As Republican efforts to repeal and replace the Affordable Care Act continue in the background, some Democrats are beginning to contemplate a new health policy goal: implementing a single-payer system. sen. Bernie Sanders, I-Vt., introduced a single-payer bill in mid-September with 16 Democratic co-sponsors, 16 more than he got when he introduced the bill two years earlier. but how is the health system financed now and how would “single payer” change that?
how health systems are financed
There are three main components to any single-payer or non-single-payer health care system: a patient, a payer (usually an insurance company or the government), and a provider. this is how money moves between them:
how multipayer systems work
Virtually all health care systems follow this general pattern, but payers can vary widely. In the USA. In the private insurance market, patients typically purchase coverage from one insurance company among many competing insurers. Because different people end up with different insurers, there are multiple payers in the US. uu. health system.
how single payer systems work
In a purely single payer system, as the name implies, there is only one payer, usually the government. This is analogous to how the United States administers some portions of Medicaid: the government provides coverage and no private insurers are involved.
sanders’ bill takes universal coverage close to this extreme: government insurance would cover so many services with such small copays that private insurance would be almost universally unnecessary. consequently, it would also be quite expensive: $32 billion over 10 years, according to a report by the urban institute. That’s an increase of more than 50 percent in federal spending, all federal spending, according to spending projections from the Congressional Budget Office. however, that would be partially offset because people would no longer have to pay premiums to private insurers, and the government’s monopoly could allow it to implement cost-saving measures.
but most universal coverage systems don’t look like that. It is expensive for a government to fund a comprehensive health care system, especially in places like the United States where costs are so high.
Instead, many governments pay for most, but not all, of their residents’ medical treatment. In those countries, people have the option of purchasing private “supplementary” insurance, which pays for services like dental care that the government health program excludes. People also often have the option of purchasing “supplementary” private insurance, which pays for copays and deductibles in the government insurance plan.
this is analogous to how traditional medicare (as opposed to medicare advantage) works in the united states. The government pays for a large part of medical services, but it is common for people to buy supplemental medigap plans from the private insurance market. And it’s common for people to buy Medicare Part D supplemental plans from private insurers to cover prescription drugs not covered by traditional Medicare.
Countries with universal coverage fall on a spectrum from the least pure to the purest single payer, that is, the governments that offer the least comprehensive care, where complementary or supplemental insurance is most needed, to those that offer the most complete attention. health coverage, with little need for private insurance. (Where one draws the line between “single payer” versus merely “universal coverage” is debatable and largely a semantic issue).
some countries, like norway, are closer to the “pure” end. they offer such comprehensive coverage that supplemental or complementary private insurance makes up only a small part of the system. In Canada, by contrast, 29 percent of health care spending comes from the private sector, and about two-thirds of Canadians have some form of private supplemental insurance, according to a Commonwealth Fund report.
It remains to be seen whether Democrats will rally around a single-payer plan and, if so, where it will fall on this spectrum.
icons by aaron steckelberg from the washington post.