Single-Payer or Bust

By providing a single tier of coverage to all, with automatic enrollment, comprehensive benefits, and no cost-sharing, single-payer provides a distinct—and more egalitarian—vision of universality.

By Adam Gaffney, M.D.
Dissent, Spring 2018

In the 1960s, a struggle took place over the fate of healthcare in Canada. On one side, there were the proponents of the single-payer program called Medicare, like the stubborn Scottish-born socialist Tommy Douglas. Medicare was modeled on a program passed in the province of Saskatchewan in 1961 under Douglas’s leadership, which provided universal coverage of physicians’ services (the province’s 1947 plan for universal hospital coverage had already been federalized in the late 1950s). And on the other side there were those who advocated a more gradual approach, such as Ernest Manning, the premier of Alberta, who went on television in 1965 to ask the nation to “look before we leap.” After all, the Saskatchewan program—funded by premiums and a slew of new taxes—had been implemented only after a bruising physicians’ strike, which ended only after twenty-three bitter, dangerous days that made international headlines. And that was just in one snowy, sparsely populated province—this was what Douglas was now demanding for the entire nation.

It wasn’t that Manning was opposed to expanding healthcare access. On the contrary, he reassured listeners that he was “100 percent in support of the proposition that high quality comprehensive medical services should be available to every citizen whether his income be large or small.” But, as a 1995 article in Alberta History described, he had philosophical differences with Douglas’s approach: he thought it neglected the importance of personal responsibility. Manning also foresaw practical problems with the Saskatchewan model. It would necessitate unpopular new taxes for all of Canada, while its lack of cost-sharing (that is, co-payments) would, he feared, encourage excess healthcare use. Its implementation would also require that existing medical insurance programs and the companies providing them be eliminated, a move he considered “unwise and unwarranted.”

Nor was single-payer the only option. In 1963, Manning had introduced a more incremental healthcare reform in Alberta, dubbed “Manningcare,” that achieved results, and which he thought could serve as a better, less disruptive model for the nation. “Like Obamacare,” wrote Canadian healthcare expert Greg Marchildon in 2016, “[Manningcare] . . . involved multiple tiers of coverage above a basic plan . . . and eschewed single-payer financing in favour of multi-payer administration through numerous private insurance carriers.” Private insurance would be expanded via public subsidization, while out-of-pocket payments—like co-payments—would be retained. Alberta had notable success in broadening coverage this way—achieving 80 percent coverage of the population—as Marchildon and Nicole O’Byrne note in Making Medicare: New Perspectives on the History of Medicare in Canada (2012).

Of course, the Canadian healthcare debate of the 1960s bears a striking resemblance to discussions in the United States today. The argument over “universal coverage” is basically over: there is now a broad consensus among liberals, leftists, and even some conservatives that expanding coverage is imperative. Yet a new debate has been brewing regarding the necessity of the Saskatchewan model—of single-payer healthcare.

“Single-payer is not, in itself, a principle,” declared scholar Harold Pollack last fall in Democracy. “It is one way to organize health-care financing.” An alternative way would be like Obamacare—a regulated and subsidized system of private insurance combined with an individual mandate to be covered—something he argued needed improvement. But Pollack asserted that regardless of which approach we embrace, both paths are tactics, or “means to an end”: the ultimate goal—and the one we all share—is not a particular financing arrangement, but universal coverage.

Others have made similar points, such as the economist Paul Krugman. Although a “commitment to universal health coverage” should “definitely be a litmus test” for Democratic candidates, he opined in the New York Times last August, “single-payer . . . isn’t the only way to get there.” The Netherlands, for instance, had what he called “Obamacare done right.” Other progressives (and also some conservatives) have similarly noted that it is not only the Netherlands but also nations such as Germany and Switzerland that have achieved universal coverage without single-payer.

This debate is a highly consequential one, and will only heat up as we head into the 2018 and 2020 elections. The question at its core is simple: should the Saskatchewan model be the standard progressive healthcare position—the one we demand of candidates seeking support from the left? Or, should we embrace alternative multi-payer models, perhaps a German or Dutch one? In other words, might Manningcare have been good enough?

Many roads to universal coverage?

A central argument for the multi-payer model of universal coverage—and today, the German, Swiss, and Dutch systems are typical examples—is that it offers a more gentle road to universality than single-payer. For instance, Pollack argued, the healthcare systems of these three nations look “surprisingly similar to America’s ACA marketplaces.” Krugman similarly noted that “the Dutch system works, which suggests that a lot could be accomplished via incremental improvements in the ACA, rather than radical change.”

On the one hand, they are right: nations with a range of healthcare systems—including many that do not exactly fit the single-payer mold—have universal coverage, or something close to it. On the other hand, would importing these other models actually be much less of a leap than single-payer?

Take Germany. According to a 2017 report by the Commonwealth Fund, 86 percent of the German population is covered through one of 118 not-for-profit social health insurance (SHI) sickness funds, which have boards that are controlled by workers and employers. Other Germans—such as the self-employed and civil servants—are mostly covered by insurance companies, both profit and not-for-profit. Under SHI, there is no co-payment for doctors’ visits, and no more than a €10 co-pay for a prescription or a day in the hospital. Consider, then, what a transition to the German system would entail in the United States. We would have to ask the health-insurance industry to graciously agree to mostly being replaced by a system of not-for-profit funds that would be partially controlled by elected workers’ representatives. Insurer shareholders would thus be largely wiped out. This would be a shiv only slightly less sharp than single-payer to the industry.

Or consider the Dutch model (itself partially based on the Swiss), which is perhaps the most frequently invoked alternative to single-payer. Traditionally, the Dutch had a system that resembled the German model: a majority of its citizens were automatically enrolled into a SHI fund, while the remainder, with higher incomes, could buy private plans. Through this system, it achieved near-universal coverage. In 2006, however, the nation passed a law replacing SHI with a mandate to buy highly regulated, highly subsidized private health insurance, similar to Switzerland; hence the frequent allusions to the Dutch system as an Obamacare-like model that we might follow. The analogy, however, is strained. Far from ushering in universal coverage, the 2006 proto-Obamacare Dutch law may have, at least at first, decreased coverage relative to the SHI system it replaced. “The process of implementing the new insurance regime has been complicated and difficult,” Kieke Okma and Luca Crivelli wrote in Health Policy in 2013. They note that following passage of the law, the percentage of those who were either uninsured or delinquent in their premium payments at first “went up sharply.”

The Dutch, in other words, achieved universal coverage with a German “Bismarck” model, and then partially privatized it through an Obamacare-like reform in 2006. At the end of the day, they still had a system close to universal coverage. But that’s an awfully complicated path to follow—and not a convincingly easier one than expanding Medicare, a popular program, to the whole nation.

Then again this is probably all beside the point. Those pointing to the healthcare systems of these nations are not actually arguing that these models should be transplanted to the United States—changes that could be as (or almost as) disruptive as single-payer. Rather, what they are mostly talking about is retaining the architecture of the Obamacare system, and building on it—with a public option, for instance, or a Medicare buy-in—so as to less disruptively reach the goal that we all share: universal coverage.

To be clear, advocates of European models are not contending that single-payer is wrong-headed in theory. They are, however, suggesting that a universal public program that replaced all existing private insurance arrangements would cause a riot in the United States. Joshua Holland, writing in the Nation, worried about the “loss aversion” that a solid chunk of the population would have about their “decent coverage” being replaced by Medicare for All. Krugman, sociologist Paul Starr, political scientist Jacob Hacker, and others have made more or less the same point: more than 150 million people get plans through their employer, and some of them won’t want that coverage replaced, not even by something better, or so the argument goes. Moreover, as Hacker noted in the American Prospect, although new taxes to fund single-payer would replace employers’ premium contributions (which effectively come out of employees’ wages), the former would be far more visible to workers than the latter. The GOP and fellow travelers would pounce, “hammering Democrats for wanting to raise taxes steeply while taking away Americans’ health care.”

These predictions indeed sound frightful. Fortunately, they are far off the mark, both in terms of politics and policy. For instance, what are we to make of the apprehension about “loss aversion,” of asking people to give up their current private plan for improved Medicare? The best response to this concern comes from policy writer Matt Bruenig, who points out that Americans are constantly being forced to change their healthcare plans. People change plans when they get a new job, lose a job, or whenever employers decide to change the options they provide. They transition into and out of Medicaid as their incomes rise or fall. Those buying plans on the Obamacare marketplaces switch plans as frequently as once a year (indeed, they are encouraged to “shop around” every enrollment period to avoid being ripped off). But most importantly, essentially every single American will transition to Medicare upon turning sixty-five years old. Implementing Medicare for All, Bruenig notes, would simply expedite this process: everybody would gain Medicare today, rather than however many years in the future, and would never have to change again.

Meanwhile, the idea that invisible healthcare costs (that is, employer premium contributions) would be replaced with visible costs (new taxes) and thereby lead to popular outrage is dependent on how we design the program, and thus can be easily avoided. For instance, Medicare for All could be financed (at least in part) by imposing employer-side payroll taxes to replace today’s employer-side premium contributions, a point made by Josh Mound in this issue. One “hidden” cost would hence be replaced by another. Moreover, Medicare for All, by eliminating out-of-pocket payments (like co-payments and deductibles), would make using the new coverage far less financially onerous, something that would be warmly welcomed by the 42.9 percent of privately insured Americans under sixty-five who have high-deductible health plans. Care that is free at point-of-use is an incredibly powerful selling point for single-payer, particularly as the high-deductible health plan becomes the new normal.

But political considerations aside, there are also critical policy advantages to achieving universality via a single-payer, as opposed to multi-payer models. Public health scholars David Himmelstein and Steffie Woolhandler have studied the issue of comparative administrative spending over many years and estimate that a single-payer transition could save some $500 billion a year, savings that could cover the costs of expanded coverage without requiring an overall increase in national healthcare spending. Multi-payer reforms, by contrast, offer no such savings, at least not on a comparable scale.

Moreover, ensuring that nobody falls through the cracks—that 100 percent coverage is actually achieved—would not be easy without automatic enrollment of all the uninsured, something that is not offered by the currently discussed incremental reforms (Hacker’s proposal for a sort of automatic public option based on Medicare is an exception). Consider, for instance, that the Congressional Budget Office (CBO) estimated that an old iteration of the public option would not significantly increase coverage at all. We don’t have a CBO estimate for Paul Starr’s proposed optional Medicare buy-in for those aged fifty-five to sixty-four who also lack employer coverage (a minimalist reform if there ever was one), but it’s safe to assume it would leave the majority of the uninsured still uninsured.

In sum, the political road to Germany and the Netherlands could prove just as steep as the one to Saskatchewan. Meanwhile, it is unclear if the path to Alberta would take us to the destination of universal coverage at all. But even if it did—even if we can and do achieve universal coverage through an improved Obamacare system—what sort of universality would it be?

The two souls of universal healthcare

A central issue in this debate, mostly side-stepped by advocates of a non-single-payer approach to expanding healthcare coverage, is the meaning of healthcare universality. It is not a simple binary of whether or not people are “covered.” Poor-quality coverage—which so many of us today have—is only incrementally better than no coverage at all. The World Health Organization, for instance, sketches out the three dimensions of universal coverage: the percentage of the population “covered,” the degree of cost-sharing (that is, out-of-pocket payments like co-pays or deductibles), and finally, the comprehensiveness of benefits. To these I would add a fourth element, of equity: to what extent does the nation offer a similar level of access to providers, hospitals, and other healthcare goods and services to all, regardless of economic means?

It seems very unlikely that non-single-payer roads to universal coverage would, at least in the American context, achieve universality in all four of these domains. For instance, incremental reforms of the Obamacare system that further decrease the number of uninsured would probably do little to turn the tide of growing “underinsurance.” Some 41 million people between the ages of eighteen and sixty-four were underinsured (that is, had insurance, but with onerous out-of-pocket costs on things like co-payments or deductibles) in 2016 according to a recent report from the Commonwealth Fund—up from 16 million in 2003. These underinsured individuals are less likely to obtain healthcare when they need it: they skip doctors visits and avoid filling prescriptions, and are more likely to end up in medical debt.

Single-payer, on the other hand, could eradicate underinsurance, by doing what Saskatchewan did, and making coverage “first-dollar”—that is to say, without co-pays or deductibles—for everyone. This was something strongly advocated by Tommy Douglas (and resisted by Manning), and which was made universal by the Canada Health Act of 1984. In the United States today, it is reflected in the single-payer bills in Congress, both of which lack cost-sharing (with the exception of limited co-pays on some prescription drugs in the Sanders bill).

Now, some will argue that eliminating cost-sharing in this fashion is unnecessary, pointing to various European nations that have co-payments or deductibles but also universal coverage. This is true, but there are important caveats. First, European cost-sharing is generally much lower than that of the United States; for instance, as mentioned, there are no co-pays for doctors’ visits in Germany. Second, when cost-sharing is more than nominal in those nations, it may very well be doing harm. In the Netherlands, for instance, the standard medical deductible has been raised to the equivalent of $465, which sounds like a bargain by American standards, but which has nonetheless raised concerns that “greater numbers of people [are] abstaining from or postponing needed medical care,” as was noted by the Commonwealth Fund.

Third, Europe has a far better-developed social-safety net than the United States, which makes relatively modest co-payments less harmful. Underinsurance is a particularly pernicious problem in the United States because we already face staggering (and climbing) income inequality, together with enormous social and racial disparities in wealth. Perhaps high co-payments can work to a degree (although I am not convinced) in a nation like Switzerland, which has the highest median wealth levels of any country in the world. In the United States, however, the situation is rather different: for instance, a November study from the Kaiser Family Foundation found that less than half of American families owned enough liquid assets to cover a $4,000 medical deductible. Perhaps via a massive, historic redistribution of wealth, we could all afford $4,000 deductibles. (I’d still be against deductibles, given their deterrent effects on the use of needed healthcare.) But regardless, that’s going to be a far steeper climb.

In other words, although it is true that nations like the Netherlands or Germany provide, for the most part, equal access to healthcare for their citizens, this is less due to the specific architecture of their systems and more because of their political economies. Historically, European nations have more developed welfare states, stronger unions, and less inequality, all of which are the products of more potent left-wing parties and labor movements that succeeded in reforming capitalism in the post–Second World War period. But this never happened here. The United States therefore needs a healthcare system that has universalism—and equity—built into its very foundation.

Consider also that non-single-payer models would mostly not advance us toward universality along the third axis of universal coverage, that of the comprehensiveness of covered benefits. For instance, there is a massive gap in dental access in this nation (as explored by Mary Otto in her article in this section), in part because dental care is covered by few health plans, especially among adults. Meanwhile, outside of Medicaid, coverage of long-term care is largely non-existent. Universality must mean not just universal “coverage,” but coverage without financial barriers and with comprehensive benefits. Major U.S. single-payer proposals, like that of my organization, Physicians for a National Health Program, and the bills in Congress, envision (for the most part) such a broadening of benefits; non-single-payer proposals typically do not.

There is a final way in which multi-payer models would fall short of meaningful universality in the U.S. context. There is a hierarchy of health plans in the United States, with narrower or broader access to networks of doctors or hospitals depending on whether one has Medicaid, Obamacare, a high-quality or low-quality employer plan, or Medicare. Single-payer does not merely mean a unitary financing source, but an equitable, single tier of access: one big network to replace the hierarchy of smaller, fragmented, and inequitable ones, which are often divided by race and class.

Pollack is thus wrong. Single-payer is not, as he asserts, simply one tactic among many to achieve universality. For there are two souls of universal healthcare in the American context, to repurpose Hal Draper’s famous framing about the dueling souls of socialism. By providing a single tier of coverage to all, regardless of wealth or station, with automatic enrollment, comprehensive benefits, and no cost-sharing, single-payer provides a distinct—and more egalitarian—vision of universality. Although the analogy is loose, this can be seen as a sort of universal healthcare “from below.” In contrast, a patchwork approach to universal coverage, which incorporates a privatized hierarchy of different levels of coverage, without comprehensive benefits, with varying degrees of cost-sharing, perhaps undergirded by a restored government “mandate” to buy insurance, can be seen as a type of universal healthcare “from above.” And it constitutes a far narrower vision of universal coverage that falls short of the full universality that our fractured and increasingly unequal society urgently requires.

Lessons from Canada

As Americans looking back at the Canadian healthcare debate of the 1960s and considering our own way forward, it may seem unlikely that it was the reform model championed by Tommy Douglas, and not Ernest Manning, that was victorious. “In the early 1960s,” Marchildon wrote in Making Medicare, “it was far from a foregone conclusion that Saskatchewan’s version of Medicare would become the model for the rest of the country. Medicare could just as easily have taken the form of Manningcare, which had been supported by the majority of provinces, the medical profession, and the business establishment.”

So why did Douglas’s vision prevail? In part, because single-payer advocates were successful in the field of ideas. Early in the debate, in 1961, a Royal Commission on Health Services, the so-called “Hall Commission,” was called to weigh the opposing options. According to Marchildon, writing in the Journal of Canadian Studies, the Hall Commission ultimately recommended the Saskatchewan model over Manningcare for two familiar reasons: first, because single-payer would produce more administrative savings; and second, because of “the benefits associated with first-dollar coverage of the entire Canadian population on the same terms and conditions.” The Hall report, he notes, raised hopes; pressure from the public—and from Douglas, who was then a leading opposition figure in the national parliament—succeeded in pushing the Liberal government to pass a national physician care bill in the Saskatchewan mold in 1966. As a result, private insurers were pushed out of the physician care markets where they were operating, and within a few years, all the Canadian provinces had universal healthcare programs.

Consider, for a moment, that if Manningcare had instead been the winning model, the Canadian healthcare system would today look vastly different—and probably a lot more like ours. The costs of healthcare would probably be much higher, some Canadians would likely still be uninsured for physicians’ services, and cost-sharing might have persisted, such that class would remain an important determinant of who has access to physician care and who does not. “While it might have been politically easier for Canadians to subsidize private health insurance to expand coverage,” Marchildon told me by email, “the result for generations after would have been far more expensive and inequitable.”

None of which is to say that the Canadian model is perfect. Although it is quite universal from the perspective of population coverage (100 percent) as well as the depth of coverage (no cost-sharing for medically necessary physicians’ services, diagnostic tests, or hospital care), it has failed to achieve universalism in terms of the breadth of coverage (outpatient prescription drugs and long-term care are not universally covered services, a point acknowledged by Marchildon in a 2014 article).

Yet these are shortcomings for Canadian progressives to remedy—not mistakes for American progressives to replicate. What we should instead emulate is Douglas’s egalitarian healthcare vision.

As a child in Scotland, goes an oft-told tale he narrated to journalist Chris Higginbotham in 1958, Douglas one day tripped and fell on his knee, an injury that injected bacteria deep into his bone, causing a chronic infection called osteomyelitis. After multiple primitive surgeries performed by country doctors in Scotland, the infection was thought to have been cured, but after the Douglas family moved to Canada, it came back with a vengeance—and Douglas was told the leg would have to go. Fortunately, a prominent orthopedic surgeon at the children’s specialty hospital in Winnipeg agreed to take a stab at the infection—and, miraculously, succeeded in saving the child’s leg. Douglas would note that though he was grateful to this man, he also knew that had the prestigious physician not offered to perform the procedure for free, he would have lost his limb, for his family was strapped for cash. And he felt that no child should ever be put in such a position. “[O]ut of this experience,” Douglas said to Higginbotham, “I came to believe that health services ought not to have a price-tag on them, and that people should be able to get whatever health services they required irrespective of their individual capacity to pay.”

The story of Douglas’s rescued leg—and how it inspired him—is now a chestnut of Canadian lore. Manningcare, on the other hand, barely amounts to a minor historical footnote—and the nation has a far better healthcare system for it. It is a lesson we would be wise to heed today when deciding which path to follow.

Dr. Adam Gaffney is a physician, healthcare researcher, universal healthcare advocate, and writer. He is the author of "To Heal Humankind: The Right to Health in History" (Routledge, 2017).