If there are two words that strike fear into the hearts of those who sell health insurance, they are the words single payer.
A single-payer health care system is a way of life in most countries around the world. But not all of these systems are the same, and it’s unlikely any of them could be adapted for use in the United States, said an industry association leader who has studied single-payer systems in other nations.
Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), has studied single-payer systems through the London School of Economics. She discussed her findings with a standing-room-only group at the association’s recent Capitol Conference.
Why Single Payer?
Trautwein said her interest in studying single-payer systems came from seeing the American health care system become increasingly more expensive over the years.
The United States spends about twice as much per person on health care than other wealthy nations spend. The total health expenditure per capita in the U.S. was $10,348 in 2016, according to the Kaiser Family Foundation. That compares with $5,550 in Germany, $5,385 in the Netherlands, $4,752 in Canada and $4,192 in the United Kingdom.
Despite this high spending, Americans have worse health outcomes than many of their European counterparts. Hospital admissions for asthma, congestive heart failure, hypertension and diabetes are more frequent in the U.S. than in comparable countries, according to Kaiser. The U.S. also has a higher rate of disability and premature death than do the United Kingdom, Canada, Japan or much of Western Europe.
“You always hear someone saying, ‘We should do it like Canada does it!’ or ‘We should do it like Great Britain does it!’ And then you always hear about rationing and all the negative things associated with that,” Trautwein said. “So my thought was: are all single-payer systems the same?”
Although all of Europe has some provision for universal coverage, that coverage is delivered differently depending on what country you’re in, she said.
Trautwein said as she dug deeper into various nations’ health care systems, she saw that some were more flawed than others. “I asked, is there anything out there that we can use in this country because our private system is actually better for the type of country we have. But are there things we could do that might be useful? And to be honest, I didn’t find any.”
What she did learn is that Europeans readily accept a health care system that would seem repugnant to most Americans. “A lot of it stems from that post-World War II feeling of solidarity in Europe,” she said. “They all had to work together for the good of everyone in order to rebuild. It’s a very strong cultural norm over there.”
Another thing that Trautwein said she took away from her study is that reinsurance plays a strong role in the European single-payer systems, particularly in the Netherlands and Switzerland.
“They use reinsurance to balance out adverse selection because the health insurance there is all guaranteed issue,” she said. “But there’s not much of an issue with adverse selection because people there don’t wait until they’re sick to get insurance. They’re insured all the time.”
What was the biggest takeaway?
Although Trautwein said no two single-payer systems are the same, they all have two big things in common.
The first commonality is that everybody is in the system.
The second is that the government is involved in setting the cost of medical care. “In the United Kingdom, the government sets prices,” she said. “In others, the government is an active negotiator in setting the costs of care. In this country, outside of Medicare and Medicaid, that is not happening. We have a much more free-market system here. Sometimes it results in more expedient care, but it also can be more expensive.”
Trautwein pointed out that the U.S. system of employer-based health coverage that has tax-preferred status and where employers are heavily involved in insurance is unique.
The United States’ history of not having government involvement in provider pricing for private plans works against a European single-payer model, she said. In addition, the size of the U.S. population, its diversity and the division between rural and urban populations also work against a single-payer model.
Trautwein presented this comparison of how single-payer systems work in a sampling of countries she has studied. Here is how the system works in three of those countries.
Of all the nations she studied, Trautwein said the system used in the Netherlands is the one that would mostly likely fit the U.S., although she said that cultural differences between the populations of the two countries make it unlikely that such a system would end up being implemented here.
The Netherlands has universally mandated private insurance through a national exchange, and the private plans provide mandated benefits. The government regulates and subsidizes insurance. The system is financed through a payroll tax and community-rated insurance premiums as well as through general tax revenue.
Although insurers negotiate pricing with providers, there is some government involvement in the system, especially in terms of hospital pricing.
Proponents of a single-payer system for the U.S. often cite Canada’s system as a model. Trautwein broke down the main points of the Canadian system.
Canada has a regionally administered public insurance program paid through federal and provincial taxes. Despite this public program, she said, about two-thirds of Canadians buy voluntary coverage for services not covered by public insurance.
Coverage levels are determined by each province, and there is no cost-sharing for covered services.
Provincial governments negotiate with medical providers and pay them. Most outpatient specialist care is provided in hospitals.
One consequence of the Canadian health care system, Trautwein said, is that the wait time for elective procedures is high.
The single-payer system in the United Kingdom is the most heavy-handed in terms of the government deciding which services are available to individuals, Trautwein said.
The British created the National Health Service. The service owns some physician practices, although many private physicians practice in England as well.
Many residents of the U.K. have supplemental insurance that allows them to access coverage more quickly or to receive treatment in private hospitals.
Where Are the Agents?
Health insurance agents have some role in the countries where single payer is in use. But they have a different role than agents do in the U.S., Trautwein said.
Agents in single-payer nations are more involved in voluntary or supplemental coverage, selling products to cover things that are not covered by that country’s health insurance or that enable people to access services more quickly.
“But it’s still not the same role as an agent in the U.S.,” she said. “An agent here is involved in voluntary coverage through an employer; it’s more of an active role and more prescriptive role. In other countries, the insurers take more of a prescriptive role.”
Efforts to Establish Single Payer in the U.S.
Despite the fact that the single-payer idea is floated in the U.S. from time to time, Trautwein said she believes that the odds of it becoming a reality are unlikely.
“I believe our culture plays a big part in this,” she said. “I don’t think we are at the point where we are ready to have the government be the sole provider of health care, plus we are much larger in population than any of these countries that have single payer. We might see some expansion of the public programs we already have, but I don’t believe we will see a Medicare-for-all program. I don’t think people would accept that.”
In the U.S., the Republicans control the White House and both houses of Congress, effectively precluding any single-payer system from getting enough traction to pass, Trautwein said.
But she cautioned that interest in single payer is growing. A single-payer bill sponsored by Sen. Bernie Sanders, I-Vt., has 16 co-sponsors in the Senate.
In addition, she said, frustration with the current health care system opens the door for a broadening of our current public programs little by little. This could lead to incremental changes in our current government health care programs. Such changes could include a buy-in to Medicare, a buy-in to Medicaid or a public option.
All of these programs would likely be permitted to use government-negotiated prices in competition with commercial products, which are required to operate without this advantage, she said.