Single-payer health care is having a moment.
The unexpected success of Sen. Bernie Sanders’ (I-VT) presidential campaign, Democratic lawmakers searching for a new agenda in the Trump era, and the fact that Obamacare has revealed both the benefits and the limitations of a market-driven plan to expand health access have all combined to make a unified, government-run health plan seem like an attractive solution to our broken system.
Nearly every Senate Democrat with presidential ambitions has signed on to Sanders’ latest Medicare for All bill. It’s starting to look like single-payer is a policy that could actually happen.
It’s easy to see the benefits of pursuing this policy. If implemented successfully, a single-payer system is vastly superior to our own. Canada’s single-payer health care system, for instance, is more than twice as efficient as America’s current mash-up of government programs, state-federal partnerships, private-public partnerships, and somewhat regulated markets. We spend more than twice as our neighbor to the north on each person’s health care, yet we have much worse health outcomes; our average life expectancy is nearly three years less than Canada’s.
But figuring out how to move from our current system to a single-payer model will not be easy. It will require difficult choices about how much pain we are willing to make fairly large groups of Americans endure in the short term so that we can all be better off in the long term. It will require lawmakers to confront some of the most powerful and, in at least one instance, sympathetic interest groups in the nation. And it will require patience, as it will also require us to decide just how long we are willing to wait to smooth the transition into single-payer.
Now, lawmakers who support single-payer will need to close the gap between a promising theory and an array of policy and political challenges. They will need to answer one of the hardest questions in politics — how long can we wait for overdue reform? — and they will need to answer this question at a time when getting it wrong could sabotage their movement.
How will you keep hospitals from shutting down?
The term “single-payer” refers to a system where a single insurance provider, typically one run by the government and funded by tax dollars, pays the health costs for a particular population. This is a distinct concept from a system that ensures “universal” coverage, meaning that everyone within a nation is entitled to care. A system can be single-payer but not universal (as is the case with Medicare, which primarily covers the elderly), and it can be universal without being single-payer (as could be the case if the Obamacare exchanges offered more generous subsidies and did not exclude certain populations).
But when a system is both universal and single-payer, that means that the government-run health plan has a tremendous amount of power to bargain down health prices.
Health providers typically charge exorbitant sticker prices for medical procedures, but these sticker prices are merely an opening bid in a bargaining process between insurers and providers. Larger insurers typically pay lower prices because they can threaten to take away a substantial network of patients if a doctor doesn’t charge less, whereas smaller insurers — and the uninsured — can pay out the nose.
A major reason why Canada’s health costs are so much lower than those in the United States is because Canada’s single-payer plan can drive a very hard bargain with Canadian health providers. American providers, meanwhile, can play atomized insurance companies off against each other.
One consequence of this dichotomy is that American hospitals have grown quite accustomed to the very high prices they can charge to American insurers, and they’ve built their business models around them. As Princeton’s Paul Starr explains, the American health care system’s “investments in medical technology, the physical infrastructure of hospitals and other facilities, the patterns of medical training and specialization, and the size and structure of the health-care labor force” all presume high levels of health spending. Hospitals and doctors’ offices are essentially set up to operate on the assumption that our system will remain broken.
If we suddenly moved to Canada’s more efficient system tomorrow, the immediate impact would be retired doctors, laid off nurses, and closed down hospitals. Health outcomes would get bad very quickly, as many patients were unable to obtain care. Fox News would have a field day.
There are ways around this problem, but all of them come with a cost. We could accept very high taxes. The federal government could take on a great deal of debt, at least in the short term. Or we could put a lot of effort into transitioning into a new health care model before fully implementing the single-payer system.
How will you pay for it?
Because America has put off a reckoning on its spiraling health costs for so long, they have grown like a cancer. The sheer cost of paying for America’s massive health bills is probably the biggest obstacle to a single-payer system.
Indeed, Professor Starr suggests that our health costs have grown so much that a single-payer plan would be quite difficult to achieve. “If we could wind back the clock to the 1940s, when health care was just 4 percent of GDP and private insurance was just beginning to develop,” he writes, “we might well be able to design a national insurance program.” But, without such a program in place, there’s been no adequate downward pressure on health providers charging more and more for services, and the health sector has devoured more and more of our economy. It’s now about 17.5 percent of GDP.
Implementing a single-payer system tomorrow would mean that the government would pick up all — or at least, nearly all — of those costs. That would require massive new taxes.
An analysis of the Sanders campaign’s single-payer health plan by Emory health policy professor Kenneth Thorpe, for example, finds that the “average annual cost of the plan would be approximately $2.5 trillion per year,” a staggering number when you consider that the federal government spent only $3.9 trillion on everything it spent money on in 2016. After accounting for the taxes necessary to fund such a program, Thorpe estimates that “over 70 percent of working privately insured households would pay more under a fully funded single-payer plan than they do for health insurance today.”
Thorpe’s estimates are more modest than others. The Urban Institute determined that the Sanders campaign’s plan would increase federal expenditures by $32 trillion over the course of a decade, or $3.2 trillion per year — just slightly less than the $3.3 trillion in total revenues the United States brought in in 2016.
Of course, there are other ways to design a single-payer program that will produce less shocking numbers.
One option is to cover fewer services. During the 2016 campaign, the plan put forth by Sanders was particularly generous, covering services like long-term care that are not covered by traditional Medicare.
Once a single-payer plan is in place, it could eventually use its position as the lone payer of health costs to drive down health costs. For instance, Urban’s analysis assumes “that the Sanders plan would pay physicians and other providers at Medicare rates for all enrollees” — but paying health providers much less than Medicare currently offers would ultimately drive down costs.
Designing a single-payer model that ramps down costs too quickly, however, presents other challenges. It would risk putting many health providers out of business and leaving patients much worse off — especially in rural areas where there may not be many options to begin with.
Health providers most likely could adapt to a slower ramp down, but this would leave the government with three unpalatable options. It could collect massive amounts of tax revenue until health prices climb down to more reasonable levels (in Canada, health care only accounts for 10.2 percent of GDP; the OECD average is 8.9 percent). It could borrow tens of trillions of dollars and hope that health costs decline fast enough that the government will eventually be able to pay off this debt. Or it could delay implementation of a universal single-payer program until other measures are taken to drive down costs.
How fast will you implement universal, single-payer coverage?
The trade-off in deciding how fast to implement a single-payer plan — do you move quickly and risk hospital bankruptcies, or move slowly and delay a beneficial program? — presents a difficult problem for policy wonks. But it presents an equally challenging political problem.
It is possible that President Donald Trump’s unpopularity will hand Democrats the commanding majorities they will need to enact major health reform in 2021 — much like George W. Bush’s unpopularity and a major recession handed them similar majorities in 2009. But, as the 2010 midterm elections revealed, big congressional majorities are hard to maintain.
If Democrats move too quickly, in other words, they could disrupt the health sector in ways that will harm many Americans and discredit the single-payer project. But if they move too slowly, they are likely to lose their ability to enact new legislation before the project is complete.
Different lawmakers have responded to this conundrum with different timetables. Rep. John Conyers’ (D-MI) single-payer bill, which currently has 117 co-sponsors in the House, calls for a massive new single-payer infrastructure to be built in just two years. Sanders’ latest single-payer proposal, which is distinct from the one he proposed as a presidential candidate, would ramp up over four years.
Other lawmakers offer incremental steps in the direction of single-payer, such as Sen. Brian Schatz’s (D-HI) Medicaid buy-in bill or Sen. Chris Murphy’s (D-CT) Medicare buy-in bill, which could gradually increase the percentage of Americans in government-run programs, eventually allowing those programs to drive a harder bargain with health providers (though Schatz’s bill would also increase the amount Medicaid pays doctors, which would be a step in the other direction).
A middle ground between these two proposals would be for Congress to enact a series of bills that either lower the Medicare eligibility age, increase the population eligible for Medicaid, or both. These bills could potentially be coupled with provisions lowering the cost of care, as government-run programs capture more and more of the health insurance sector.
How will you confront the doctor’s lobby?
The advantage of a single-payer program, of course, is that it allows patients to receive many of the same services for less money. That means that there are some big losers in a world with single-payer insurances — hospitals, physicians, and other health providers who aren’t going to be happy to learn that they’re about to take a big haircut. All of these groups, moreover, have powerful lobbies.
The American Medical Association in particular has a long history of trying to scuttle legislation that could cut off the medical profession’s ability to suck up more of the nation’s money with each passing year.
As I detailed earlier this year during the debate over the GOP’s effort to repeal Obamacare, the AMA ran national campaigns under the Roosevelt, Truman, and Kennedy administrations designed to frighten Americans about the specter of universal health care or “socialized” coverage. After President Harry Truman pledged to create a national health insurance system, for example, health providers distributed 55 million pamphlets that included a scare quote — “Socialized medicine is the keystone to the arch of the Socialist State” — falsely attributed to Soviet leader Vladimir Lenin .
Since then, the AMA has somewhat moderated. The group supported the Affordable Care Act. But its support was contingent on designing a piece of legislation that addressed some of its concerns.
Before the ACA, the Clinton health plan was killed in part due to scathing ads run by a coalition of health insurers. Fearing the power well-moneyed groups have to halt reform, the Obama administration specifically designed the ACA to balance the interests of various players in the health industry — which ultimately enabled it to pass a bill with support from groups like the AMA and the American Hospital Association, but which also limited the steps the law could take to control costs.
If Congress looks toward a single-payer plan in the future, all of these groups are likely to make killing the legislation a top priority — and lawmakers need to figure out how to push back.
What will happen to people with employer-provided plans?
More than half of America’s non-elderly population is insured through their employer. And polls show that about two-thirds of this population is satisfied with their health plan. That’s a huge chunk of Americans who can potentially be whipped into a frenzy if they think that the government is going to take away something that they both like and depend upon.
It’s difficult to exaggerate how much this fear of upsetting people with employer-provided plans penetrates into the liberal health wonk community. Barack Obama cited the fact that “most people have become accustomed to getting their health insurance through their employer” as one of the reasons why he did not propose a single-payer plan in 2008. Just this morning, Vox’s Ezra Klein published an interview with former Democratic presidential candidate Hillary Clinton in which she raised the same concern:
You’re going to tell 50 percent of America, “You are no longer to have your employer-based health care, but oh, trust us, it’s going to be really good when we finally work out all the kinks” — you’re going to have massive resistance by people, who are gonna say, “I’m happy with what I’ve got.” But if you say, “You know what, we need to lower the age for Medicare, and here’s how we can do that, and we need to continue the expansion of Medicaid,” we will be at universal coverage. Then once we’re at universal coverage, and people know what that feels like, then we can begin to say, “Okay, here’s what we’re going to do to make it work better, to get the costs down.”
Clinton’s argument, of course, is an argument for gradualism. It is a claim that we have to ease people into a new system rather then pushing them into the deep end and expecting them to swim in it. Fear of people with employer-provided plans can potentially be overcome, but it is a major driver of liberal angst against single-payer proposals. And many of the people who hold this angst are lawmakers or other major policy influencers who will need to be won over if a single-payer plan is to become law.
How will you help people who lose their jobs?
“If I were designing a system from scratch,” future President Obama said at a campaign event in 2008, “then I’d probably set up a single-payer system.” The problem, however, was that Obama was not starting from nothing. Among other things, he noted that “a lot of people work for insurance companies,” and many of them would become unemployed if the private insurance industry either ceased to exist or was reduced into a rump industry providing supplemental plans for services not covered by the government.
This problem is one of the easier problems for the government to address. Just over half-a-million people worked in the health insurance industry in 2015, according to the Insurance Information Institute. That’s nothing to sneeze at, but it is a small portion of the working population in a nation of over 300 million people.
Some of these individuals would probably be employable by the government, which would need employees experienced in administering health plans after it launches a single-payer program. Others might remain in their company as consultants helping the government administer the new plan. But a sizable number would simply be let go — and would become fodder for attack ads against the new single-payer system.
Single-payer legislation should consider how to deal with these individuals, whether by providing them an income bridge until they are able to find a new job, or simply by implementing the new system gradually enough that former health insurance workers are not all dumped into the new economy at once.
What services won’t you cover?
A finally, heart-wrenching question is what services a universal, single-payer plan will not cover. Some of these choices will be easy. There’s no reason why taxpayers should pick up the cost of someone’s medically unnecessary cosmetic surgery, for example. But what about expensive services like long-term nursing care, which traditional Medicare does not cover (although Medicaid frequently does)? What about other services traditional Medicare leaves behind, like hearing aides, many eye examinations, and most dental care?
Indeed, as Joshua Holland notes in an excellent essay in The Nation, even countries with model health plans wrestle with the question of what not to cover. Canada’s universal Medicare system, for example, “provides good, basic coverage, but around two in three Canadians purchase supplemental insurance because it doesn’t cover things like prescription drugs, dental health, or vision care.”
There’s also one particular medical treatment which could become much harder to obtain in a single-payer system: abortion.
During the Obamacare debate, a group of anti-abortion Democrats made support for the Stupak Amendment, which prohibited Obamacare exchange plans from covering abortion care, a condition for their support of the overall bill. Lacking the votes to pass Obamacare without this amendment, the Democratic caucus as a whole acquiesced.
If a single-payer debate reaches the House or Senate floor, a similar drama is likely to play out. Conservative groups, and religious groups opposed to abortion, could do everything short of lighting the Capitol on fire to prevent the single-payer plan from covering abortion care.
That may be an unavoidable compromise, but it will of course have a profound impact on patients needing an abortion. People who currently have abortion coverage through an employer-provided plan will lose that coverage, and an insurance plan covering just abortion care is likely to be expensive since it will only be purchased by fertile women who believe they are reasonably likely to need an abortion.