Single Payer: Navigating the Tricky Route From Here to There
Costs are just one factor policymakers need to consider in transitioning to a system in which government provides health insurance for everyone.
There's no mystery as to why efforts to establish single-payer health-insurance systems at the state and federal levels have failed so far. The prospect of major tax increases to pay for a such a publicly financed system has gotten the most attention. But there's another important factor: a lack of realistic planning for transitioning to such a system.
The issues surrounding single payer haven't daunted advocates. At the federal level, Sen. Bernie Sanders introduced his "Medicare for All" bill last year, and several state legislatures are or have recently considered moving to a similar single-payer system. But while a majority of the public supports the concept of universal coverage and support for single payer as a means of accomplishing that has been growing, there has been little public discussion of how to get "There" -- an operating Medicare for All-style program -- from "Here" -- a complicated, multi-payer system that leaves too many people without coverage.
In a single-payer system, government is the source of health insurance for everyone, and that coverage is financed with taxes and premiums paid by businesses, individuals or both. California is the latest state to get caught in the political brambles of single payer. Though a popular concept among Californians, a bill passed by the state Senate last year was stopped cold in the Assembly. The likelihood of a substantial tax increase was a major sticking point, and affected stakeholders raised the alarm. Similarly, Vermont's single-payer effort met its demise late in 2014, largely owing to political concerns over a tax increase to finance the plan.
To overcome this barrier, the mechanism to pay into the new system should be structured to resemble monthly premium payments to a health insurance plan rather than a massive new tax. Reaching consensus on such a financing mechanism would certainly be politically daunting. But suppose lawmakers and advocates managed to overcome political opposition and find a palatable way to pay for a state's single-payer system. What then? Policymakers still would face practical roadblocks on the path from Here to There, but there is much that they could learn about transitioning to a single-payer system from the implementation issues Vermont officials encountered.
To begin with, Americans need to feel confident they would continue to have access to services they depend on. A transition to single payer should give individual consumers some control over when they join the plan and instill confidence by making the new coverage voluntary in its first year or two. Once the program has built a successful track record, more people would opt in, and escalating penalties could discourage opting out. Planners should identify key access issues for seniors, low-income families, self-insured employers and other key groups to ensure that the transition plan meets their needs. Readily available information, such as online tools for consumers and employers to estimate how they will fare under the new plan, would boost public confidence.
How premiums are structured is a crucial factor. Premiums for private health insurance are not based on income, so people who earn a little too much to qualify for a public subsidy pay the largest share of their income for health insurance while those with high incomes pay a very small share. A public financing plan should calibrate contributions to be progressive relative to income. This can be phased in over several years to minimize disruption.
Similarly, employer contributions to coverage vary today based on individual employers' benefit policies and the collective age and health risk of their employees. In an equitable public financing plan, employers would contribute a set percentage of payroll toward the cost of public coverage. Transition plans should use the approach taken by Vermont's single payer analysis by including tax credits for employers during the transition so that they would not pay twice for their employees' coverage.
Transition plans should also cushion perceived and actual economic disruption. Incorporating cost containment for health-care services and methods that pay for value rather than volume will make the financing plan more sustainable. There also should be an orderly path for downsizing the private insurance industry, for example by moving employees to other industries and fairly dispersing financial assets. Existing public agencies or private-sector experts should administer the program to ensure continuity of employment.
The lesson from California and Vermont is that there are no shortcuts -- no switch labeled "single payer" that can be flicked on. By focusing on the transition from today's health-care coverage to a new system, lawmakers can start to move from concept to reality by considering key issues individuals and employers would face. Without that, you can't get There from Here.