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Single-Payer Health Care: Opportunities and Vulnerabilities

The idea of a single-payer health care plan has been getting a lot of buzz lately. Why all the interest, when it’s likely there’s little chance of enactment by Congress anytime soon?

Image: AlexLMX/Thinkstock

Credit, in part, goes to a big and public push by Sen Bernie Sanders (I, Vermont) during the Democratic presidential primary in 2016, who made “Medicare for All” a centerpiece of his campaign.

The failed effort by Republicans last year to repeal and replace the Affordable Care Act (ACA) also sparked interest among Democrats in what could be the next chapter in health care reform. The ACA is a market-based approach built on the idea of competing private insurers, with the hope that it would attract broad-based political support. However, support among conservatives hasn’t really materialized. While left-of-center health advocates campaigned aggressively to stop repeal and replace by Republicans, many would, if given the opportunity, support repeal and replace from the left, with a single-payer plan instead.

Litmus Tests

Although the next presidential election is still more than 2 years away, a number of potential Democratic candidates have endorsed a single-payer approach. Support for single-payer health care has in some ways become a litmus test for progressivism, in much the same way that opposition to Obamacare was a litmus test for conservatism. However, to understand the policy aims behind a single-payer health care system and how they might be accomplished, as well its political opportunities and vulnerabilities, it’s useful to unpack its elements:

Universal Coverage. Central to the idea of a single-payer plan is universal coverage. The ACA has made tremendous headway in improving coverage, leading to 20 million more people insured. Yet, 29 million remain uninsured, with few prospects for making meaningful further progress anytime soon. Interestingly, while all other high-income countries have achieved universal coverage, many of them are not true single-payer systems. For example, Germany and Switzerland cover everyone, but their systems still use private insurance arrangements (though they are all nonproft).

Tax-Based Financing. A single-payer plan would shift the financing of health care from premiums paid by employers and individuals to taxes. Tax-based financing is key to true universal coverage, since it means that everyone is automatically insured. But it also could be quite disruptive. The overall amount spent on health care could decrease under a single-payer plan, but some people would end up paying much less while others would pay much more.

Cost Containment. A single-payer plan has the potential to push down health costs in 3 ways: by lowering the prices paid for health care (higher prices are the main reason the United States spends so much more than other countries), by cutting out administrative costs for billing and insurance sales, and by reducing profits. While no 2 countries have approached their health systems in the same way, those with universal coverage generally have a much bigger role for government in regulating prices and a much smaller role for for-profit insurance companies. Other elements of a single-payer plan that could push health spending up include covering more people and reducing or eliminating deductibles and copays. The net effect on health spending would depend significantly on the details of how a single-payer system was designed and implemented.

There’s a certain simplicity to single-payer plans that have been proposed so far nationally or in states like California. That’s especially clear in contrast to our current health system, which marries public plans like Medicare and Medicaid with employer-based and individually purchased private health insurance in messy and complicated ways. Under Sen Sanders’ proposal, for example, everyone is covered, anyone can go to any physician or hospital, and there are no out-of-pocket costs when accessing services.

That simplicity in some ways obscures tradeoffs, which are inevitable in any comprehensive health reform. A bigger government role in the health system could bring down prices, but those prices represent income to hospitals, physicians, and drug companies, which they will fiercely resist reducing. People may not have to pay premiums or anything at the point of service, but they will pay higher taxes. The absence of deductibles or copays would remove financial barriers to accessing needed care but could also result in more unnecessary care.

It’s rare that major policy proposals end up simple or pure after going through the meat grinder of the US political system, which tends to highlight tradeoffs and emphasize losers over winners.

Public Opinion

Polling from the Kaiser Family Foundation informs how public opinion might be swayed in a revved-up debate over a single-payer health care system. A majority (54%) of US consumers support the idea a single-payer plan, with 43% opposing it. However, when presented with arguments that opponents might use in a heated political debate—that taxes would increase, that the government would have too much control over health care, or that a single-payer system would eliminate the role of employers in health care—majority support turns to majority opposition. On the other hand, arguments from supporters of a single-payer plan—that it would ensure universal coverage, reduce administrative costs, or decrease the role of private insurers—increase support.

A recent proposal from the Center for American Progress (CAP), called Medicare Extra for All, seems designed to capture the appeal of single-payer plans while mitigating some of their potential political liabilities. In particular, the CAP proposal would preserve a role for employer-based insurance, and importantly, the money employers contribute towards health benefits. Employers could offer their own coverage or buy their employees into a new Medicare Extra plan, or employees themselves could choose to switch to the public plan. The proposal would also allow private insurers to participate in Medicare Extra, much like they do in Medicare Advantage today.

The CAP proposal blunts some of the arguments against a single-payer system, but in doing so, it also compromises on some of the principles that motivate single payer’s most ardent supporters.

We will no doubt see other variants of health reform plans that build on existing public insurance programs or seek to create new ones, while at the same time we will continue to see efforts to roll back the ACA and place limits on Medicaid. This is closer to the beginning rather than the end of a process that may or may not result in a serious debate over a single-payer system years from now in a future Congress.

About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance. (Image: Ted Grudzinski/AMA)
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