., 2018). Further to reducing billing expenses, a single-payer system would reduce the malpractice premiums paid for by physicians. Currently, half of all malpractice awards are for present and future medical costs, therefore premiums would drop significantly if their costs were no longer incorporated into malpractice settlements  (Petrou et al., 2018). It is evident that a single-payer model would eliminate inefficiencies of fragmentation by converting public programs such as Medicare, Medicaid, and the Children’s Health Insurance Program, into a single, streamlined, efficient financing system.

In addition to a reduction in overheads, a single-payer model would further reduce overall healthcare costs by taking advantage of bulk purchasing to negotiate lower costs of drugs and medical devices. The U.S. currently spends more but uses less of most healthcare services compared to other member nations of the Organization for Economic Cooperation and Development (OECD) (Papanicolas et al., 2018). In fact, it is estimated that the prices for identical products or services in the U.S. tend to be, on average, at least two times higher than that in other OECD countries. A study in Canada estimated physician practices in Ontario spent $22,205 per physician per year interacting with Canada’s single-payer system – just under 30% of the cost per physician per year spent in the U.S. (Papanicolas et al., 2018). The high prices are a result of the fragmented health payment system that limits the market purchasing power of limited buyers against a consolidated supply side. Only a single-payer system would enable to bulk purchasing of drugs and medical devices with sufficient purchasing power to reduce costs. This model already exists in the U.S. through the department of Veteran Affairs (VA), which pays only half of the retail price of drugs through the government’s ability to negotiate drug prices (Gong et al., 2019).

A single-payer model would allow the adoption of responsible, rather than profit-driven, strategies towards the national planning of healthcare resource allocation. Under a single-payer system, the regional planning of resource allocation would be based on public health needs as opposed to the duplication of services that drive up medically questionable utilization (Petrou et al., 2018). At present, capital spending drives operating costs and determines the allocation of resources provided to each region – spend more, get more. This allows prosperous hospitals to expand and modernize, while impoverished ones cannot, widening the gap between different socio-economic groups and threatening the viability of institutions serving vulnerable populations. This spiralling relationship between spending and receiving resources is dependent upon market opportunities, which do not necessarily coincide with public health priorities. The separation of capital from operating budgets would eliminate the ongoing pressure to earn future capital growth by limiting reimbursements to clinicians (Petrou et al., 2018). A single-payer system would allow capital and operating budgets to be funded at a national level and administered regionally with thorough planning and coordination.

The benefits of a single-payer system extend to allowing access to all essential healthcare for everyone, creating a healthier population overall. The increased provision of preventative care will reduce illnesses as well as overall healthcare costs by ameliorating the pressure on other healthcare services – for example, almost half of Americans used emergency rooms as their primary care physician because they had no other place to go for healthcare (Rosella et al., 2018). Adopting a single-payer system to provide primary care to these individuals would redirect the staggering $10 billion a year cost towards treating uninsured patients in emergency rooms – a cost that is currently added to health insurance premiums and Medicaid (National Center for Health Statistics, 2019). Single-payer healthcare can potentially be designed to allow people to choose their healthcare provider, rather than being restricted to the one chosen by their Health Maintenance Organization. Finally, a single-payer system would allow individuals to stop worrying about medical bills and having to choose between their health or medical debt. A Bankrate survey in 2017 found that a quarter of Americans or their family member had forgone medical treatment due to the cost  (Petrou et al., 2018). A single-payer system would expand coverage and ensure all individuals have access to healthcare, regardless of age, race, and wealth.

While many regard the single-payer system as a silver bullet for the broken American healthcare system, others view it as an infringement on individual human autonomy and the transference of private decisions about health to taxpayer-funded bureaucracy (Oberlander, 2016). The cost of a single-payer system would depend upon its design, benefit levels, and coverage scope, but would ultimately result in higher taxes for its funding. This would most likely be in the form of individual income tax as well as a wide variety of specialized taxes on investments. The Urban Institute estimates that 10-year spending of $32 trillion would result from the adoption of a single-payer “medicare for all” system proposed by Vermont Senator Bernie Sanders, which is also estimated to double the current tax obligations for today’s taxpayers (Holahan et al., 2016). In fact, the Mercatus Center predicts a similar $32.6 trillion increase in federal spending over a decade, and estimates that the projected federal individual and corporate tax income collections would not achieve even half of the funding required for the plan (Blahouse, 2018). Furthermore, estimates place average deficits between $1.1 trillion to $2.1 trillion per year upon the adoption of the plan. Advocates of a single-payer system argue that the reduction of administrative costs would save the nation money, pointing to the low administrative cost rates of the Medicare model where administrative costs are approximately two percent of total costs. However, this statistic is over-simplistic and potentially misleading. Per capita administrative costs have in the past been higher for Medicare. For example, in 2009 the per capita cost was $509 for Medicare and $453 for private insurance (Book, 2019). Administrative costs as a percentage of total costs also tend to be lower for Medicare because the total claims tend to be higher in Medicaid compared to private insurance, primarily because Medicare’s older and less healthy population are the ones filing the claims.

A single-payer system would also delay the availability of life-saving drugs. Americans enjoy the world’s quickest access to the newest prescription drugs compared to patients in single-payer systems. A study in 2006 of patient access to 71 drugs showed that the U.K. had been slower than the U.S. to authorize 64 of these drugs. Based on the Annals of Oncology in 2007, the U.S. new cancer drugs launched first in the U.S. by at least four times compared to other OECD countries such as Germany, Japan, Canada, and the U.K. (Cohen et al., 2006). Furthermore, a 2011 study of 35 new cancer drugs showed that the U.S. Food and Drug Administration (FDA) had approved 32 while the European Medicines Agency (EMA) only approved 26 (Roberts et al., 2011). The median time to approval in the U.S. was also half of that of the EMA.

Universal coverage is not necessarily equal to universal access to quality care, as demonstrated by the British and Canadian experiences of single-payer healthcare systems. In 2017, Canadians were on waiting lists for over one million total procedures (MacKinnon, 2017). The wait times are also long – for example, the median wait time for hip, knee, ankle, and shoulder surgeries ranged from 20 weeks to a year. Private insurance is also outlawed in Canada, and an estimated 63,000 Canadians had to receive non-emergency medical treatment outside of Canada (MacKinnon, 2017). The U.K allows private insurance but as an additional cost to the taxes that fund the National Health Service – therefore, it is generally the wealthy that can escape the system to receive higher quality healthcare. Cancellations are also common in the U.K. – the National Health Service cancelled over 80,000 elective operations in England for nonclinical reasons on the day the patient was due to arrive (McIntosh et al., 2012). Waiting times matter – only 81% of UK breast cancer patients survive at least five years after diagnosis compared to 89% in the U.S., and only 83% of patients in the U.K. survive five years after a prostate cancer diagnosis compared to 97% in the U.S. It is evident that government-run healthcare cannot deliver on its promises (McIntosh et al., 2017). It would impose significant taxes on Americans, deliver subpar quality healthcare to patients, and put the government in charge of personal healthcare decisions, which may not necessarily lead to better outcomes for the patients.

A single-payer health insurance system aims to provide essential health care to all its residents, and is funded by a single payer. The U.S currently does not have a single-payer health system, despite numerous other countries in the OECD such as Canada, Australia, the U.K., and New Zealand having adopted the system. The idea of a single-payer system, such as “Medicare for all” is currently a hotly debated issue, with compelling arguments from both sides. Proponents of a single-payer healthcare system argue that the streamlining and reduction of administrative overheads would be substantial, pointing to Medicare’s low administrative costs as an example of what could be achieved for all of America. Furthermore, it is argued that a single buyer would possess significant purchasing power to negotiate the price of drugs and medical devices to a significantly lower level, evidenced by the reduced costs of drugs negotiated by the government on behalf of the VA. Adopting a single-payer model would also allow the adoption of a responsible strategy towards the allocation of resources across the country, rather than a fragmented, self-serving, profit-driven one by individual institutions. Finally, the adoption of a single-payer system would extend to allowing everyone to have access to healthcare, and would reduce the uneven pressures currently experienced by certain sectors of the healthcare industry, such as emergency rooms. On the other hand, many believe that a single-payer system simply cannot deliver on its promises, pointing to the turmoils and woes experienced by countries that have already adopted the system. The long wait times and delays on the availability of life-saving drugs in countries such as Canada and the U.K. are evidence that the healthcare outcomes are not necessarily better with a single-payer system. Furthermore, several studies have shown that significant funding would be required to finance a single-payer system, primarily through taxes at unprecedented levels. These costs could far exceed the amount saved in administrative costs and could lead to deficits in the trillions for several years. Finally, universal coverage does not necessarily equate to universal access to quality care. For example, breast and prostate cancer survival rates are higher in the U.S. compared to the U.K., primarily due to the longer wait times in the U.K. There are compelling reasons for and against a single-payer system, and while it is difficult to maintain a firm stance, there is no denying that there is renewed political energy around providing access to basic health services to every citizen.

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