What is a single payer health care system?
In general terms, it is a system that pays all medical pills through a single pool of money. Contributors to the pool help to establish a system of care for everyone, whether they can pay into the system or cannot afford to do so.
There are several pros and cons of single payer health care that must be considered, especially before transitioning from a free-market system to a single payer system.
Here Are the Pros of Single Payer Health Care
1. Everyone gets covered.
There are no questions about health insurance coverage or affordable care in a single payer system. Everyone is allowed to see the doctor when they feel ill, need treatment, or have an injury. It doesn’t matter if you are rich or you are poor. In a single payer system, health care is a right instead of being treated as a privilege.
2. Providers are paid at the same rate.
Patients don’t need to worry about a doctor deciding to charge them $320 per hour for a visit because their health insurance allows for that maximum. There aren’t different rates for people who are insured versus those who are uninsured either. Rate consistency enables medical providers to know exactly how much payment they will receive.
3. It creates spending leverage.
Smaller systems may create more competition, but that also limits their spending power. Large systems that use a single pool of cash create spending leverage because their size allows them to negotiate lower overall rates. In return, the costs of providing care through the use of medical devices, prescription medication, and other services can go down for everyone.
4. Private care can still be made available.
Private medical providers can establish services outside of the single payer system if they wish. These providers can set their own rates, allowing them to achieve their target profit margins outside of the single payer system.
5. The United States already has a single payer system in place.
Medicare and Medicaid are essentially single payer systems. The only difference is that they cover specific groups of people instead of the general population. At the moment, only senior citizens, young children, and those who have low incomes qualify for Medicare or Medicaid. The US could relatively easily convert its general population to a single payer system by expanding the existing Medicare and Medicaid systems.
6. Costs are reduced in a single payer system.
Canada has a single payer system and its spending is $2,233 less per person than in the United States. Canada has a life expectancy rate which is 2 years higher than that of the US and a lower infant mortality rate as well.
7. Different compensation structures can be implemented.
Although there is a level playing field in terms of provider payment, there are bonus programs that can be implemented to improve salaries. Providing proper healthcare, working in rural areas, and other possibilities can be legislated into the system to ease the transition from the free-market system to the single payer system.
8. Health insurance costs go away.
Although there are generally higher taxes for populations that have single payer systems, there are no health insurance costs that need to be paid. The resulting overall costs may be a little higher for most households, but there is also a guarantee of coverage. With some families paying more than $600 per month, even with employer-sponsored coverage, it may be cheaper for some to transition to this type of health care system.
Here Are the Cons of Single Payer Health Care
1. Medical providers may opt for private-pay only unless legally mandated otherwise.
For many medical providers, especially when converting from a free-market system, the idea of making less money per service is not appealing. Since may single payer systems allow for the establishment of a private-pay option, many communities may see a reduction or elimination of single payer system options unless the government mandates that care options continue to be provided.
2. It does not solve the doctor shortage problem.
One of the biggest problems that the United States faces is a shortage of qualified medical personnel. Forbes reported in 2016 that even with the growth of specialists, there will be a shortage of up to 94,700 doctors in the US by 2025 to care for the aging population. Even with a single payer system in place, patients are still going to be stuck with a lack of access issue in some regions.
3. The money for a single payer system needs to come from somewhere.
For countries that have already established a single payer system, the pool of cash that is used for care typically comes from taxation. This is seen in the US already as well through the Medicare/Medicaid salary withholding tax. Corporate and sales taxes are often raised to supplement the fund, with some countries putting higher taxes on gasoline.
4. There can be long wait times to receive specialized services.
In Canada and the United Kingdom, wait times can be excessively long to receive a non-emergency approved surgery. The UK has the goal of providing these services in fewer than 5 months after approval, but patients can often wait longer than 8 months for a needed surgery. In Canada, wait times often exceed 6 months and have continued to increase since 1993. In a free-market system, waiting times are rarely an issue.
5. It increases the size of government.
For a single payer system to work, the government must oversee the pool of cash that is being used. This creates an added level of bureaucracy that can slow down access to health care. For those who are looking to streamline government and get it out of their lives, the idea of a single payer system is a negative one because it adds influence instead of subtracting from it.
6. There may be a reduced effort to innovate.
When everyone gets paid the same rate, plus or minus a possible bonus, then there are reduced efforts to innovate within the health care industry. This can reduce the quality of care that can be provided, especially for those who cannot afford to go through a private-pay center.
7. Health insurance costs may not disappear.
In a single payer system, a certain level of health care is guaranteed. To access the private-pay market, health insurance will generally still be offered. This means some families with difficult health conditions to manage may need to pay health insurance costs and the additional costs of a single payer system.
The pros and cons of single payer health care show that there is potential with this idea, but there are difficult scenarios which must be effectively managed at the same time. A single payer system can be good or it can be bad. It all depends on each individual perspective.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.