Single Payer Healthcare Explained

A reader called to ask if I could explain “Single Payer”, so here goes!

In its simplest form, single payer refers to the financing of health care. Typically this means that there is only one party that pays for all health care expenses and it is usually a government entity. All of the expenses are financed or paid by this single entity. A government’s ability to tax the members to collect funds to pay for expenses allows unrestricted funding. In other words, the participant contributions are not voluntary.

The delivery system refers to doctors, hospitals, and pharmacies etc. who deliver care to the patient. They are paid by the financing system. The quality of the delivery system or actual health care, may or may not be related to the financing.

If the system also has a private funding component, then it is a hybrid system.

We often think of Canada as a “single payer” system. Most Canadians who live in a specific region have the same base benefit plan and it is funded by taxes. It is subject to a sliding scale based on income. Using private insurance for public services is illegal in several provinces. In 2015, private insurance accounted for only about 12% of the nation’s health care spending. But since there is some private funding, it is technically a hybrid system.

Critics say that the Canadian system, called Medicare, is fine for primary care, but is left wanting when it comes to specialty care and elective surgeries. The government actually publishes the wait times for services. A quick look at knee replacements shows 7172 cases waiting, 50% of the cases completed in 29 weeks and 90% in 59 weeks.

In the US, we have multiple financing systems. The closest to the Canadian system is our Medicare program. Taxes are collected from individuals and businesses to finance the basic benefits. There is also a private component wherein individuals pay for a portion of the Part D Rx plan and may purchase supplemental coverage to fill in the gaps.

The VA is a full single payer system. All of the benefits are funded by taxes. For the most part, all the providers are government employees..

President Trump recently commented that Australia has” superior health care”. Aussies have had a “Medicare for all” program since 1984. It is funded by a 1.5% income tax, but also allows for private insurance to be purchased. There is a penalty for opting out of the government plan.

Aussies can choose to be treated at a public hospital for free or private hospital and pay 25% of the bill.. Australia is protective of its system. When my brother moved there, he had to prove to the government that his epileptic daughter would not be a burden to the state before he was allowed to emigrate.

One argument in favor of a single payer system, if only for the basic benefits, is simplicity. With this approach, if you are knocked over by a car door opening in my office parking lot, you simply go to the doctor and pay your copay. No need to look at your employer’s health plan, my office liability coverage, the driver’s auto coverage or your workers compensation policy if you were here on a work related errand. You don’t have to worry about the provider being in your network.

There were many accusations that the Affordable Care Act (ACA, also known as Obamacare) was an attempt at single payer. Nothing could be further from the truth. It was designed to be a hybrid system that provided a safety net for the poor (under 400% of Federal Poverty Level) as well as strive for Universal Coverage.

Universal Coverage means just that: everyone has coverage. This approach is based on a value set that believes basic health care is a right for all. That was the goal of the ACA. But its design was set firmly in the commercial insurance market.

In contrast it appears that California SB562 if passed, would create a single payer system in California. My understanding of this bill tells me to vote “no”. In my opinion, to attempt to overhaul the system for just one state, especially as proposed in SB 562 is financial suicide. . According to Michael Lujan of Limelight Health and former Blue Shield executive, “The last time a fully-defined single-payer bill was scored in California, it showed that even after the massive payroll tax increases proposed, the funding for the law was still $40 billion short, which effectively ended debate on that bill. CA Gov. Jerry Brown expressed skepticism in the state’s ability to fund the current plan.”

Again I must state, controlling health insurance premiums can only be done by reducing health care costs- a topic we will continue to discuss in this column.

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com. Beck's column is also published in the Redding Record Searchlight.
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12 Responses

  1. Beverly Stafford says:

    Thanks, Margaret.  I wondered about the California coverage proposal when it appeared on the news.  Sounded too good to be true.

  2. Richard Christoph says:

    Thanks for this clear, concise, and very informative tutorial.

  3. sue k says:

    Thank you for this succinct explanation.

  4. Grammy says:

    After 17 months of actively searching for a replacement of my internist, I have come to realize that Redding (Shasta County’s) main problem isn’t homelessness,, it is our lack of doctors. It should not take nine months to get a specialist to see you when a chronic situation exist. But here in Redding that is now the usual. There are clinic being advertised on television that they are seeking patients but they just do not have the doctors to address your problem to back up the advertising. Lots of promises (we are taking patients for an internist now. Please bring in your file.) And then none is provided, ever. The last doctor I saw was a fly in doctor that contracted with Shasta Regency for three months. He was wonderful but why get al happy with him when he won’t be the doctor (or PA) you see next time? After the 17 months of dealing with this problem, I now know that Shasta County has a major problem and it is not going to be solved easily. There were more doctors when we moved here 40 years ago than there are now. Just plain sad what the government has done to our medical care.

  5. Frank Treadway says:

    Beg to differ, there’s several permanent Internists in Shasta & Siskiyou Co, call Dignity Health on Court St  and you’ll get one of them.

  6. Lisa says:

    I would happily pay massive payroll taxes if it prevented the even more massive health insurance premiums. The ACA saved us enough money to get our roof fixed, paying the estimated cost for CACare would let us get the rest of our home repairs done. The money saved would go to local businesses, not executive bonuses.

  7. A. Jacoby says:

    THANK YOU for an understandable (to the lay person) and succinct explanation of what appears to be a very complicated subject. I know you “dumbed” it down for those of us who need help to understand, but I feel like you covered the basics.

    As for a doctor in Shasta Co. When my internist retired, I went thru Dignity Health. I was pretty specific about what I wanted: female and young (so her practice would out live me and I wouldn’t have to go doctor shopping again). I didn’t have any pending health problems at the time but it still only took a couple of weeks to see her. I’m a happy camper!

    If you need a specialist, it really helps cut through the red tape and delays if you have an internist to refer you. Let their office make the call.

  8. Jeff Gore says:

    If taxing cigarettes reduces smoking, shouldn’t taxing payroll reduce hiring?  It already costs a California employer ~$13.50/hour to hire a minimum wage worker at 30hours/week, yet that employee takes home just ~$8.  Is it any wonder our main export is jobs?

     

    And shouldn’t we as citizens have had a discussion about whether health insurance is a right?  When lamenting repeal, it is easy to make the emotional appeal by showing folks who would have died without treatments paid by their new insurance.  But what about the people who died because they had treatments paid by their new insurance?

     

    The best estimate is that 250,000 Americans die each year from medical mistakes, which, at an average of 5 doctor visits per year, means approximately 1 in 6,400 encounters with the US medical system results in accidental death.  We spend an awful lot of time & money worrying about terrorism, but the truth is Americans are about as likely to be killed by deer as terrorists (both have a 25 year average of ~150 deaths/year).  Instead we ought to fear nurses with unwashed hands, doctors/pharmacists who miss drug interactions, etc.

     

    There are plenty of afflictions with well-studied & effective treatments (e.g. diabetes/insulin), but we tend to apply that same level of confidence to every newly discovered disease & drug.  The fact is, our medical system is not far removed from tobacco-smoke enemas, radioactive water, blood-letting, lobotomies, mercury pills, & even urine facials (for achne).

     

    An Oregon Research Institute study found not only did radiologists rarely agree with each other on diagnoses, they would often offer a different diagnosis when later presented with the exact same patient information.  And only 18% of Harvard Medical graduates correctly answered the following:

    A patient is given a random screen for a disease that affects 1 in 1000 people.  The test has a false positive rate of 5%.  If a patient has a positive test result, how likely is it that they actually have the disease?

    The most common answer was 95%, but the correct answer is 2%  — 1 in 1000 will have the disease, but 50/1000 will test positive.  That the medical industry has a bias toward over treatment should be obvious to those who remember the helpful heart screening offered by Redding Medical Center 15 years ago.

     

    But if the US healthcare system is so dangerous, shouldn’t we have seen a difference after Obamacare?  Turns out, we did: American’s average life expectancy declined last year.

     

    Which brings me back to point #1:  why do we want to make it more costly for employers to hire employees?  How many deaths, from things like malnutrition (4000 deaths/year) or suicide (40,000 deaths/year), stemmed from un- or under-employment?

     

    So if we do decide healthcare is a right, why shouldn’t that cost be shouldered by society as a whole?  Making employers solely liable harkens back to feudalism — or worse, slavery — where lords & masters were given total responsibility for their subjects well-being.

  9. Common Sense says:

    But isn’t that the nature of Technology….to Increase the costs of the new machines…medicines etc…..I guess there are two camps on this topic….the one says….we must get rid of the Insurance Companies that make Millions and Billions per year.They are the reason the average person can’t afford health care anymore….and your Camp…we have to get Medical Costs down!

    With newer treatments….technologies and rising worker costs (nurses etc)….how can we ever expect to get Health Care Costs down? Drug companies aren’t going to sell their newest and latest drugs at a discount when they spent $300 Million on R and D. Trump talked big about getting the Drug companies to slash their prices….but as we have seen that was a statement that sounded good….like the Majority of his statements…but went nowhere!

    There is a price to having the most cutting edge technology and medicines available…..the question is….whom will be paying for it ?

    It sounds like Canada has the Basics covered….but you will wait for a year for your favorite non life threatening surgery……

    I guess another real BIG problem is that the new healthcare act will be eliminating the subsidy payments to insurers? Is this correct?….if that is the case….insurance health premiums should be going UP and not down?

  10. The Old Pretender says:

    “Again I must state, controlling health insurance premiums can only be done by reducing health care costs- a topic we will continue to discuss in this column.”

    I disagree, unless you include administrative and profit costs not associated with delivering health care.  Health care would be immensely cheaper once the opportunity for inflated profits from consumable material and pharmaceuticals are removed.  This is what the “health care is a right” idea is all about.  Training costs are also a racket that should be compensated for instead of driving professionals into massive debt upon graduation, and the liability insurance industry is criminal.

    This topic runs far deeper than “who pays”, we all do and will continue to.  Nobody in this country should die for want of health care.  Profits before people must stop for a civilized society to remain viable.

  11. CoachBob says:

    One of the most important comments in this article was the Aussie rule that you can’t come into their country if you’re gonna be a burden to the system. We could learn lots from them.

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