What the heck is ‘Single Payer Health Care?’

by Nancy Reed and James Potter

We are constantly being bombarded by all the problems with our health care system and the different proposals to fix it — or at least try to tape it together. In the confusion, the term “single payer health care” pops up. What is it?

Well, let’s start with the word payer. “ Payer” means the one who pays the medical bills. So why doesn’t everyone just pay their own medical bills? Because a single injury or illness will break the bank and put us in the poor house. So we need to pool our risk by buying health insurance. If enough people pay in, we spread the risk of medical catastrophe and no one person will face disaster. We all share the pool of money that we contribute to so that, when things happen, money’s there to pay the bill. Since not everyone gets sick or injured at the same time, there is enough to cover those unlucky few who need it from time to time, and we all have the security of knowing that we will be covered when it happens to us. Our “payer” is the insurance company that manages the pool of money that we contribute.

In the U.S., there are many private health insurance payers of medical bills many insurance companies with different pools of people. Therefore, we have a multi-payer system and multiple pools of money.

But we also have a single payer system: Medicare. Medicare is a single payer insurance system for those over 65. Our premiums are paid with payroll taxes and everyone over 65 is in the pool. Think of Medicare as a public insurance system financed with premium taxes.

Single payer systems like Medicare are not “socialized medicine.” A socialized system is when the government owns the hospitals, and doctors are salaried public employees. Medicare, on the other hand, merely pays the bills just like private health insurance. It does not own the hospitals, nor does it pay salaries to doctors as if they were government employees.

The problem

Our insurance system has multiple for-profit private insurers like Anthem, Blue Cross, and hundreds of others. In a multi-payer, for-profit system, each private insurance payer creates its own risk pool of insured people and their premiums. Because each private company creates its own risk pool, it can make more money if it selects the youngest and healthiest people to join its plan. Young people are less likely to get sick, and more from the pool of premiums can be turned into profit. The less a company has to pay for health care, the more money it can make. This drive for profit is why private health insurance companies look for ways to take in more premiums and pay out less for health care. This results in cherry picking the healthiest people to insure. It also results in denying claims whenever possible. Private health insurance companies are seeking profits. They are not looking to pay for health care.

This perverse profit incentive adds huge costs to our health care system in the form of

“Quarantine” by DareWrek

profit-enhancing gimmicks such as narrow networks, maze-like claim rules, deductibles, co-pays, exclusions and limitations all designed to keep our premium dollars for their profits instead of paying for care. All of this mess requires an army of insurance clerks to review the fine print and deny payment of claims. This huge bureaucratic bloat also requires that hospitals and doctors hire their own billing army to battle with those claim denials and deal with hundreds of insurance companies and their arcane rules, coding, and claim forms. Add to insurer’s high cost of marketing, extravagant executive salaries, duplication by multiple payers and lobbying of state and federal legislatures, and it is easy to see why the cost of administration of this beast eats up at least 15-20% of premiums.

Medicare, on the other hand, is a single payer nonprofit system designed to cover the health needs of an entire population, all those over 65. So Medicare does not seek to make money from the premium taxes paid into the pool of those covered, nor seek out the healthiest people in order to avoid paying for health care. Medicare wastes no money on advertising, high executive salaries, expensive lobbyists, nor does it seek to increase dividends to shareholders by denying claims in order to make larger profits. Its mission is to create a large pool of people and raise just enough money to cover their health care needs. As a result, Medicare’s administrative costs are around 2%; its claims procedures are uniform requiring less clerical staff; paper work is reduced; the duplication of a multi-payer system is eliminated; and it’s large enough to negotiate for lower prices and coverage, and is not tied to employment or marriage. All providers and hospitals are part of this single system. This is how most other developed countries pay for health care within their free-market economies.

The Bottom Line

To lead a healthy productive life, people need medical care much as they need clean water and safe food. The universal system that covers everyone is a single payer nonprofit system that costs less, provides more, and eliminates the duplication and bloat of our current mess. We’ll all be physically, mentally and financially healthier with it.

Why it’s worse for rural Coloradans:

As health insurance companies become bigger and more consolidated, competition shrinks. There are areas in the U.S., especially in rural areas in Colorado, where there is only one company offering insurance – only one place where a person can pay premiums into a pot of money and have medical bills paid. This is also a single payer system because there is only one payer available to join. In this case, however, it is not the government but a private insurance company that is the single payer. And with its monopoly power and goal of making a profit, it is a single payer without any real interest in paying for health care.

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10 Responses to What the heck is ‘Single Payer Health Care?’

  1. George Swan says:

    Very good article! Most people don’t appreciate the way single payer covers everyone regardless of employment, not dependent on their employer, in between jobs, or when people are working on their own, or when they take early retirement. Everyone is covered all the time!
    There is no more haggling over kids insurance. Children do not choose their parents, and their healthcare should not be dependent on the insurance of their parents. All children are covered!
    One thing missing is an analysis, or projection, of the costs of healthcare under single payer. You can contact me, or see the “public input” folder on the website of the Colorado Commission for Affordable Health Care. Under “Single Payer” folder, there are many resources you might be interested in, including a financial projection showing single-payer reduces healthcare expense to 16% of GDP, from the near 20% of our current multi-payer system. Contact me for more discussion.

  2. Dolores Williams says:

    Very good. Would it be good to follow up with the two bills in Congress to make Universal single-payer happen? HR676, Expanded Medicare for All and a Senate bill sponsored by Bernie Sanders to make it happen if it could be signed into law by the President? Both Senators and our Representative must have much pressure on them to vote for these bills. The public is asking for it, we just have to get out to vote and make 2020 with a Democratic President – and Democratic Senate finish the job. Everyone needs to put extreme effort to get the voting system fixed in each state and get every Democrat out to vote, hopefully in the mail or on a Sunday so hourly workers don’t have to lose money by standing in lines for hours to vote! I might add that if we left Medicare alone, did not change one word except eliminated “over 65” we would not be arguing for years on new wording. Medicare works!

  3. House Bill 676 medicare for all is the only way to go. During WWII Winston Churchill Said that you can always depend on the Americans to do the right thing after they have tried everything else and failed. We are in the failing stage of financing medical care and it is terrible. I have been a member of Physicians for a National Health Plan for 26 years.
    http://www.pnhp.org . Go to this website and it will explain this as you have done. You will see papers and discussions by MD’s and others who are national leaders in fair ,efficient health care which we do not have today.

  4. Margaret Copi says:

    This is the best simple explanation of single payer that I’ve seen, especially since it actually explains what the term means. I would be able to use it more freely as an organizing tool though if it got into the ways our current Medicare system is NOT single payer, most especially the privatization via Medicare Advantage plans. thanks for all the work you do!

  5. Dorsey Moore says:

    I’m in the 4% of those over 65 who have to pay for Medicare(artist who hasn’t been able to pay in enough) With Obamacare I paid $50 a month, now I’m paying &550 a month so I worry that won’t improve with the new system. Will you have a setup that truly covers everyone? I’m happy to pay in but not so much, it’s taking all my retirement money (I don’t get social security, obviously). In general I’m all for this and appreciate the work you do on it

  6. rebecca sawyer-spoon says:

    How many plans there are is more important than how many payers there are. We need to be one nation with one plan (equal protection under the law).

  7. gabriela says:

    I can attest to the administrative nightmare that is medical billing. A simple clerical error on the part of an intake ‘specialist’ resulted in a cascade of denied payments after my father-in-laws final hospitalization. It took us almost 2 years to reconcile his accounts, coordinating between his supplemental insurance provider, medicare, doctors and hospital billing departments. He passed away long before that point, which made the whole thing all the more painful and infuriating.

  8. Barbara Thomas says:

    Single payer health care for all is absolutely doable. We have a structure in place that can be used to take in all. Do some thinking and planning and get this done. It is well beyond time that all our people have decent health care. It’s the right and decent thing to do.

  9. Cheryl Walker says:

    Want to help us move in the right direction, especially for rural Colorado where I grew up.

  10. I agree. The multiplayer, for profit system isn’t working. We need together word out about the single payer, for health, not for profit, like in Europe and Canada, that are working!
    Karlton D Culig

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