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A Single Payer Healthcare System in the US

Paper Type: Free Essay Subject: Economics
Wordcount: 2091 words Published: 17th Sep 2021

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Various countries have adopted a various types of health insurance systems to protect their citizens against the financial risks of medical needs and to facilitate easy access to appropriate medical care. Broadly health insurance systems are classified into: single-payer and multiple-payer systems. In single-payer systems, one organization-typically the government-collects and pools revenues and purchases health services for the entire population, while in multiple-payer systems several organizations carry out these roles for specific segments of the population.

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Usually the term Single-Payer is used to describe a type of financing system. In the case of health care, a single-payer system would be an entity like a government run non-profit organization which would collect all health care fees, and pay out all health care costs. Health care delivery facilities like hospitals, doctors, nurses etc. remains in private hands and patients have guaranteed choice of care from providers. In U.S. Single Payer system is also known as Medicare for All. Single Payer system expands the cost-effectiveness and makes Medicare program more efficient to cover each and everyone in the United States. It creates a single-tiered system that covers all people equally regardless of age, income, employment, or diagnosis. This unified system would promote universal high quality healthcare, because quality of care would have to be kept high enough to be acceptable to all citizens.

U.S. has multi payer healthcare system. The collection of money for healthcare is done by government in the form of taxes from individuals and businesses; and the private insurance agencies in the form of premiums and other payments like co-payment and deductibles. In a similar fashion both agencies deliver the healthcare, private insurance agencies reimburses healthcare providers for the services used by privately insured individuals and government reimburses the healthcare service providers for the services used by publicly insured people like those enrolled in Medicare, Medicaid, SCHIP etc.

It is necessary to distinguish single payer from the ‘Socialized Medicine’ (as in United Kingdom), where the healthcare providing agencies are owned by the government. In single payer system government does not own the healthcare providing facilities. In socialized medicine the government owns the hospitals and the doctors and nurses are paid by the government. Single payer health system is a socialized health insurance system not a socialized medicine. In United States, Medicare can be viewed as a form of socialized health insurance, making it a kind of single payer system, where the doctors are in a private practice and are paid on a fee-for-service basis by the government, but it does not cover the whole population of United States. This kind of system has led to the rationing of healthcare in the country. If a person in capable to afford the care he gets it, and if he cannot afford, he doesn’t get it. According to Institute of Medicine, 18,000 Americans die because they don’t have health insurance. This is called rationing. The reason for this is that our system is not publicly accountable, no one in ultimately responsible for how the system works. In contrast, the Canadian health system in publically accountable so there’s no room for discrepancy, thus the single payer system in Canada is a success.

Currently U.S. healthcare system is expensive, inefficient and ineffective. U.S. spends nearly $8,160 per capita twice as much as other industrialized countries, but yet it is inadequate. Despite this, U.S. leaves 51 million uninsured and many other inadequately covered. U.S. spends more and gets less, reason being its patchwork system of for profit payers. U.S.’s private insures spend nearly one third of every dollar spent for healthcare on administrative costs and on those things that have nothing to do with it, for e.g. billing, marketing, overhead expenses, underwriting, huge profits and exorbitant executive pays. This make United States the most bureaucratic health care systemin the world. Single payer health insurance is the only way to recapture this wasted money. It would save around $400 billion annually, which is enough to provide comprehensive coverage to everyone without paying any extra. Also establishing a single payer health care system would provide a stimulus for the U.S. economy by creating 2.6 million new jobs and infusing $317 billion in new business and public revenues with another $100 billion in wages into the U.S. economy (source: Institute for Health & Socio-Economic Policy (IHSP) (2009). Single Payer/Medicare for All: An Economic Stimulus Plan for the Nation).

Peter Shumlin, newly elected governor of Vermont State, formally introduced the proposal of Single payer system in the state by 2014, which appears likely to be passed. If enacted, it will be first system of its kind in U.S. and Vermont will be the first state in U.S. to abolish most forms of private health insurance from the state and de-link health insurance from employment in the state.

However, the single-payer system also has some disadvantages that may make it unattractive to some. A single-payer system would lead to a wrenching change and create a huge, faceless bureaucracy. That prospect scares many physicians, even those who dread haggling with insurance companies over treatment for their patients. They also fear the power that would be conferred upon a single payer. The disadvantage that stands as the greatest obstacle to single payer is political in nature. At a time when many people feel that the private sector is better equipped to deliver high quality services to the population, it will be difficult to convince government agencies and politicians that government should take over the role of financing health care, especially when it would mean increased taxation. The government part of healthcare finance is inefficient because it fails to address key policy issues, fraud, and-for Medicaid- complex determination of eligibility. As health-care financing can become be a function of the federal government, it become sensitive to fluctuations in unexpected political climate. Budgetary adjustments in the healthcare system can have serious impacts on the quality of healthcare delivered.

Additionally, since this system virtually eliminates the private insurance companies, these wealthy and influential corporations would do everything in their power to prevent single payer from becoming a reality. The transition from the current health care system to a single payer would undoubtedly be very difficult. Thousands of people who work for private insurance companies would need to be shifted to other sectors of the economy. Though these individuals could be trained to work in the new system, they would still experience a significant change in their lives. More health care providers will be needed, and many insurance clerks can be retrained to enter these fields. Many people now working in the insurance industry are, in fact, already health professionals (e.g. nurses) who will be able to find work in the health care field again. But many insurance and health administrative workers will need a job retraining and placement program. Because of these considerations, most single payer advocates and policy analysts believe that any transition to a single payer system would necessarily be gradual, taking place over the course of many years.

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Profits of the pharmaceutical companies will drop because of government’s expanded role in purchasing prescription medication. Speaking for the entire population, the government would be able to negotiate lower prices for drugs, possibly by purchasing in bulk. Health care observers also fear that removing the profit motive from the health care system altogether would stifle investment and innovation in finding new treatments and drugs. If the federal government becomes the only payer, limiting potential profit, companies would be less likely to invest the huge sums necessary up front to develop new drugs and treatments.  Reduction in profits margins for the pharmaceutical companies will lead to less money devoted to research and development and a minor slow down in technological advancement. It is said that money drives innovation, thus weakening or eliminating the profit-motive may cause technological slowdowns throughout the entire medical field.

When the government lowers the price of health care and/or extends health insurance coverage for everyone, more people will want to use more health care services and the government has to find a way to ration care. Rather than rationing the healthcare by charging beneficiaries the full price of health care, they limit the budget of hospitals and physicians. Facing strict budgets that limit the amount of services they can provide, providers do not want anybody to take any of their budgeted dollars.

Another problem of a single-payer system is its reliance on rigid budgets. This will results in the demand for health care exceeding supply that, in turn, leads to rationing available care by forcing people to wait for long periods. That is a big cost and there are plenty of examples in which people in Canada have died while waiting on lists for 6 months to a year. Preventive care will not be promoted more because most of the available resources are allocated to acute or urgent care. In a single-payer system, however, there are limitations on budgets and prices which can limit the tasks performed by providers because no one is going to do additional tasks for which they will not be paid. Also there will be limitation to the ability of nurses to expand their practice in all settings. Under fixed and tight budgets, it will be difficult for the employers to increase wages in response to changing economic conditions. This could result in shortage of nurses, which will eventually negatively affect the willingness of many people to go into the nursing profession as alternative professions become more attractive financially. It is highly likely a single-payer system would lead to de-facto wage controls in the health care system, and the nursing profession would derive little benefit economically in addition to limited opportunities to advance professionally. Also the income disparity between medical specialties will shrink.

Another argument against single payer is that if physicians are paid according to fee-for-service, there may be no incentive for doctors to try and control costs. Earlier, Managed Care became more prominent because physicians were unable to control their costs. Having the government reimburse physicians on a fee-for-service basis may encourage exploitation of the system. Lastly, it may not be easy to change some of the negative perceptions Americans have about a single-payer health care system, long lines, inefficient bureaucracy, restricted choice, and lack of quality care are some of the inaccurate complaints against single-payer systems. Government control of the health care system makes the rationing problem worse as governments attempt to slow the use of services by limiting access to modern medical technology. Under government management, both efficiency and quality of patient care steadily deteriorate.

This primer has endeavored to articulate the nature and advantages of a single payer system. Solutions that achieve universal health care through mechanisms that build on the current system of for-profit employer-based insurance, while potentially beneficial, do not achieve the philosophical purity, administrative simplification, or cost control potential that a single payer system achieves. Single payer, however, has significant potential disadvantages that must be addressed. Although many of the disadvantages can be avoided through proper management of the system (e.g. funding the system at a very high level and insuring adequate capacity), others represent true tradeoffs that the American public must debate in its mind. The time for such debates is now. In the current system, insurance companies have a financial incentive to avoid insuring the people who need it the most, which means that more and more Americans suffer every year. It is only a matter of time before some type of reform takes place, and single payer should be a reform option that should be seriously considered.


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