Healthcare Debates: Single-Payer vs. Multi-Payer

A gap in American health coverage has created an inequitable, fragmented, expensive, inefficient, and profit-driven landscape. Over 40 million Americans remain uninsured. According to The New England Journal of Medicine, more money is spent on administrative costs than on heart disease and cancer. But, among a group of rich countries, these problems are unique to the United States. To some, the root of the issue lies in the American use of a multi-payer healthcare system, when the majority of the wealthy modern world has moved towards single-payer systems.

Simply put, a single-payer system of healthcare is where a single entity is responsible for collecting the funds that pay for healthcare on behalf of an entire population. A multi-payer system, by contrast, allows multiple entities (e.g., insurance companies) to collect and pay for those services.

In reality, the term single-payer is murkier than that and there’s a lot of room for variation. When looking to our global counterparts, the single-payer system in some rich economies (Germany, the Netherlands, and Switzerland) allows people to enroll in multiple insurance plans that are run by both private companies and non-profit organizations. Other countries, such as the United Kingdom, have government both run hospitals and employ physicians. Each system is the result of numerous iterations and a long evolution.

If the U.S. wants to transition to a single-payer system, it has a long way to go. But it’s not starting from zero, either. Despite its current commitment to a multi-payer system, single-payer healthcare has a long history in the U.S. President Harry Truman endorsed such a system in 1945, which would’ve funded national health insurance through payroll taxes. When those proposals failed, a new single-payer system (Medicare) took its place.

Initially offered to the elderly, Medicare was designed to be eventually rolled out to the rest of the American population. A similar system, Medicaid, was developed for low-income families. But between these two groups (those of low-income and the elderly) a large gap in coverage has remained. President Obama’s Affordable Care Act sought to put the first steps in place towards covering that gap, but it’s been met with resistance.

The debate between single-payer and multi-payer healthcare continues to rage in the United States and remains a largely partisan issue. Many Democratic candidates in the upcoming 2020 election have built a platform centered around Medicare-for-All. Meanwhile, Republican candidates rally their base with commitments to undo any legislation remotely resembling the single-payer model.

But the issue of healthcare itself cuts across party lines. Over half of Americans worry “a great deal” about the affordability and availability of healthcare. According to February 2019 poll, over 70 percent of Americans want some form of universal healthcare, but the way such a plan would be enacted remains divisive. The main conflicts center around cost, care, and complexity. There are valid points to be made on each side.

Two main questions haunt the conversation around a single-payer system:

• How much will this cost?
• How are we going to pay for it?

But the answers aren’t unknowable. They’re just complicated.

The question of how much a single-payer system would cost has a wide range of answers. If something like long-term care were included in a single-payer plan, for example, the costs could rise significantly. If citizens were asked to pay a premium, meet a deductible, or pay a copay along with their services, the costs could drop. Overall, the unspecified cost of a single-payer proposal is often attacked as a weakness by its critics.

As to the question of how it will be paid for, it’s clear that any form of single-payer healthcare would require new taxes. But does that mean higher payroll taxes, income taxes, or sales taxes? Each has its own set of consequences and its own set of vocal opponents. Senators Elizabeth Warren and Bernie Sanders have proposed increasing taxes on the top one percent of the country in order to provide medical coverage for every American. Still, little can rile the average American more than the T-word from the mouth of a politician. Even though the out-of-pocket costs would be comparable (or less) than what people pay now, the average American may have more of a problem paying their government than they would a private company for the same service.

The retort to both of these questions is that a single-payer system saves people money in the long run. By eliminating for-profit private insurers, a single-payer model would cut the administrative costs of medical facilities. The government would pay something closer to an at-cost price. Currently, under the multi-payer model, the U.S. spends the most out of a list of rich countries and its health outcomes are also some of the worst. Reducing administrative costs to levels on-par with single-payer systems in Scotland and Canada could save the U.S. over $150 billion annually, according to a study published in Health Affairs.

Americans are right to see cost as a critical issue with healthcare. But a single-payer system seeks to alleviate, rather than exacerbate, the problem. A single-payer system could ensure that no one goes broke fighting cancer or no one goes into bankruptcy from a workplace injury. But it would require each American to dig just a fraction deeper into their pockets, invest in their future, and save everyone money over the long run.

America is the child of revolution and distrust of governmental authority runs deep within our blood. Anyone who’s stood in line at the DMV could justifiably raise an eye at turning healthcare into a similarly government-run proposition. While a profit-driven company may not have its customers savings at the forefront of its mind, it will be motivated to provide efficient and effective services to its highest-paying clients.

Under a multi-payer model, the more you pay, the better service you get. Wealthy citizens on premium plans can get better care and a wider array of options. The fear for many opponents of single-payer systems is that a routine trip to the doctor’s office could eventually resemble a trip to the DMV: long lines, long waits, and increased bureaucracy.

Non-essential and cosmetic services would not be covered by a single-payer insurance plan, and would thus be exposed to higher costs. But the bogeyman of single-payer causing a steep drop in the quality of care is largely bogus. In 2018, Public Health published a review of 49 studies on multi-payer versus single-payer systems found no difference in the quality, effectiveness, or efficiency of care. What it did find, however, was that single-payer systems were vastly more equitable.

This is the crux of what single-payer healthcare seeks to promote: equitable health services for the people who need it most. But there are valid concerns about how it looks in practice. The single-payer system for veterans in America, for example, has been met with strong rebukes as to the quality and efficiency of its care. But veterans largely report themselves to be highly satisfied with their care‚—higher than their satisfaction with private hospitals, in fact. How a single-payer system provides its care is largely a function of its design, which can vary drastically.

Each single-payer system across the globe is tailored to its own specific context. The single-payer system in Denmark differs from the system in Canada, which differs from the systems in Taiwan and the United Kingdom. The U.S. can’t simply plug in another country’s model and expect it to work. It needs to be rebuilt from the ground up.

Completely restructuring the country’s largest employer is a massive task, and it comes with seemingly endless technical questions. For instance, if a proponent of a single-payer system says the government should provide for all medically necessary services, what constitutes a “medical necessity?” Is dental care included? How about the cost of prescription drugs or gender reassignment surgery? Technicalities can quickly become extremely contentious and partisan points of division.

For proponents of single-payer healthcare, the answer to all these questions is to build off of what’s already in place. Leveraging the infrastructure of both the Affordable Care Act and Medicare, a single-payer system could be rolled out to every citizen over the course of a decade, slowly lowering the age and loosening the admissions requirements for these programs. A slow and methodical rollout of existing systems allows for time to make adjustments along the way. Individual states could choose their own level of involvement and speed of adoption, increasing the ability to customize and hybridize a single-payer model that works for every context, every region, and every person.

For those who prefer the multi-payer model, the answer to these questions is to avoid them and work with the system we already have. While that would spare government resources, it would also do little to address the current gap in healthcare coverage and do nothing to assuage the valid concerns of a majority of Americans. Complexity may be a hurdle to fixing healthcare in the U.S., but it shouldn’t be viewed as an insurmountable barrier.

At present, a multitude of plans for a single-payer system (or a hybrid system adopting single-payer elements) exists at both the state and federal level. Public opinion is likely to change further as more options are put into the mainstream eye. A majority of physicians already approve of a switch to a single-payer system, but, curiously, only half believe that their colleagues would support such a switch. Meanwhile, a majority of Americans are open to the idea of a Medicare-for-All approach.

But those who stand to lose the most from a switch towards single-payer healthcare (health insurers and pharmaceutical companies) represent a powerful, and wealthy, lobby. Still, while it’s unlikely that a nationwide transformation to a single-payer model would occur overnight, top consulting firms like PwC are advising their corporate clients to focus on ways to add value while still positioning themselves for a possible systemic change towards a single-payer system.

The Affordable Care Act introduced a soft system of government intervention in the healthcare space and further propositions by individual states and senators allow for more flexibility—and more equity—in the American healthcare system. Few of these systems are outright single-payer systems with no private option: instead, they represent a hybrid option that allows freedom of choice for its citizens, one that builds upon existing infrastructure. The further hybridization of single-payer and multi-payer models will continue to change the landscape, and the language, of what’s possible.

Given that healthcare polls above any other issue as the most important for Americans, it’s no surprise that the Democratic Party has made it its top priority for the 2020 elections. As single-payer healthcare enters into the national conversation, false analogies to socialism may give way to more nuanced debates about the manner and method of healthcare delivery. The U.S. may not be as quick to implement changes as its wealthier and healthier allies, but it’s also unlikely to give up on the cause.