Study Finds 90% of Single-Payer Healthcare Proposals Would Reduce Costs
A sweeping new study of proposed single-payer healthcare plans over the last 30 years suggested a high probability of both short and long-term cost savings.
A new study published January 15 by the journal PLOS Medicine concluded universal healthcare could bring significant economic benefits over the current privatized US healthcare system. Researchers for the report analyzed 22 single-payer plans that have been proposed over the past 30 years, 20 of which they determined could reduce American healthcare costs.
The study’s nine authors hailed from the University of California San Francisco, University of California Los Angeles and the University of California Berkeley. In an abstract, the authors wrote, “We 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.”
“We found a high degree of analytic consensus for the fiscal feasibility of a single-payer approach in the US. Actual costs will depend on plan features and implementation,” the authors concluded.
What is a Single-Payer System?
Physicians for a National Health Program (PNHP) has advocated for healthcare reform since 1987, educating physicians and health care professionals about the benefits of a single-payer system. PNHP defines a single-payer structure as “a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands.”
In layman’s terms, the government would operate as the insurer instead of companies such as Blue Cross Blue Shield, Aetna, and the like. Instead of enrolling in coverage either independently or through employers, people would automatically be covered through the federal government. In lieu of paying premiums, PNHP calls for merging the Medicare and Medicaid programs, in addition to diverting other sources of revenue and imposing “modest new taxes.”
The report published in PLOS Medicine found “a net cost reduction of 3 to 4 percent is likely initially, growing over time.” Of the 20 plans it said would bring savings, 19 of those would deliver reductions in the first year after implementation. According to the Centers for Medicare & Medicaid Services, the US spent $3.6 trillion on healthcare in 2018, amounting to $11,172 per capita.
Obama Laid the Groundwork
Healthcare has been a dividing issue in American politics for decades, but former President Barack Obama brought it to the forefront during the 2008 presidential election. In his first campaign, Obama advocated for systemic reform but shied away from calling for an overhaul and refrained from calling for a single-payer system. After two years in the White House, his administration and Congress managed to pass the Patient Protection and Affordable Care Act, commonly referred to as “Obamacare.”
The Affordable Care Act focused primarily on expanding healthcare coverage through the introduction of federal and state marketplaces and cost reductions, commonly provided through subsidies.
“If [people] are provided those subsidies and they have good, quality care that’s available, then they will purchase it. That is my belief. I never said that we should try to go ahead and get single-payer,” Obama said at the 2008 Congressional Black Caucus Democratic debate, according to On The Issues. “What I said was that if I were starting from scratch, if we didn’t have a system in which employers had typically provided health care, I would probably go with a single-payer system.”
Leading Democratic Candidates Support an Overhaul
Democratic candidates Sen. Bernie Sanders (D-Vt.) and Elizabeth Warren (D-Ma.) have distinguished themselves by calling for Medicare for All, another term for a single-payer system. Sanders campaigned on it in the 2016 Democratic primary and even after losing the nomination, continued to push for it in Congress by introducing a Medicare for All bill in 2017. The bill did not pass the Republican-controlled Senate, but he remained undeterred.
“We remain the only major country on earth that allows chief executives and stockholders in the health care industry to get incredibly rich, while tens of millions of people suffer because they can’t get the health care they need,” Sanders wrote in an op-ed for the New York Times. “This is not what the United States should be about.”
Warren appeared less eager to promote a single-payer system and after an initial delay to release a plan comparable to Sanders’, she made headlines by revealing her proposal would cost $52 million over 10 years. Her opponent’s idea would cost a drastically-lower $34 trillion, according to Urban Institute, a public policy think tank. Sanders admitted that the cost could soar to $50 trillion over the next decade, however, underscoring the difficulty in accurately predicting the true long-term economic effects of a single-payer system.
Differences in their plans lie largely in how they are funded. While Sanders proposes a tax increase, which will affect middle class families, Warren has chosen to promote a controversial wealth tax, two percent for every dollar earned over $50 million. She also highlighted capital gains and financial transactions, putting wealthy Americans in her crosshairs.
Not All Democrats are Onboard
Pushback for a single-payer system has come from both conservatives and democrats, such as presidential candidate and former Vice President Joe Biden. Biden lambasted Warren’s plan because he said it could not guarantee no tax increases for the middle class. Biden has steadfastly refused to support a single-payer system, instead promoting a mixed system, which would contain a government option, but leave private insurance companies in place.
Notably, his plan would cap healthcare premiums at 8.5 percent of a person’s income level and offer a government healthcare option for people unhappy with their private insurance company.
Ten-year cost estimates for single-payer plans range across the board, from Kenneth Thorpe, Emory University, who pegs costs at $24.7 trillion to The Center for Health and Economy on the high end at $44 trillion. Costs aside, 53 percent of Americans support Medicare For All, according to a November 2019 poll by Kaiser Family Foundation. As the Iowa Caucus approaches on Feb. 3, voters in favor of a single-payer system have options in the three leading Democratic candidates, but must choose between varying levels of systematic overhaul and methods to fund them.