The Single Payer vs. Universal Coverage Conundrum

Thursday, May 11, 2017 | Larry Sobal

 

You may have whiplash from the back-and-forth on Capitol Hill over the American Health Care Act (AHCA), which was passed by the House in a 217-213 vote last week and now moves on to the Senate.

With so much focus on health care, I want to clarify a topic that I find (almost without fail) to be part of conversations these days. Whether it’s with my neighbor while walking the dog, out for dinner with friends, or on an airplane, people want to talk about health care. And inevitably in these discussions, we get into the confusing terrain related to single payer and/or universal coverage.

Let’s start with the basics: universal coverage is not single payer health care. If you already knew that, you can stop reading and move on with your day. If you still aren’t sure of the differences, read on.

Simply put, "universal coverage" refers to a health care system where every individual has health coverage, whether they want it or not. Canada is often the example used when describing a universal coverage system.  With the exception of undocumented immigrants, there are no Canadian citizens who do not have health insurance—their government-run system provides universal health coverage. Examples of other countries with universal coverage include Australia, England, Denmark, France, Germany, Ireland, and New Zealand.

On the other hand, a single-payer system is one in which there is one entity—usually the government— responsible for paying health care claims. Here’s where I think people get confused.  In some cases, universal coverage and a single-payer system go hand-in-hand, because a country's federal government is a likely candidate to administer and pay for a health care system covering millions of people.

Most countries who implement universal health care do so through legislation, regulation and taxation.

 

But they are not one and the same. The fact is, there are multiple ways to go about achieving universal coverage, only one of which is to have a single payer at the governmental level that reimburses private hospitals and doctor's offices. Examples of alternate plans are Canada's system, which provides universal coverage but makes the individual provinces responsible for developing single-payer plans for their residents, and the UK's system of nationalizing the health care system (meaning the majority but not all hospitals and doctor's offices are run by the government).

Possibly an easier way to look at it is that universal health coverage is a broad concept that can be implemented in several ways, all with the intent of extending access to health care as widely as possible with some set of minimum standards of what that coverage will be. But it is not the payer model.

Most countries who implement universal health care do so through legislation, regulation and taxation. Legislation and regulation direct what care must be provided, to whom, and on what basis. Usually some costs are borne by the patient at the time of consumption, but the bulk of costs come from a combination of compulsory insurance and tax revenues. Some programs are paid for entirely out of tax revenues. In others, tax revenues are used either to fund insurance for the very poor or for those needing long-term chronic care. In some cases, government involvement also includes directly managing the health care system, but many countries use mixed public and private systems to deliver universal health care.

Seen visually on the map below, the green-shaded parts of the world are countries where universal coverage exists.

What's interesting is how the green and grey seem to separate developed nations from developing countries.  Nearly the entire developed world is colored. A handful of developing countries that provide universal access to health care include oil-rich Saudi Arabia and Oman, booming Costa Rica, and, famously, Cuba, among a few others. A number of countries, such as South Africa, have attempted universal health care but failed. (South Africa maintains a notoriously inefficient and troubled public plan to complement the private plans popular among middle- and upper-class citizens.) Of course, the United States is not green.  

Many people think universal coverage and single payer are one and the same, yet the reality is that there are surprisingly few countries that truly have “single payer universal health care.” For example, most European countries either never had or no longer have single-payer systems. Most are basically social insurance systems. Social insurance programs ensure that almost everyone is covered (emphasis on almost). They are taxpayer-funded, but aren't necessarily run by the government and often have multiple payers.

Germany, for example, has 135 "sickness funds," which are essentially private, nonprofit insurance plans that negotiate prices with health care providers. Switzerland and the Netherlands require their residents to have private insurance (just like the Affordable Care Act does), with subsidies to help those who cannot otherwise afford coverage. And while many people I talk to often bring up Great Britain's National Health Service as a “single payer universal coverage” model, there are many private insurance options available to residents there, too.

Clear as mud? I hope so since I think it will take a long time for the Senate to figure out what type of health care policy it could conceivably approve so we can give the health care debate a rest until there is something substantive to react to. I don’t mean to trivialize the next phase of whatever health reform does or doesn’t happen. Actually, I hope that the next steps are truly bipartisan and transparent, and that process will require months to get it right. Until then, there are plenty of other important national and global issues to keep conversations going.

 

Illustration: Lee Sauer

---

 

Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

.

 

---