Single-Payer Healthcare Can Work in the United States

Single-Payer Healthcare Can Work in the United States

Written by Heather Day
Published 1 January 2019

In 2012, the United Nations passed a resolution urging member governments to move toward universal health coverage. The UN formally acknowledged health as a key factor for international development. The Affordable Care Act AKA Obamacare was designed to move the United States closer to universal health coverage. As of 2017, 22% of the population in the United States remained without healthcare coverage. Implementation of the ACA has been fraught with difficulty. Multiple states refused the Medicaid expansion reducing the effectiveness of the ACA. The scope of the ACA made it hard to disseminate to the public. Following the election of President Trump and a Republican majority in both the Senate and House, the ACA has been under siege with multiple threats to abolish it. Last year, Congress reduced the tax penalty of the insurance mandate to zero.

A few weeks ago, a federal judge in Texas ruled the ACA’s insurance mandate unconstitutional and further stated that the rest of the ACA was “invalid” without the insurance mandate. So here we are in 2018, the health care debate continues to rage on. Here, I will outline the differences between universal and single-payer healthcare, the problems we face in our current so-called healthcare “system”, how we as a country got to this point, and why moving to a single-payer system would make both moral and economic sense.

The differences between “universal” and “single-payer” healthcare

First, let’s define some terms and outline the differences between “universal” and “single-payer” healthcare. Universal health coverage is the provision of affordable healthcare services to the entire population. Countries approach universal healthcare differently, and there is no single way to provide universal coverage. Most importantly, universal coverage does not automatically imply government control of health care. There are three primary mechanisms to implement universal health care: public insurance plans, government run health care organizations, or a combination of public and private plans.

By, contrast, single-payer healthcare describes the use of a public insurance plan administered by the government to automatically cover all citizens. Canada provides universal health coverage using a single-payer system, where the health services themselves are not run directly by the government. The United Kingdom provides universal health coverage through their National Health Service (NHS), which is operated by the British government directly. Hospital and physician practices are run by the state rather than by private entities. Germany provides universal health coverage via sickness plans; it is probably the closest to the private insurance system found in the United States. As in the United States, sickness plans are typically provided by employers, but the cost of the plan is dependent on one’s income, with the government subsidizing part of the cost. The government regulates the plans with minimum coverage requirements. Plans are also provided to those who are unemployed or retired.

The United States is the only highly developed nation without some form of universal health coverage. However, a recent poll by Reuters-Ipsos found that 70% of Americans support single-payer health care: 84% of Democrats and 52% of Republicans.

The problems of our current healthcare “system”, and their solutions through single-payer

Personally, I believe it is a misnomer to call the entirety of healthcare in the United States a “system”, because “system” implies coherence and organization. In reality, we have multiple systems that complicate and obfuscate the delivery of healthcare to the American public. There is the private “system”, made of for-profit hospital systems and private insurers. There are multiple public systems, with some public hospitals that provide care for indigent patients, public insurers like Medicaid and Medicare, the Public Health Service, and the Veterans Administration (VA). Hospital systems must navigate this byzantine payor landscape for reimbursement, where each system has different requirements, different billing procedures, and different payment rates. Individuals must also navigate this system of copays and deductibles and preferred medications and tiers and prior authorizations. A 2018 study at Duke University demonstrated that it costs $99,000 per year for billing and insurance related costs for a single primary care provider, or $1 for every $7 collected. This number was even higher for emergency room visits or $1 for every $4 collected. The hospital system examined in the study employed 1,500 people for billing and insurance alone. It is important to note is that these costs did not include the increased costs for physician/nursing time required for documentation. Single payer systems would reduce the complexity and excessive costs of these systems by implementing a standardized set of practices to be adopted nationwide.

Speaking of costs, the United States spends much more per capita for health care than the average OECD country: $9,892 per person annually vs the average of $4,003. Despite this excessive spending, the United States has made only modest gains in healthcare quality, and health outcomes in the United States are only on par with the OECD average. The United States also disproportionately struggles with disability and premature death, as measured by disability-adjusted life years. Essentially, our “system” offers comparable quality but at a higher price tag, so we’re getting much less bang for our healthcare buck than does most of the rest of the developed world.

The prohibitive costs and logistics of healthcare delivery are key reasons for the suppressed quality of our health outcomes. Let’s use diabetes, a serious disease that is widespread across the United States, as an example. Diabetes is a major cause of death and disability. It increases the risk for cardiovascular diseases, and it is the leading cause of end-stage renal disease that requires dialysis. Unfortunately, mild to moderate diabetes is largely asymptomatic, only causing severe (and costly) health issues when the disease progresses and blood sugar levels become very high. Because many patients without health insurance will only seek care when symptoms become severe, diabetes is often diagnosed only when patients present with major health issues, like life-threatening infections, heart attacks, or strokes. Not only are these complications more expensive to treat (thus resulting in higher health care costs), but they are also more likely to lead to long-term disability or premature death.

The surrender of bargaining power to a private insurance market has also directly contributed to the increase in prices for life-saving medicines, like the EpiPen and insulin. This has forced low-income Americans to ration these medications, which puts them at a much greater risk of premature death.  Implementing a single-payer system with appropriate bargaining power – which is currently restricted by the federal government – would allow for negotiation of lower prices for pharmaceuticals and devices, helping to reduce healthcare-related financial burdens on the American public. This is likely one reason why pharmaceutical and device companies have lobbied so hard to prevent single-payer insurance from becoming a reality – which neatly leads us towards the next point of discussion.

So why don’t we have single-payer healthcare?

One major reason reason why the United States has not implemented universal health coverage is the prevalence of employer-provided private health insurance. During the Second World War, the government enforced wage caps to prevent private companies from recruiting employees from industries focused on the war effort. It was a tight labor market, with many young men serving in the military. Benefits were not included under the wage cap, so employers began offering health insurance as a way around the wage cap. Soon, health insurance became tied to employment and we have not looked back. Medicare was then enacted in 1965, to cover retirees as a part of a comprehensive strategy to reduce poverty among the elderly.

For many years, those with health insurance benefits were shielded from the cost of health insurance. However, in recent years, rising healthcare costs have resulted in employees taking on more of the costs associated with insurance. Companies have also attempted to reduce costs by changing the workforce to avoid paying benefits. Part-time, temporary, and contract workers (such as Uber drivers) often do not qualify for benefits. The end result is a fragmented system with increasingly high costs and mediocre outcomes.

Privatization has long been touted as the solution to government inefficiency. This theory is based on the “profit motive” – the idea that more efficient companies can generate greater profits, and therefore private companies are incentivized to be more efficient than government-run agencies that lack such motive. Contrary to this idea, private insurance has higher rates of overhead costs than does Medicare, the comparable single-payer system in the United States. On average, private insurance companies spend 11.3% on administrative costs, compared to 1.4% for Medicare.

A second consequence to privatization is unequal access to resources. Regions of the country with a greater proportion uninsured patients or low-income patients have disproportionately poorer availability of healthcare resources. This is because it is not financially sensible to open hospitals or clinics in areas where nobody can pay for services. A single-payer system would guarantee payment for facilities and therefore increase access to health care services for those in rural areas or in other medically underserved areas.

One complaint often raised about single-payer is the claim that it increases the amount of time that patients need to wait to receive care. While this argument may “feel” good to make, the United States has slower access to doctors or nurses than any other OECD country – including Canada – which has been much maligned in the media for reportedly long wait times. A corollary consequence of these wait times is the excessive inappropriate use of emergency rooms – another area where the United States is mediocre compared to other developed countries. The utility of single-payer to counteract this problem is further reinforced when considering these facts alongside the aforementioned data on low-income Americans delaying treatment until symptoms are severe, because of their inability to afford good quality private health insurance.

Is single-payer possible in America? Yes.

With so much data to support the claim that the United States would be better off with a single-payer healthcare system, the key question is whether the difficulty of switching would be worth our while. Many politicians have made dodgy claims about how making this change would cause serious problems for the United States. Additionally, the status quo is fairly convenient, and it isn’t much of a cognitive risk to believe that through heavy regulation and comprehensive reform, it could theoretically be adapted to provide (more) universal coverage.

There are a number of possible approaches to implement single-payer healthcare in the United States, but with such variability in populations, healthcare accessibility, and budgets between different states, it is reasonable to believe that a federal-level approach would be the most likely to succeed. With single-payer systems like Medicare and Medicaid already in place, it would be feasible to modify those programs and centralize their administration to ensure the coverage. Since Medicaid administration is state-administered, it may also be possible to dissolve the program and incorporate its resources into a nationwide single-payer system. There are a multitude of factors to consider, but with the grand majority of the American public supportive of the change to single-payer, the greater the degree of public engagement in advocacy for the change, the more likely it would be that the change would succeed.

There is copious evidence to indicate that a single-payer system would benefit the American public interest. It is now up to politicians to subscribe to the data – and up to us to speak up for what we know will be a better future for American healthcare.