Single-Payer Systems Explained

Single-payer healthcare systems have received a lot of attention in recent years. Many proposals for it have come and gone, and it still has much support. But, although it has been successfully introduced in several countries, it is not yet a part of the US healthcare landscape. 

Will it ever be a reality in the US? And perhaps more importantly, what would it take to achieve it? We look at these and other issues in the guide to the single-payer system below. You’ll find single-payer systems explained and the pros and cons of implementing such a system. 

What Is A Single-Payer System?

A single-payer system is a health care system in which a single-payer collects all the health care fees and pays all the health care costs. Healthcare providers collectively bill one entity, and that entity is generally the government.

This type of healthcare system can reduce the administrative time and costs associated with the multiple entities in traditional healthcare systems, with their various provider networks.

It sounds like a great idea, but it has yet to be implemented in the US. However, several nations across the world do have single-payer systems. Why have they done so? Despite differences in how they are run, single-payer systems usually have a common purpose.

Purpose Of One-Payer Health Systems

The purpose of a single-payer system is a streamlined, cost-effective, and efficient healthcare system. It aims to provide universal healthcare. 

The focus is no longer on the potential profits of offering healthcare and health insurance but on the well-being of the people. The glaring inequalities of the current healthcare system fall away. At least, that’s the idea. This is, sadly, not always the result.

Whether it is realistic or not, proponents of the system believe that a single-payer system is the answer for America. They suggest that it could address many of the problems with the current US healthcare system. 

Problems With The Current U.S. Healthcare System

Despite healthcare reforms like the Affordable Care Act (ACA) of 2010, affectionately known as Obamacare, there are still several problems with the US healthcare system. 

  • Healthcare is still too expensive for many average Americans to afford. If it were not for the ACA subsidies introduced a few years ago, many Americans would not be able to afford their health insurance. 
  • Most health insurance plans are primarily dictated by the provider networks that they support. These networks offer benefits to patients, like better-negotiated rates with the insurer. However, these benefits are often overshadowed by the restrictions. 
  • The US spends more on healthcare than other high-income countries. Yet most Americans complain of an inadequate healthcare system that they cannot afford. There are options for low-income families, like Medicaid and CHIP, but these also have eligibility requirements.
  • A large section of the healthcare budget is directed to administrative costs. And the profits for healthcare organizations, pharmaceutical companies, and health insurance companies appear to be more important than providing healthcare to all.

How Would The US Fund Single-Payer Systems?

In a single-payer system, the government is the single-payer. This is true virtually everywhere single-payer systems are used. But in truth, the bulk of the funding usually comes from taxpayers and is merely administered by the government. 

If such a system is implemented in the US, it will follow these same lines. Because taxes will be the primary funding source, the IRS will be heavily involved in US healthcare. Of course, they already are because they oversee the ACA’s health insurance subsidies and premium tax credits.

But their involvement would increase in a single-payer system. And the cost of running the system is not the only factor. There will be an initial cost as the system is set up. It takes time and money to overhaul a large country’s healthcare system completely.

The History Of Single-Payer Systems

The United Kingdom, Taiwan, and South Korea are examples of countries with a single-payer healthcare system. But although the term ‘single-payer’ was coined relatively recently, the idea behind it has a much longer history.

In the 1930s, President Franklin D. Roosevelt proposed a form of nationalized health care similar to these single-payer systems. The American Medical Association, amongst other organizations, opposed this plan. This led to the single-payer idea being dropped.

Undeterred by President Roosevelt’s failed attempt, President Harry Truman revived the idea in 1945 in an address before Congress. He, too, called for a comprehensive healthcare program of sorts. But like his predecessor, he met with fierce opposition.

Senator Ted Kennedy introduced the Health Security Act in the 1970s, which proposed a national health insurance program. It would be administered by the Federal government and funded by payroll taxes. However, although he had several supporters, the Nixon administration and the insurance industry were not among them. That spelled the end of the bill, which never even made it to a floor vote.

Several similar bills have been introduced in Congress over the years. But they have yet to come to fruition. Meanwhile, 17 countries across the world offer single-payer healthcare. The UK has had theirs since 1948!

Who Currently Supports Single-Payer Care In The US?

According to research into single-payer system support, many Americans favor a single-payer system for US healthcare, notably among the Democrats. Other surveys have had similar results. 

This renewed interest in the single-payer system for US healthcare led to the American Public Health Association policy statement of October 2021. It suggested that single-payer health care is the most efficient and equitable health system for Americans to adopt.

So, why hasn’t it happened? Many changes would have to be made to establish a successful single-payer system in the US. 

Health insurance coverage would have to be drastically reformed. There would have to be a shift from bureaucracy and profit to quality, value-based healthcare. Most importantly, any new proposals for a national healthcare system would need the support of healthcare stakeholders and policymakers.

The Pros And Cons Of One-Payer Healthcare

Like any other system, the single-payer system has some pros and cons. What are the advantages and disadvantages of introducing a single-payer system in healthcare for the US?

Pros

  • A single-payer system would allow people who currently can’t afford adequate healthcare to access it. The financial burden on average Americans would be reduced, allowing them a better quality of life.
  • The government would reduce its healthcare spending. Much of the budget is now wasted on administrative costs that would become redundant with implementing a single-payer system.
  • Accessing healthcare services would be less complicated and more user-friendly. Currently, most people are at the mercy of their health insurance plans. The terms and conditions in these plans can be challenging for a layperson to understand.

Cons

  • In a single-payer system, the government is responsible for paying healthcare claims, using money collected via taxes. While this is, in theory, a sensible approach, it can be open to abuse. The chances of corruption and mismanagement of funds are always higher in any system that relies on one body to oversee it.
  • A tax-funded single-payer system will require higher taxes, which is never a popular proposal. This could see Americans already feeling the stress of financial difficulty at their wits ends.
  • A single-payer system may provide more people with access to basic healthcare. But it could come at a price – less choice and less innovation. One of the advantages of the current system is that people can choose for themselves which provider networks to use. And to attract more interest, some of these providers offer the latest innovations. There would be no incentive to do so In a single-payer system.

Are Single-Payer Systems Successful In Other Countries?

According to the data available, 17 countries have healthcare systems that can be categorized as single-payer systems. 

It is important to note that not all single-payer systems are alike. There is a misconception that single-payer systems ensure free access to all healthcare services for everyone. This is not always the case.

Some of these one-payer systems may still require deductibles or copayments. A one-payer system does not necessarily cover all types of health services. That said, some countries have had great success with their single-payer healthcare, and some have not enjoyed the success they hoped for.

Canada

Canada has a universal healthcare system. Patients can choose their physicians and hospitals, but some services, such as prescription drugs, dentistry, and vision care, are not covered. Therefore, Canadians still have to pay out-of-pocket or have private insurance for certain services.

While long wait times are a constant problem for some healthcare services in Canada, this is not necessarily proof of single-payer healthcare failures. Instead, poor management of facilities may be to blame in such cases.

Taiwan

Taiwan is usually one of the first countries mentioned in a discussion on one-payer healthcare. The nation adopted its system in 1995 and has achieved an affordable and equitable healthcare system, which is the envy of wealthier countries.

Positive aspects of the system that have been noted include ease of healthcare access, comprehensive population coverage, affordability, and short waiting times for health services. However, there have been concerns about the quality of care as consultation times are often short. 

United Kingdom

The UK has had its National Health Service for a long time. They, too, are often cited in any discussion around this issue. It has been an overall success over the decades, but its detractors point out that it has slowly become overshadowed by bureaucracy, state monopoly, and inefficiency.

But the NHS has the support of most of the British public, who pridefully view their healthcare system. It’s the world’s largest publicly funded healthcare service. Regardless of their financial status, it provides all UK residents with universal health coverage. That’s something to be proud of.

What Happens To Insurance Companies In A Single-Payer System?

In a single-payer system, health insurance plans could become obsolete. Not necessarily though. As some countries’ single-payer health systems show, some services may not be covered. This would leave room for insurers to offer supplementary coverage.

Even if health insurance was no longer needed, insurance companies could still operate other forms of insurance. They would not necessarily go out of business but would merely shift their focus to different types of insurance.

Could The Single-Payer System Be Successful In The US?

Yes, the system could be successful in the US. However, there’s a lot of preparatory work to be done before the US can successfully introduce a single-payer healthcare system. And we don’t see it happening any time soon.

As our walk through the history of US single-payer system proposals showed, every attempt was thwarted. Intense and fierce opposition still exists in specific sectors, not least of which is the insurance industry. 

For now, health insurance is the best way to access good-quality healthcare. Is US healthcare perfect? No. But a good health insurance plan is the only way to ensure you and your loved ones are covered.

Without insurance, any medical emergency or health issues that may arise could have serious negative consequences for your well-being and financial security.  It’s your best decision in a multiple-payer healthcare environment for the foreseeable future.

Conclusion

A single-payer healthcare system has long been the dream, but this dream has never been realized in the US. Will it happen one day? Time will tell, but it doesn’t seem likely. 

What you can count on is the safety net of affordable, quality health insurance. Choosing a health plan may seem daunting with so many choices available. But at Enhance Health, we make choosing a health plan easy. 

Our consultants are knowledgeable about all types of health insurance in the US. We’ll help you find one that meets your health needs and your budget. Give us a call today.

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