What is Single Payer?

Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” In the case of health care, a single-payer system would be setup such that one entity—a government run organization—would collect all health care fees, and pay out all health care costs. In the current US system, there are literally 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. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services. This alone reduces administrative waste greatly, and saves money, which can be used to provide care and insurance to those who currently don’t have it.

Access and Benefits

All Americans would receive comprehensive medical benefits under single payer. 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.

Payment

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

The program would be federally financed and administered by a single public insurer at the state or regional level. Premiums, copayments, and deductibles would be eliminated. A single payer system as embodied in national legislation (H.R. 676) could be financed in several ways. One progressive option would be to fund it with a combination of existing federal and state revenues for health care, a payroll tax on employers (4-7 percent, much less that what employers pay today to provide less secure coverage), a 6 percent tax on unearned income, a 6 percent surtax on the highest 5 percent of income-earners, and a small tax on financial transactions.

Under this plan, 95 percent of people would pay less for health care. (Gerald Friedman, "Medicare for All" would save billions, and could be redistributive. Dollars and Sense, March/April 2012).

Administrative Savings

Harvard researchers estimate that administrative costs consume 31 cents of every health care dollar in the U.S.  Slashing that to Canadian levels would save $400 billion annually, enough to cover all the uninsured and to improve coverage for everyone else.  A study by the General Accounting Office estimated that single payer would save 10 percent on total health care costs by slashing administrative waste, enough to cover all the uninsured.

Cost Containment

Single payer is the only plan which features effective cost control measures like global budgeting, negotiated fees, bulk purchasing, and capital investment planning.  As a result single payer can reduce the growth of health spending.  Whereas health spending is projected to increase to 20 percent of GDP by 2020, if single payer were adopted in 2012 it could contain costs to 17 percent of GDP (Friedman, Dollars and Sense, 4/2012).  A study by the Congressional Budget Office also projected that single payer could reduce health inflation.

Different Perspectives on the Benefits of Single-Payer

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 overall for health care than they pay now.

Doctors

Doctors’ incomes would change little, though the disparity in income between specialties would shrink. The need for a “wallet biopsy” before treatment would be eliminated; time currently wasted on administrative duties could be channeled into providing care; and clinical decisions would no longer be dictated by insurance company policy.

Medical endorsements include PNHP (18,000), the American Public Health Association (30,000), American Association of Community Psychiatrists, Massachusetts Academy of Family Practice, American Medical Women’s Association (13,500), Alameda-Contra Costa Medical Society, American Medical Student’s Association, D.C. Medical Society, National Medical Association (6,500), American College of Physicians (Illinois Chapter), Long Island Dermatological Society, Islamic Medical Association, National Nurses United (160,000), American Nurses Association, the D.C. chapter of the American Medical Association, and the Hawaii Medical Association.

Hospitals

The massive numbers of administrative personnel needed to handle itemized billing to thousands of private insurance plans 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.

Congress

Single payer would be the simplest and most efficient health care plan that Congress could implement.