Single-payer—often referred to as Medicare for All—is a policy solution that is receiving the most press attention and popular support since it was first proposed in 1990.
The United States is the only high-income nation without universal, government-funded or -mandated health insurance employing a unified payment system.
The US multi-payer system leaves residents uninsured or underinsured, despite overall healthcare costs far above other nations.
The concept behind “Medicare for All” is to create a single-payer, government-run healthcare program that covers all Americans, and not just older Americans who are currently covered by Medicare, thereby replacing the current health insurance system comprised of a plethora of public and private plans.
As with any social program, however, there has been fierce debate regarding the mechanics and feasibility of such a program, including among physicians.
Christopher Cai and colleagues at three University of California campuses examined 22 studies on the projected cost impact for single-payer health insurance in the United States and reported their findings in a recent paper in PLOS Medicine.
Every single study predicted that it would yield net savings over several years. In fact, it’s the only way to rein in health care spending significantly in the U.S.
All of the studies, regardless of ideological orientation, showed that long-term cost savings were likely. Even the Mercatus Center, a right-wing think tank, recently found about $2 trillion in net savings over 10 years from a single-payer Medicare for All system. Most importantly, everyone in America would have high-quality health care coverage.
Medicare for All is far less costly than our current system largely because it reduces administrative costs. With one public plan negotiating rates with health care providers, billing becomes quite simple. We do away with three-quarters of the estimated $812 billion the U.S. now spends on health care administration.
Administrative costs are so high because thousands of insurance companies individually negotiate benefit rules and rates with thousands of hospitals and doctors. On top of that, they rely on different billing procedures — and this puts a costly burden on providers.
Administrative savings from Medicare for All would be about $600 billion a year. Savings on prescription drugs would be between $200 billion and $300 billion a year, if we paid about the same price as other wealthy countries pay for their drugs.
A Medicare for All system would save still more with the implementation of global health care spending budgets.
Even more, savings are possible in a Medicare for All system because, like every other wealthy country, we would have a uniform electronic health records system.
Such a system generates additional savings because system problems would be easier to detect and correct. A uniform claims data system helps reduce health care spending for fraudulent services.
In 2018, total U.S. health care costs were $3.6 trillion, representing 17.7 percent of GDP.
Savings are in part a function of the benefits Medicare for All covers. The Mercatus report and others projected savings, even with the elimination of deductibles and out-of-pocket costs.
Under Medicare for All bills proposed by both Sen. Bernie Sanders and Rep. Pramila Jayapal, patients would not pay deductibles or coinsurance when they receive medical care.
Their bills also provide for vision, hearing and dental care, as well as long-term services and supports, such as home care and nursing home care.
No matter how you design a single-payer public health insurance system, it would have lower overall health care costs, so long as for-profit private health insurers no longer exist to drive up health care costs.
A key concern for many physicians has been that a single-payer plan will negatively impact earning potential, but an published article by Christopher Cai, MD, in the Journal of Internal Medicine makes the case that “physicians would prosper under single-payer reform.”
Organized medicine in the USA is shifting its position toward single-payer reform as Medicare for All has gained substantial support in Congress.
The American Medical Association recently left the Partnership for America’s Healthcare Future, a lobbying group that spent more than $100 million annually opposing both a public option and Medicare for All in federal election campaigns.
In 2020, the American College of Physicians and the Society of General Internal Medicine went a step further, endorsing both the public option and single-payer reforms.
Although some other wealthy countries rely on “private insurers” to provide benefits and spend far less than Americans do on care, those insurance underwriters do not operate in any way like corporations in the U.S.
Other wealthy countries dictate virtually every element of the health insurance people receive, including what’s covered, what’s paid, and people’s out-of-pocket costs — all identical for everyone. The insurers operate like claims processors or bill payers.
They follow the coverage and payment rules set by the government, nothing like the private health insurers in the U.S. which revel in complexity and confusion.
An exhaustive review of academic studies sought to assess the projected cost impact of a single-payer approach.
“In this systematic review, we found a high degree of analytic consensus for the fiscal feasibility of a single-payer approach in the US,” said Christopher Cai, the study’s author. “Actual costs will depend on plan features and implementation.”
“Future research should refine estimates of the effects of coverage expansion on utilization, evaluate provider administrative costs in varied existing single-payer systems, analyze implementation options, and evaluate US-based single-payer programs, as available,” said Cai.
“The government already pays for about two-thirds of health care costs. Among other things, it pays for Medicare, Medicaid, VA, TriCare and a wide range of state and local health care programs, along with private insurance for government employees and tax subsidies for private insurance,” said Diane Archer, a senior adviser at Social Security Works. “Whether you call it single-payer or Medicare for All, it isn’t some socialist pipe dream. It’s a sensible, efficient, and effective way to guarantee excellent health insurance to everyone.”
Researchers conducted an exploration that surveyed an expert panel and searched PubMed, Google, and Google Scholar lists for preexisting formal economic studies of the projected costs of single-payer plans for the US or for individual states.
Reviewer pairs extracted data on methods and findings using a template.
Researchers quantified changes in total costs standardized to the percentage of contemporaneous health care spending.
Additionally, they quantified cost changes by subtypes, such as costs due to increased healthcare utilization and savings due to simplified payment administration, lower drug costs, and other factors.
Researchers further examined how modeling assumptions affected results.
The search yielded economic analyses of the cost of 22 single-payer plans over the past 30 years.
Researchers found that 19 (86%) of the analyses predicted net savings (median net result was a savings of 3.46% of total costs) in the first year of program operation and 20 (91%) predicted savings over several years; anticipated growth rates would result in long-term net savings for all plans.
The largest source of savings was simplified payment administration (median 8.8%), and the best predictors of net savings were the magnitude of utilization increase, and savings on administration and drug costs (R2 of 0.035, 0.43, and 0.62, respectively).
Only drug cost savings remained significant in multivariate analysis. Included studies were heterogeneous in methods, which precluded us from conducting a formal meta-analysis.