What Would a Single Payer Universal Health Care System Look Like?

(this section is largely drawn from PNHP; a paper by John R. Battista, M.D. and Justine McCabe, Ph.D.;)

The United States is the only industrialized nation that does not guarantee access to health care as a right of citizenship. 28 industrialized nations have single payer universal health care systems, while 1 (Germany) has a multipayer universal health care system like President Clinton proposed for the United States.

The United States ranks poorly relative to other industrialized nations in health care despite having the best trained health care providers and the best medical infrastructure of any industrialized nation. The World Health Organizations ranks the US 37th in terms of overall quality of our health care system – and we’re getting worse. The United States ranks 23rd in infant mortality, down from 12th in 1960 and 21st in 1990. The United States ranks 20th in life expectancy for women down from 1st in 1945 and 13th in 1960. The United States ranks 21st in life expectancy for men down from 1st in 1945 and 17th in 1960.

What is Single Payer?

Singe Payer – One entity pays all bills, while choice is preserved on who provides health care

Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” One entity—a government run organization—would collect all health care fees, and pay out all health care costs. Currently, there are tens of thousands of different health care organizations—HMOs, billing agencies, etc. By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system.

In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services.

Under single payer, the health care delivery system remains private. The “government” is billed, but doctors remain in private practice. In contrast, a national health service is where the government employs doctors,

Access and Benefits

All Americans would receive comprehensive medical benefits under single payer – regardless of their employement status. Coverage would include all medically necessary services, including rehabilitative, long-term, and home care; mental health care, prescription drugs, and medical supplies; and preventive and public health measures. Care would be based on need, not on ability to pay.

Payments to Medical Providers

Hospital billing would be virtually eliminated. Instead, hospitals would receive an annual lump-sum payment from the government to cover operating expenses—a “global budget.” A separate budget would cover such expenses as hospital expansion, the purchase of technology, marketing, etc.

Doctors would have three options for payment: fee-for-service, salaried positions in hospitals, and salaried positions within group practices or HMOs. Fees would be negotiated between a representative of the fee-for-service practitioners (such as the state medical society) and a state payment board. In most cases, government would serve as administrator, not employer.

Financing

Premiums, copayments, and deductibles would be eliminated.

90 to 95 percent of people would pay less overall for health care.

One possible financing mechanism is that employers would pay a 7.0 percent payroll tax and employees would pay 2.0 percent, essentially converting premium payments to a health care payroll tax. Existing public expenditures (e.g., Medicaid) would be continued.

Administrative Savings

The General Accounting Office projects an administrative savings of 10 percent through the elimination of private insurance bills and administrative waste, or $150 billion in 2002. This savings would pay for providing medical care to those currently underserved.

Cost Containment

The Congressional Budget Office projects that single payer would reduce overall health costs by $225 billion by 2004 despite the expansion of comprehensive care to all Americans.

How would a Single Payer System Impact Upon Patients, Doctors,
Hospitals and Insurance Companies

Patients

Each person, regardless of ability to pay would receive high-quality, comprehensive medical care, and the free choice of doctors and hospitals. Individuals would receive no bills, and copayment and deductibles would be eliminated. Most people would pay less for health care.

Your insurance wouldn’t depend on your job. Whether you’re a student, professor, or working part-time raising children, you’re provided with care.
Doctors

Doctors’ incomes would change little, though the disparity in income between specialties would shrink. Time currently wasted on administrative duties could be channeled into providing care; and clinical decisions would no longer be dictated by insurance company policy.

Hospitals

The massive numbers of administrative personnel needed to handle itemized billing to 1,500 private insurance companies would no longer be needed. A negotiated “global budget” would cover operating expenses. Budgets for capital would be allocated separately based on health care priorities. Hospitals would no longer close because of unpaid bills.

Insurance Industry

The need for private insurance would be eliminated. One single payer bill currently in the House (H.R. 1200) would provide one percent of funding for retraining displaced insurance workers during its first few years of implementation.

Business

In general, businesses would see Single Payer limit their health costs and remove the burden of administering health insurance for their employees.

In Canada, the three major auto manufacturers (Ford, GM, and Daimler-Chrysler) have all publicly endorsed Canada’s single-payer health system from a business and financial standpoint. In the United States, Ford pays more for its workers health insurance than it does for the steel to make its cars.

Some Myths About Single Payer

Myth: The government would dictate how physicians practice medicine.

In countries with a national health insurance system, physicians are rarely questioned about their medical practices (and usually only in cases of expected fraud). Compare it to today’s system, where doctors routinely have to ask an insurance company permission to perform procedures, prescribe certain medications, or run certain tests to help their patients.

Myth: Waits for services would be extremely long.

In countries with NHI, urgent care is always provided immediately. Other countries do experience some waits for elective procedures (like cataract removal), but maintaining the US’s same level of health expenditures (twice as much as the next-highest country), waits would be much shorter or even non-existent.

There would be no lines under a universal health care system in the United States because we have about a 30% oversupply of medical equipment and surgeons, whereas demand would increase about 15%

Myth: People will overutilize the system.

Most estimates do indicate that there would be some increased utilization of the system (mostly from the 42 million people that are currently uninsured and therefore not receiving adequate health care), however the staggering savings from a single-payer system would easily compensate for this. (And remember, doctors still control most health care utilization. Patients don’t receive prescriptions or tests because they want them; they receive them because their doctors have deemed them appropriate.)

Myth: Government programs are wasteful and inefficient.

Some are better than others, just as some businesses are better than others. Just to name a few of the most successful and helpful: the National Institutes of Health, the Centers for Disease Control, and Social Security. Even consider Medicare, the government program for the elderly; its overhead is approximately 3%, while in private insurance companies, overhead and profits add up to 15-25%.

Myth: Universal Health Care Would Be Too Expensive

The United States spends at least 40% more per capita on health care than any other industrialized country with universal health care. Federal studies by the Congressional Budget Office and the General Accounting office show that single payer universal health care would save 100 to 200 Billion dollars per year despite covering all the uninsured and increasing health care benefits. The United States spends 50 to 100% more on administration than single payer systems. By lowering these administrative costs the United States would have the ability to provide universal health care, without managed care, increase benefits and still save money

Myth: A single payer system Would Result In Government Control And Intrusion Into Health Care Resulting In Loss Of Freedom Of Choice

There would be free choice of health care providers under a single payer universal health care system, unlike our current managed care system in which people are forced to see providers on the insurer’s panel to obtain medical benefits. There would be no management of care under a single payer system unlike the current managed care system which mandates insurer preapproval for services thus undercutting patient confidentiality and taking health care decisions away from the health care provider and consumer

Myth: Universal Health Care Is Socialized Medicine And Would Be Unacceptable To The Public

Single payer universal health care is not socialized medicine. It is health care payment system, not a health care delivery system. Health care providers would be in fee for service practice, and would not be employees of the government, which would be socialized medicine. Repeated national and state polls have shown that between 60 and 75% of Americans would like a publicly financed, universal health care system

Myth: The Problems With The US Health Care System Are Being Solved and Are Best Solved By Private Corporate Managed Care Medicine because they are the most efficient

Private for profit corporation are the lease efficient deliverer of health care. They spend between 20 and 30% of premiums on administration and profits. The public sector is the most efficient. Medicare spends 3% on administration. The same procedure in the same hospital the year after conversion from not-for profit to for-profit costs in between 20 to 35% more. Health care costs in the United States grew more in the United States under managed care in 1990 to 1996 than any other industrialized nation with single payer universal health care. 80% of citizens and 71% of doctors believe that managed care has caused quality of care to be compromised.