Single Payer Healthcare System – An American pipe dream

Current American Healthcare Situation

In 2016, healthcare costs in the United States comprised 17.9% of the total GDP (CMS, 2017). In future years, healthcare costs are expected to outpace GDP growth by 1.2% (CMS, 2017). Healthcare costs continue to rise due to increasing complexities in the system and overall ignorance of healthcare waste. Six broad categories can be used to classify healthcare waste in the United States: Fraud, care coordination failure, care delivery failure, overtreatment, administrative costs, and a lack of transparency (Berwick & Hackbarth, 2012). Collectively, these categories waste over 500 billion dollars per year, which is close to 25% of total healthcare costs.

Healthcare administrative costs alone in the United States account for over 25.3% of the expenses per year, the highest among countries with developed health care systems (Himmelstein, Busse, Chevreul, Geissler, & Jeurissen, 2014). Administrative costs are likely due to the complexity of the system in the United States. The healthcare system is a combination of the four different insurance models seen around the world (Reid, 2009). Therefore, every patient may have a different form of insurance and with several separate possible entities. Having different systems makes standardizing the system difficult, leading to individual variation and a significant administrative load. This is a stark contrast to Taiwan, with administrative costs accounting for 2% of total expenses (Wu, Majeed, & Kuo, 2010). Taiwan’s low costs have been attributed to their national health insurance (NHI) system. The Taiwanese government makes negotiations with physicians and hospitals regarding cost on a yearly basis that reduces costs and aligns providers with the government budget (Wu et al., 2010).

In the United States, we already have a form of a single-payer system: the Veterans Administration where the government owns and operates the hospitals.  These systems all operate under the model of a single-payer system, but, like any healthcare model, they inherit have both pros and cons.

Single Payer systems around the world

In fact, many countries around the world utilize a single-payer healthcare system.  Countries such as Canada, the United Kingdom, Australia, and Finland all use the single-payer system.  In these countries, government-funded insurance coincides with private health-insurance.  In Canada, a country which has used the single-payer model since 1984, many of the services are still offered within the private sector, and administered by many self-employed doctors. In Canada, there is a federal requirement to provide coverage for necessary medical services such as a hospital or a doctor visit. While the cost of the service is placed in the hands of the taxpayer, the responsibility of providing the medical service is not left up to the federal government but instead to Canada’s thirteen territories and provinces.  This gives each Canadian province or area the opportunity to innovate.  Each province, must, however, abide by the guarantee that all of its citizens receive free care for basic medical services.  ( Canadian Institute for Health Information)

Many supporters of the single-payer health care system look to countries such as Canada and the United Kingdom as inspiration for potential success in the United States. However, there are several reasons why success in these countries does not determine success in the United States. First, the populations of each country do not compare with the United States: the United States has a population of 320+ million, while Canada’s is roughly 36 million and the United Kingdom’s is roughly 65 million (“QUORA: WHY SINGLE PAYER HEALTHCARE WON’T WORK”, 2017) Second, Canada and the United Kingdom have encountered major obstacles such as high waiting lists at hospitals in which patients who need treatment have to wait years to receive it. They substantially increased their taxes to afford the system, which is not only problematic for the average consumer, but they also are far behind the United States’ technological advances and accessibility, such as their substantially lower number of MRI machines (“QUORA: WHY SINGLE PAYER HEALTHCARE WON’T WORK,” 2017).

Canada and the United Kingdom can attain success with the single payer system because they can ration care and turn patients away. American consumers want to easily receive their desired treatments and services, whether it is a chemotherapy treatment or elective cosmetic surgery. This desire for choice comes at a cost. Looking at the current system, today’s seniors and doctors must abide by more than 100,000 pages of Medicare rules and regulations dictating what types of services are covered or not under the program” (Blevins, 2003). This is not something that American consumers want or will endure. The single-payer approach to health care will considerably raise taxes, cannot guarantee equal access to health care for over 300 million people, and will substantially increase administrative costs and bureaucracy. While it is successful in other countries, it could potentially bankrupt the United States’ economy and is not a feasible nor viable option for the country’s future.

Kevin Grant

Global Business Projects –  Summer 2018