Single-Payer System: Why It Would Save US Healthcare

Why America Should Have a Single-Payer System

By Leigh Page
Medscape, Sept. 29, 2015

Donald Berwick, MD, helped launch the Affordable Care Act (ACA)—considered at the time to be the only health reform this country would need—when he was administrator of the Centers for Medicare & Medicaid Services (CMS) in 2010 to 2011.

But 5 years later, Dr Berwick and millions of other Americans are calling for a new round of reform that would involve much deeper changes: a single-payer system. Dr Berwick says he still supports the ACA—"It's been a step forward for the country," he says—but adds, "The ACA does not deal with problem of waste and complexity in the system."

Other single-payer advocates are less forgiving. They think that the ACA has pampered the commercial insurance industry, providing it with millions more customers and allowing it to jack up charges to levels that fewer Americans can afford.

The single payer would be the US government.

Single-payer reform would take an audacious step. It would virtually eliminate the entire commercial insurance industry—with $730 billion in revenues and a work force of 470,000—and replace it with one unified payer. A small vestige of the industry would remain to cover nonessential services, such as LASIK surgery.

Advocates often envision a single-payer system as an expansion of Medicare, or "Medicare for all." Single-payer systems in Canada, Australia, Denmark, Norway, and Sweden—as well as other types of centrally run systems—have much lower per capita health spending and generally better health outcomes than the United States.[1] However, this is also true for non–single-payer systems outside of the United States. The United States simply has the highest healthcare costs, regardless of the system.

The single-payer approach has a moral argument—that everyone should have a right to healthcare—but it also has a practical argument, says James Burdick, MD, a transplant surgeon at Johns Hopkins University School of Medicine and author of Talking About SINGLE PAYER!, which will be published later this year. "It's a more economical way to use healthcare resources," Dr Burdick says. "You could reduce expenses and still improve quality. That's a tremendous opportunity that you don't have in many other fields."

According to a 2014 study,[2] the new, streamlined system would save US healthcare $375 billion per year, owing mainly to removal of the inefficient administrative costs of multiple payers. The authors calculated that the savings would cover millions of people who are still uninsured and terminate high deductibles and other out-of-pocket costs levied by commercial insurers.

Restoring Doctors' Authority

Terrence McAllister, a pediatrician with a solo practice in Plymouth, Massachusetts, thinks that a single-payer system would restore the medical profession's independence and authority. Dealing with multiple commercial insurers makes it very difficult to be independent. "The profession is becoming more and more dependent on employment, and that usually means serving the needs of hospitals," he says.

Dr McAllister's wife, Leann, who administers the practice, sees a renaissance for small practices under a single-payer system. In the United States, small practices often have to make do with lower reimbursements because they lack negotiating leverage with insurers. There are no such negotiations in a single-payer system. "I could build a business plan with far more certainty," she says.

For all practices, administrative costs would plummet because there would be only one set of payment rules. Prior authorizations, narrow networks, and out-of-pocket payments would be eliminated, proponents of a single-payer system say.

Under the Canadian single-payer system, physicians turn in a slip of paper for each encounter. Dr Burdick says that a Canadian orthopedic surgeon who moved from the United States told him he was greatly relieved to no longer have an extra room in the back for coding clerks and claims files. "I fill out the chits for each encounter, and my secretary bundles them up and sends them in," he told Dr Burdick. Indeed, a 2011 study[3] found that US doctors spend almost four times more money dealing with payers than do doctors in Ontario, Canada.

Dr Berwick did not support a single-payer system until late 2013—several months into his campaign to be the Democratic nominee for governor of Massachusetts, his first foray into electoral politics. While campaigning, "I became more and more familiar with all the obstacles people faced in education, housing, and employment," he says. "I concluded that our healthcare system takes money away from these things."

He thinks a single-payer approach could clean up a highly inefficient system. "There is too much complexity and administrative hassle in our healthcare system," he says. "We need to simplify the payment structure."

Evidence of Growing Physician Support

Dr Berwick lost the primary in September 2014, but during the campaign, he saw his single-payer message resonate with doctors. It definitely did so with the McAllisters. "He helped solidify our support for a single-payer system," Leann McAllister recalls. In March, Dr McAllister joined Physicians for a National Health Program (PNHP), a single-payer advocacy group that has more than 19,000 members nationwide.

Are more doctors flocking to support a single-payer approach? The only known recent poll of doctors is a 2014 survey of Maine physicians[4] conducted for the Maine Medical Association (MMA). The poll found that nearly 65% of MMA members preferred the single-payer option over trying to fix the current system—up from 52% in a 2008 survey.

The MMA 2014 survey showed that a single-payer system is especially popular among primary care and employed physicians. For example, more than three quarters of family physicians endorsed a single-payer system, compared with one third of radiologists. And whereas only 40.7% of physicians at fully physician-owned practices endorsed single-payer, 72.6% of those in fully hospital-operated practices did so.

Physicians seem more open to a single-payer system as the profession moves toward the Democrat Party, a stronghold of support for this idea. According to a study[5] published in July, 55% of doctors making political contributions in the 2013-2014 election cycle gave to Democrats. That's a substantial change from 18 years earlier, when 72% of contributing doctors gave to Republicans.

Proponents say there are plenty of reasons for doctors to like the single-payer approach. In addition to restoring physicians' authority and simplifying claims, Dr McAllister says that a single-payer system would simplify the clinical process, thereby boosting the quality of care. "From a clinical perspective, the main advantage is that I don't have to consider which insurance the patient has and make my plans for patients on the basis of that," he says.

It is also being claimed that a single-payer system may reduce malpractice litigation. There might not be a need to file a lawsuit to get future medical care, because a single payer would cover it. Still, it would not cover pain and suffering or economic damage.

Americans Are Warming Up to Single-Payer

There are signs that the public is also warming up to a single-payer system. A slight majority of Americans (51%) support Medicare for all, according to a national poll[7] released in January for the Progressive Change Institute. The survey also found, however, that more than one third oppose Medicare for all. Also, there is a wide partisan divide. Whereas 79% of Democrats supported a single-payer system, only 23% of Republicans did so.

Interest in single-payer may continue to grow, owing to the rise of high deductibles and other out-of-pocket costs for patients, according to Steffie Woolhandler, MD, a Harvard internist and cofounder of the PNHP. Although the ACA expanded coverage to millions more Americans, she says it also accelerated the trend toward high deductibles. "Now people with insurance are finding that they can't afford to use it," she says. (The assumption is that a single-payer system will not include high deductibles.)

A study[8] released by the Commonwealth Fund in May found that the proportion of US adults with high deductibles tripled from 2003 to 2014. It estimated that almost one quarter of insured US adults had such high out-of-pocket costs relative to their incomes that they were deemed to be underinsured. One half of this population reported problems with medical bills or debt, and more than 2 of 5 said that they didn't seek needed care because of the cost.

"The trend in this nation is to shift the costs of healthcare more and more onto individual families," Dr Berwick says. "High deductibles take money out of people's pockets under the guise of personal responsibility. There is a great shift of wealth away from the middle class and working people."

Dr Woolhandler says it may take years for many Americans with high deductibles to understand just how toxic they are. "People might need to have a major medical event to see how badly the system is failing them," she says.

Leann McAllister makes an analogy to parents who deny pediatric vaccines until they understand that their own child could die without them. "Americans are often motivated by fear," she says. "They may react only when they see that our healthcare system could fall apart."

The Massachusetts practice administrator also says that high deductibles produce an imbalance in physician supply. In less wealthy areas, such as Plymouth, she says, patients faced with large out-of-pocket expenses simply forgo care, permanently reducing demand for doctors. She says no new physicians have come into the area for many years, despite a growing population.

Movement May Start on the State Level

The movement encountered a setback last December 2014, when Vermont pulled the plug on its single-payer initiative, the only one in the nation. The Vermont governor cited high projected costs for businesses and taxpayers, which cooled Vermonters' enthusiasm and almost lost him his reelection bid the month before.

Dr Berwick says it's only a temporary setback. "What happened in Vermont gives us lessons for the next wave of efforts," he says. Advocates within the state are already working on new approaches. Deborah Richter, MD, a family physician in Berlin, Vermont, and a leader of the state's single-payer movement, says she is working with legislators on a plan to publicly fund primary care activities only, and fold in specialists later. "We realize that you can't just flip the switch and suddenly have a single-payer system," she says.

The Vermont setback shows that people need to gain a better understanding of how a single-payer system would work, Dr Berwick adds. Although taxes and fees would rise substantially to pay for the system, these costs are less than what people had to pay for their own insurance. Businesses that already cover their employees would also see lower costs owing to efficiencies.

Dr Berwick thinks it's possible that single-payer systems will initially emerge at the state level. "The current polarization in Washington makes it difficult to enact it on the federal level right now," he says. Dr Richter likes the idea of state-operated systems within a national system, similar to the way in which Canada's single-payer system is run by each province. The federal government would determine what services are covered, and each state would determine reimbursement levels.

Dr McAllister, however, doubts that a one-state single-payer system would work well. He recalls that when Massachusetts instituted its own pre-ACA version of health reform, out-of-state patients flocked to emergency departments there, driving up the program's costs.

Public Distrust Must Still Be Overcome

One potential barrier for the movement is the public's abiding mistrust of government. "A very big obstacle to progressing this policy is the widespread perception that government is unable to solve problems," Dr Berwick told a national meeting of the PHNP last November.[9] "We need to make the case that government can solve problems and manage its business well."

Dr Berwick and others in the movement see government as a mechanism for doing good. "Trying to make government look less functional, that's the agenda on the right," he says. But if anti-government attitudes prove insurmountable, he thinks that a single-payer operation could be handed over to an independent board.

Leann McAllister said that another unfair criticism of single-payer is that it would be bureaucratic. "We have an even bigger bureaucracy with commercial insurers," she says. "They have plenty of unnecessary rules." For instance, when patients in her practice move to a different plan, they sometimes are assigned a new doctor, even though her husband is in-network. "It takes a lot of paperwork to correct that," she says.

Another potential downside that is cited for a single-payer system is waiting lists for elective procedures, such as those for hip and knee operations in Canada. The problem exists, but it's "way overstated," Dr Berwick says. "The fact is that Canadians wouldn't trade their system for ours."

Dr Burdick asserts that comparisons between US and Canadian waiting lists are unfair, because Canada scrupulously measures its waits and we don't. "We know the numbers of Canadians on waiting lists because they are counted, but no one keeps track of how long you have to wait for care in the United States," he says.

Dr Richter also discounts critics' tales of a vast movement of Canadians to the United States to receive care denied back home. Most Canadians who get care in the States, she asserts, fell ill or had accidents while visiting.

What Would It Be Like for Doctors?

It's hard to predict exactly how a single-payer system would affect US doctors, because it could be implemented in a variety of different ways. For example, Canadian doctors get fee-for-service payments, but Dr Berwick says US doctors could instead receive value-based payments, which Medicare is moving toward.

"There is really a wide range of choices," says the former CMS administrator, who helped develop value-based payments for Medicare. "A global payment or capitated payment system could be quite flexible. This would allow funds to be easily shifted to where they're most needed."

Many specialists are concerned that their reimbursements would be slashed under a single-payer system, but Dr Burdick says that this doesn't have to happen. "The spending problem in US healthcare does not really have to do with physician reimbursements," he says. "It has to do with the payments that physicians are generating."

Dr Burdick added that services covered by a single-payer system could be determined by a board of experts, like the United Kingdom's National Institute for Health and Care Excellence (NICE). He wants the US board to be dominated by physicians—as NICE is—but it should also be completely independent of political influence, which he says NICE is not.

Dr Berwick agrees that physicians should have a central role on policy-making committees. "Doctors would have a voice in the terms of their work, and rules for paying them would have to be maintained in a fair way," he says. "Right now, nobody knows how fees are set, and most doctors don't at all feel that they're in the driver's seat."

Dr Berwick is also a strong proponent of use of outcomes and quality data, as well as use of electronic medical records (EMRs). "Data would be an integral part of a single-payer system," he says. "This is already going on with commercial payers, and they are using data in ways that are not accountable or transparent. You need rules so that the data aren't misused and there are privacy protections."

Under a single-payer system, EMRs would be simpler to use and there would be fewer data-reporting requirements, Dr Berwick says. "Right now, doctors are driven crazy by multiple reporting and payment structures," he says. "It's very complicated and highly demoralizing. A single-payer system would be a lot simpler."


Dr Woolhandler says more work is needed before the United States embraces a single-payer system. "We have to get the word out about problems in the current system, and the ability of a single-payer system to resolve them," she says. "And we need good political leadership that can explain the advantages. Political challenges in Washington make it very challenging to adopt a single-payer system right now, but the situation could change rapidly. Look at the late 1950s. Who could have predicted all the reforms that happened the 1960s?"

Leigh Page is a freelance health care writer in Chicago.