How a Single-payer Health Care System Might Really Work in the US

In total, federal spending would increase by about $2.5 trillion (257.6 percent) in 2017. Federal expenditures would increase by about $32.0 trillion (232.7 percent) between 2017 and 2026. The increase in federal spending is so large because the federal government would absorb a substantial amount of current spending by state and local governments, employers, and households. In addition, federal spending would be needed for newly covered individuals, expanded benefits and the elimination of cost sharing for those insured under current law, and the new long-term support and services program.

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One reason is that the Sanders plan covers far more than typical insurance plans in the United States — or abroad. The Sanders plan would charge no premiums, require no out-of-pocket spending and would pay for services like dental care and long-term nursing home stays. Those things boost the total price tag.

But imagine a universe where we had a single-payer health plan that was more like normal insurance. Perhaps it would be a true “Medicare for all,” where everyone has exactly the insurance that the federal government currently provides to older people and the disabled.

That Medicare-for-all plan would still cost more than single-payer plans in other countries. Here’s why: Medicare pays doctors and hospitals higher prices than single-payer systems do in other countries. The Organization for Economic Cooperation and Development, which looks at a group of developed countries, has found that the United States pays substantially higher prices for doctors, hospital stays and prescription drugs than the rest of the group. Medicare pays less than the United States average, but not enough less to make up that difference.

Making the American health care system significantly cheaper would mean more than just cutting the insurance companies out of the game and reducing the high administrative costs of the American system. It would also require paying doctors and nurses substantially lower salaries, using fewer new and high-tech treatments, and probably eliminating some of the perks of American hospital stays, like private patient rooms. The average family physician in the United States earns $207,000, according to the Medscape Physician Compensation Report. General practitioners in Britain, which has a single-payer system, earn $81,000 to $122,000. The gaps in pay for specialists are even bigger. The Urban Institute report assumes that the Sanders plan would cut pay for doctors substantially, but not by half. That’s a reasonable assumption. …

The Sanders plan would require a huge reorganization of the country’s health care system. Overnight, it would put the private insurance industry out of business, along with many other businesses that support it. It would shift billions of dollars of spending from individuals, workers and states into the federal budget. Doing that might well reduce some of the country’s health care spending that is going toward insurer profits and paper-pushing.

But more than 80 percent of the dollars we currently spend on health care actually go toward health care. And making big cuts all at once to doctors and hospitals could cause substantial disruptions in care. Some hospitals would go out of business. Some doctors would default on their mortgages and student loans. Even if the country decided that medicine should become a more middle-class profession — not an obvious outcome, given the substantial public support for the medical professions — it would be difficult to get there at once. All of that means that bringing a government-run, single-payer health care system could achieve many of the goals of its advocates: more equity, lower complexity and some reductions in cost. But the United States would probably continue to have the most expensive health care system in the world. And we’d have to raise taxes high enough to pay for it.