Single-Payer Reform: Only Way To Get More Coverage, Better Benefits, And Lower Costs

| Educate!

Above Photo: Health care costs via Shutterstock

President Donald Trump and congressional Republicans have vowed to repeal and replace the Patient Protection and Affordable Care Act (ACA). Repealing it is relatively easy. Replacing it with “something great” is much trickier. The president has promised universal coverage and reduced deductibles and copayments, all within tight budgetary constraints. That is a tall order and unlikely to be filled by proposals that Republicans have offered thus far.
Speaker of the House Paul Ryan’s blueprint (1) would rebrand the ACA’s premium subsidies as “tax credits” (technically, the subsidies are already tax credits) and offer them to anyone lacking job-based coverage—even the wealthy—reducing the funds available to subsidize premiums for lower-income persons in the United States. He would allow “mini-med” plans offering miniscule coverage and interstate sales of insurance, circumventing state-based consumer protections. And he would augment tax breaks for health savings accounts, a boon for persons in high tax brackets.
Speaker Ryan would also end the long-standing federal commitment to match states’ Medicaid spending, substituting block grants that state governments could divert to nonmedical purposes. Moreover, decoupling federal contributions from actual medical expenditures amounts to a sotto voce cut. For Medicare, he would trim federal spending by delaying eligibility until age 67 years; replace seniors’ guaranteed benefits with vouchers to purchase coverage; and tie the vouchers’ value to overall inflation, which lags behind health care inflation.
In sum, Speaker Ryan’s proposal, and a similar one from Secretary of Health and Human Services Tom Price, would shrink the coverage of poor and low-income persons in the United States while maintaining (or expanding) outlays for some higher-income groups. That approach might save federal dollars by shifting costs onto patients and state budgets. But containing overall health care costs requires denting the revenues (and profits) of corporate giants that increasingly dominate care—an unlikely outcome of policies that expand the role of private insurers and weaken public oversight.
Although Republicans’ proposals seem unlikely to achieve President Trump’s triple aim (more coverage, better benefits, and lower costs), single-payer reform could. Such reform would replace the current welter of insurance plans with a single, public plan covering everyone for all medically necessary care—in essence, an expanded and upgraded version of the traditional Medicare program (that is, not Medicare Advantage).
The economic case for single-payer reform is compelling. Private insurers’ overhead currently averages 12.4% versus 2.2% in traditional Medicare (2). Reducing overhead to Medicare’s level would save approximately $220 billion this year (Table) (3). Single-payer reform could also sharply reduce billing and paperwork costs for physicians, hospitals, and other providers. For example, by paying hospitals lump-sum operating budgets rather than forcing them to bill per patient, Scotland and Canada have held hospital administrative costs to approximately 12% of their revenue versus 25.3% in the United States (4). Simplified, uniform billing procedures could reduce the money and time that physicians spend on billing-related documentation.
All told, we estimate that single-payer reform could save approximately $504 billion annually on bureaucracy (Table). Any such estimate is imprecise; however, this figure is in line with Pozen and Cutler’s estimate ($383 billion, updated to reflect health care inflation) (5), which excludes potential savings for providers other than physicians and hospitals. Additional savings could come from adopting the negotiating strategies that most nations with national health insurance use, which pay approximately one half what we do for prescription drugs.

Of course, single-payer reform would bring added costs as well as savings. Full coverage would (and should) boost use for the 26 million persons in the United States who remain uninsured despite the ACA. And plugging the gaps in existing coverage (abolishing copayments and deductibles, covering such services as dental and long-term care that many policies exclude, and bringing Medicaid fees up to par) would further increase clinical expenditures.

Studies provide imperfect guidance on the probable magnitude of changes in use under single-payer reform. Microlevel experiments indicate that when a few persons in a community gain full coverage, their use surges (6). But when many persons gain coverage, the fixed supply of physicians and hospitals constrains community-wide increases in use. For example, when Canada rolled out its single-payer program, the total number of physician visits changed little; increased visits for poorer, sicker patients were offset by small declines in visits for healthier, more affluent persons (7). Despite dire predictions of patient pileups, Medicare and Medicaid’s start-up in 1966 similarly shifted care toward the poor but caused no net increase in use (8).
Despite some uncertainties, analysts from government agencies and prominent consulting firms have concluded that administrative and drug savings would fully offset increased use, allowing universal, comprehensive coverage within the current health care budgetary envelope (9). International experience with single-payer reform provides further reassurance. It has been thoroughly vetted in Canada and other nations where access is better, costs are lower, and quality is similar to that in the United States.
The potential health benefits from single-payer reform are more important than the economic ones. Being uninsured has mortal consequences. Covering the 26 million persons in the United States who are currently uninsured would probably save tens of thousands of lives annually. And underinsurance now endangers many more by, for example, delaying persons from seeking care for myocardial infarction or causing patients to skimp on cardiac or asthma medications. Single-payer reform would also free patients from the confines of narrow provider networks and lift the financial threat of illness, a frequent contributor to bankruptcy and the most common cause of serious credit problems.
The ACA has helped millions. However, our health care system remains deeply flawed. Nine percent of persons in the United States are uninsured, deductibles are rising and networks narrowing, costs are again on the upswing, the pursuit of profit too often displaces medical goals, and physicians are increasingly demoralized. Reforms that move forward from the ACA are urgently needed and widely supported. Even two fifths of Republicans (and 53% of those favoring repeal of the ACA) would opt for single-payer reform (10). Yet, the current Washington regime seems intent on moving backward, threatening to replace the ACA with something far worse.



A Better Way. A better way: our vision for a confident America. 22 June 2016. Accessed at on 1 February 2017.
The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 2016 annual report of the Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 22 June 2016. Accessed at on 2 February 2017.

WoolhandlerSCampbellTHimmelsteinDUCosts of health care administration in the United States and Canada.N Engl J Med200334976875

HimmelsteinDUJunMBusseRChevreulKGeisslerAJeurissenPet alA comparison of hospital administrative costs in eight nations: US costs exceed all others by far.Health Aff (Millwood)201433158694

PozenACutlerDMMedical spending differences in the United States and Canada: the role of prices, procedures, and administrative expenses.Inquiry20104712434
BaickerKTaubmanSLAllenHLBernsteinMGruberJHNewhouseJPet alOregon Health Study GroupThe Oregon experiment—effects of Medicaid on clinical outcomes.N Engl J Med2013368171322

EnterlinePESalterVMcDonaldADMcDonaldJCThe distribution of medical services before and after “free” medical care—the Quebec experience.N Engl J Med197328911748

WilderCSVolume of physician visits. United States—July 1966-June 1967.Vital Health Stat 10196810160
Physicians for a National Health Program. How much would a single payer cost? A summary of studies compiled by Ida Hellander, MD. 2016. Accessed at on 2 February 2017.
Newport F. Majority in U.S. support idea of fed-funded healthcare system. Gallup. 16 May 2016. Accessed at on 2 February 2017.

  • DHFabian

    “Single-payer”/universal health care wouldn’t work here. We would need a separate system for the poor. While Canada was able to balance out costs, we have a different situation here. The general public doesn’t know how vigorous our war on the poor has been.

    In the US, our welfare reform has been so “successful” that the overall life expectancy of the US poor has already fallen below that of every developed nation. Common sense alone tells us that not everyone is able to work, and the statistics show that we simply don’t have jobs for all. While it’s a quite complex issue, it’s not unusual for those who become seriously ill/disabled to be unable to secure disability aid. They are just dumped.

    The bottom line is that there would be no logic to providing anything more than emergency room services to America’s poor, just to dump them back on the streets. Lack of adequate food and shelter take a very heavy toll on human health.

  • kevinzeese

    Wow — is that a nonsensical comment. Tell the poor who are on Medicare for the elderly and the poor on Medicare because they are chronically ill that the single payer program (Medicare) is not working for them. In other words — single payer is already working for the poor who are on it. And, research shows that Medicare for those over 65 results in equity in healthcare.

    Stop spouting your constantly negative inaccurate analysis. Almost every comment you make is negative — it can’t be done etc. — maybe you should just stop reading articles from this website because we believe it can be done; and we advocate for policies that help the poor, homeless, chronically unemployed and in poverty.

    Try being positive once in awhile and stop holding those of us working for positive change back with your inaccurate critiques.

  • Lorraine Heth

    Couldn’t agree with you more. Thanks Kevin.

  • Helga Fellay

    What an ignorant statement. Single payer works for all other nations and there is no reason why it would not work here. Disability and unemployment also exist in all the other nations in which single payer works so well. Try basing your opinions on facts and statistics, instead of your defeatist projections. The system we have now, which you describe in your last paragraph (emergency room services to America’s poor) is the worst, as well as the most costly, way with the worst outcome. In this, our current system, the state pays for outrageously high ER services for the poor, but refuses to provide the relatively inexpensive preventive and follow-up care needed by patients. It makes no logical sense and it ends up killing people.