What is Single Payer?

Single payer means there is one source responsible for reimbursing providers for treatment.  The closest thing we have to this in the United States is Medicare and because seniors like Medicare, Democrats refer to their version of universal health care as Medicare-for-all.

Single payer programs can be administered by a government agency, such as the Centers for Medicare and Medicaid Services or the government can contract with one or more private insurers, which is what is done in some other countries.

The primary advantage of a single payer system is that it reduces overhead costs.  Providers such as hospitals and doctors save money because they don’t have the hassle of filling out multiple forms and tracking reimbursement from different payers.  This reduces their costs as it takes fewer people to manage the billing and accounts receivable process.  If you go to the doctor for a physical exam, Blue Cross/Blue Shield will reimburse your physician one amount, Aetna another amount, and Medicare something else.  However, under single payer, providers know exactly what they will be reimbursed because there is only one source of payment.

When single payer is administered by a government agency, operating costs are much lower because government agencies are nonprofit entities.  For example, Medicare’s administrative overhead is estimated to be between 2% and 4% compared to private insurance companies with overhead costs of between 11% and 18%.[1]  For-profit health insurance overhead includes millions of dollars for marketing and executive salaries.

Estimates as to actual dollar savings from single payer vary from $350 to $500 billion annually; between 11% and 15% of total annual health care costs.  These are cost savings which can be passed on to all of us as lower insurance rates or as in my plan as a lower health insurance transaction tax.  To put this in perspective, imagine you have a $1,500 a month family health insurance plan, where you contribute $600 and your employer $900.  Assume a savings of 12% based on lower administrative costs from shifting to a single payer system.  This would reduce your contribution by $72 a month and save you $864 a year.  Likewise, your employer would save $108 a month and $1,296 a year for every employee with a family insurance plan.  That’s a powerful financial incentive for switching to single payer!

Under the universal health care plan I’m proposing, the National Health Insurance Program will replace all government programs such as Medicare and Medicaid as well as private insurance for medically necessary health care.  This doesn’t mean health insurance companies will go out business, but they will have to change their mission, role, and function within the health care marketplace.  The administrative cost savings from a single payer system mentioned above would also transfer to the universal health care program I’m proposing.  As a result, individual and corporate costs for health care will decrease.

Single payer means providers are paid from a single source; however, doctors, psychologists, physical therapist and hospitals, for example, continue to operate as independent providers.  This is important because Republican politicians and the right wing media such as Fox News portray single payer as communism or socialized medicine where providers work directly for the government.  This is patently false, and supporters need to make this distinction when defending single payer.

Finally, it should be noted Medicare-for-all is somewhat of a misnomer, as Medicare is NOT entirely a single payer system.  Depending on the service, Medicare typically pays 80% of the costs.  Seniors either pay cash or purchase supplemental insurance from the private sector to cover the other 20% of costs.  Most of these supplemental plans also offer coverage for prescription drugs, prescription glasses, and dental visits.  And there are out-of-pocket expenses for copays and deductibles.

In comparison, my universal health care plan is truly single payer.  When you go to the doctor or hospital you show them your national health insurance card and that’s that.  Because you’re constantly contributing to the insurance fund through the health insurance transaction tax, there are no deductibles or copays and no need for supplemental insurance.

Democrats are right in championing single payer as it saves individuals and businesses money and reduces the overall costs of delivering care.  As supporters of universal health care, we need to do a better job of conveying this information.

[1] https://www.politifact.com/truth-o-meter/statements/2017/sep/20/bernie-s/comparing-administrative-costs-private-insurance-a/

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