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What Is Single-Payer Health Care?

Health care is at the forefront of a lot of minds these days. Most people agree that the system could use change. Unfortunately, the real problem is that no one seems to agree on what that change should be. One suggestion that is frequently touted is a “single-payer” system. But what is a single-payer system? Here’s what you need to know to keep up with the conversation.

Understanding a Single-Payer System

A single-payer system is one in which the government covers basic health care costs for all citizens, regardless of employment, health status or income level. This is in contrasts with a multi-payer system in which individuals, employers or insurance companies pay the costs of health care. Although the government pays for the health care, it doesn’t necessarily provide it. Doctors, hospitals, specialists and other providers may remain private. The government may or may not own some of the resources involved in the health care process.

Arguments for Single-Payer Health Care

The idea is that a single-payer system “cuts out the middleman.” Supporters of single-payer see private insurance companies as ineffective and bureaucratic. In this view, although insurance companies work to obtain lower prices for services, they also have to pay administrative employees, not to mention their officers. This cost is passed on through premiums.

Some proponents of a single payer-system point to Medicare. In their view, the United States already has a single-payer system, and it just needs to be expanded to individuals under the age of 65. Touting Medicare’s estimated 2 percent administrative costs, supporters expect that health care costs would fall by as much as 30 percent if they had their way.

Arguments Against Single-Payer Health Care

Opponents of a single-payer system would likely point out the long wait for care. There have been a number of reports in Canada about extremely long wait times for common procedures, like a knee replacement. They might point out that even if you’d be willing to pay more to see a particular doctor, you’d have to wait like everyone else.

Opponents will explain that Medicare doesn’t pay hospitals as much as private insurers do. Right now, hospitals can afford to take some patients who pay less because their costs are otherwise covered by the private insurers. If everyone had Medicare, premiums would increase a great deal, and that 30 percent cost savings would vanish. Furthermore, although insurance companies add an administrative cost to the health care system, competition and the profit incentive cause them to fight hard to pay as little as possible for services—and still they pay more than Medicare. If there were no competition involved to lower the price of health care, it would skyrocket. Again, that’s according to opponents of single-payer health care.

Who is correct? It’s difficult to say. Fortunately, now you know enough to stay abreast of the news and decide for yourself.