Single Payer System Cost?
State Studies
November 1994: New Mexico
Single Payer could save $151.8 million and cover all the uninsured
The Lewin consulting group was hired to perform a fiscal study of alternative reform plans for the state of New Mexico. The study looked at single payer, managed competition, and an individual and employer-mandate.
The study concluded that a single-payer system with modest cost-sharing was the only plan that would cover all the uninsured and save over $150 million per year (estimates given for 1998). Such a plan could be financed with a payroll tax of 7.92 percent (employer 80 percent/employee 20 percent) and a 2 percent tax on family income. If patient cost sharing was eliminated, the single payer program would cover all the uninsured for a net increase in costs of $9.1 million.
The group’s estimates of administrative savings were very conservative, about half of what other estimates have found. Thus, it is likely that a single payer program in the state of New Mexico could provide coverage for all the uninsured with no increase in current health resources.
Source :(“The Financial Impact of Alternative Health Reform plans in New Mexico” by Lewin-VHI, Inc. November 14, 1994.)
April 1995: Delaware
Single Payer would save money in Delaware
A fiscal study of single payer in Delaware by Solutions for Progress found that Delaware could save $229 million in the first year (1995). In ten years, the cumulative savings would exceed $6 billion, over $8,000 for every person in Delaware. “The benefit package for the single-payer system modeled in the report will cover all medically necessary health services” with “virtually no co-payments nor any out-of-pocket health expenditures for any covered benefit.”
The study’s authors’ note that they used a low estimate for administrative savings while using a high estimate for increased costs for utilization in order to assure a high margin for error and adequate funding.
Source: (“Single-payer financing for Universal Health Care in Delaware: Costs and Savings” prepared for the Delaware Developmental Disabilities Planning Council, April 1995 is 11 pages. Solutions for Progress, 215-972-5558. Two companion papers are also available: “Health Expenditures in Delaware Under Single-Payer Financing” and “Notes for Delaware Health Care Costs and Estimates for the Impact of Single Payer Financing.”)
February 1995: Minnesota
Single Payer to save Minnesota over $718 million in health costs each year
A March 1995 study conducted by Lewin-VHI for the Minnesota legislature found that single-payer with modest co-pays would insure all Minnesotans and save Minnesota over $718 million health costs each year. The projected savings are conservative since Lewin-VHI global budgets or fee schedules to control costs.
Source: Program Evaluation Divison, Office of the Legislative Auditor, State of Minnesota pg 68. “Health Care Administrative Costs” February 1995.
December 1998: Massachusetts
Two fiscal studies of single payer for the Massachusetts Medical Society show savings & benefits:
Lewin Group Solutions for Progress/Boston University School of Public Health (SFP/BUSPH)
“In early 1997, the Massachusetts Medical Society retained the services of two consulting teams to independently analyze the relative costs of a Canadian style single-payer system, and the current multi-payer health care system in Massachusetts.”
“While Lewin and SFP/BUSPH reports differed in their orientations and methodologies, they reached similar conclusions. First, a single-payer system would achieve significant administrative savings [between $1.8 and $3.6 billion] over the current multi-payer system. Secondly, these savings are of such a magnitude that the available funds would be sufficient to insure universal coverage in the state and provide comprehensive benefits including outpatient medications and long-term care and eliminate all out-of-pocket payments (co-payments, deductibles).”
“The major difference in the studies findings had to do with the timing of achieving the cost savings. SFP/BUSPH estimated that the savings could be in the first year of implementation of the system. Lewin felt the savings would begin in year six.”
Source: (Massachusetts Medical Society House of Delegates Report 207, A-99 (B).
Full text of the studies are available online at: http://www.massmed.org/pages/lewin.asp)
December, 2002: Massachusetts
Single Payer only plan to cover all and save money in Massachusetts
In the summer of 2001, the legislature allocated $250,000 to develop a plan for “universal health care with consolidated financing” for Massachusetts. The pro-HMO consulting firm LECG studied three options; only the single-payer option met the study criteria. Despite their industry bias LECG reported 40 percent of every health care dollar spent in the state of Massachusetts goes to administrative costs.
The initial LECG report had two major flaws: It did not include the costs of taking care of the uninsured in the non-single-payer plans, and it did not take into consideration the huge administrative savings possible under single-payer. If these factors are taken into account, single payer is the only plan to cover everyone and save money.
Source: (To get the full report e-mail: UHCEF@aol.com)
June, 2000: Maryland
Single Payer Would Save Money in Maryland
A single-payer system in the state of Maryland could provide health care for all residents and save $345 million on total health care spending in the first year, according to a study by the D.C. based consulting firm Lewin, Inc. The study also found that a highly regulated “pay or play” system (in which employers either provide their workers with coverage or pay into a state insurance pool) would increase costs by $207 million.
Editors’ Note: The pro-business Lewin group probably underestimated the administrative savings from single payer and overestimated the administrative savings (and hence understated the costs) of their “pay or play” model. Data from hospitals in Hawaii, where there are only a few major insurers, suggest that if you have more than one payer, there are few administrative savings. However single-payer systems in Canada, the U.K., Sweden and other countries have garnered administrative savings substantially larger than assumed by Lewin. Hence the estimate by Lewin that single-payer universal coverage would cost $550 million less to implement in the first year than “pay or play” is high.
Source: (“Full text of the study available online at: http://www.healthcareforall.com”)
August 2001: Vermont
Universal Health Care Makes “Business Sense”
Single-payer universal health coverage could save Vermonters more than $118 million a year over current medical insurance costs and cover every Vermonter in the process, according to a study paid for by a federal grant and prepared for the Office of Vermont Health Access by the Lewis Group. “Our analysis indicates that the single payer model would cover all Vermont residents, including the estimated 51,390 uninsured persons in the state, while actually reducing total health spending in Vermont by about $118.1 million in 2001 (i.e., five percent). These savings are attributed primarily to the lower cost of administering coverage through a single government program with uniform coverage and payment rules”
Source: (“Analysis of the Costs and Impact of a Universal Health Care Coverage Under a Single Payer Model for the State of Vermont”, The Lewin Group, Inc. Full text of the study is available on-line at: http://www.lewin.com/content/publications/1440.pdf)