Creating A Single-Payer Bill

Much has been said, both positive and negative, on supporting some form of Single-Payer health care funding within the United States. Although some form of Single-Payer does seem feasible, much of what is being said is hype, such as stating that “health care is a right” or that “single-payer is just socialism”. Or consider the slightly more descriptive term “Medicare-For-All”; as you will read below, as we consider Medicare, there are aspects of today's Medicare that don't automatically scale up to “For-All”. But it can.

So, what is Single-Payer really? Or more to the point, in YOUR opinion, what does it need to become to meet the needs of we American citizens if it really did come into existence. This last is the purpose of this page, to suggest a process and to include you in working toward some form of a complete solution. And, along the way, allow us all to weigh in on whether we like it and/or suggest changes that would allow us all to buy into such an approach. We are a democracy after all; it is time for those of us who should care - and that is ALL of us - to weigh in.

In what follows, you will find that Single-Payer, as feasible as it appears to be, is actually a very complex concept; you'll find that the devil is in the details. So, climb on and start having your say into those details. Above all, make sure that it works fairly for YOU.

You will find this page is divided into three sections

  1. An Overview of the Basics: We ought to start with some common base on which to build.
  2. The Options … and Now You Get to Determine the Details: What are we really talking about and how would you prefer to set the options to make it work.
  3. Background: Additional pertinent stuff which would make the rest of this paper too heavy to read.

An Overview of the Basics

The Term “Single-Payer”

At its most simple, think of “Single-Payer” in terms of some single quasi-governmental entity which has the purpose of paying for health care. For those over 65 in America today, Medicare might fit at least partially into this definition. (Please keep your mind open for the time being concerning its actual organization or how it is tied into government.) For now, all we know for sure is that this entity ensures that health care providers, hospitalization, and drugs at least are paid for services rendered and products consumed. The basic intent is to ensure that all health care expenses are actually paid. This is half of what it needs to be. To get a mental picture of the other half, think of Single-Payer as a financial pipe. For all the money paid out of this pipe for our nation's health care, this amount should be closely matched by money coming in. Indeed, at its most simple, this Single-Payer entity is a financial pipe just like any health insurance company. For health insurance companies, the total of funds into their coffers must exceed what they are willing to pay for their customer's health care. Part of your job is to help determine the source of Single-Payer's funds. (And, no, as you will see, the inflow is not from all new taxes.) Again, total money out must be covered by money in.

Socialistic Medicine

“Single-Payer” is merely part of the financial pipe, ensuring that those providing health care are compensated for their expenses, whatever they may be. It is not the ownership of health care proper. Unlike – say – the British National Health Service, all health care proper remains as separate independent business entities. Health care proper remains in the hands of those capable of dispensing health care. Single-Payer pays but does not manage or own any part of actual health care. Single-Payer will search for the likes of financial fraud, but health care decisions remain with the health care providers. The entity which is Single-Payer is separate and completely distinct from something like the Veterans Health Administration (VHA), a completely different quasi-government organization which has the purpose of actually dispensing health care to our veterans.

Any Single-Payer Requires Revenue

Something often missed in today's health care debates are that today's health care providers, hospitals, clinics, doctors, and drug companies, are typically getting paid. Those providing the health care, those providing the drugs, are today being compensated. (Indeed, you can likely cite cases where the compensation is “generous”, others insufficiently so.) All of that money was sourced from somewhere. None of it was created out of thin air. Again, ALL the money paid today for health care in this nation came from somewhere. The money comes from all sorts of sources:

In this page, none of this is a complaint; today, in its albeit fractured way, it is what it is, and it passes money to those providing the health care service or product. For all of these sources of funding, and more, you know that in order for any health care provider to remain capable of providing health care, the provider's income must exceed – even slightly – all of the provider's expenses. When that is not the case, the health care provider goes out of business.

All that money needed for our health care had to have come from somewhere. Indeed, for those of us covered by insurance, we sometimes miss that the amount of money insurers pay on our behalf must be less than they receive – say from us or our employers – in health insurance premiums. If that were not the case, insurers too would go out of business. Think of our health insurance companies as just many financial pipes, each taking our money – our premiums – and routing that to the health care providers. In doing so, each “pipe” leaks some of its money in basic business overhead and profit.

The key point is that health care providers are largely paid from somewhere today if they exist today. ALL of that money is accountable from sources such as our government, our employers, and to a lesser extent, ourselves. The money our health care providers receive had to have come from somewhere. It is just that that “somewhere” is not as evenly, or efficiently, or indeed fairly allocated or sourced as we might like. But, as you will be seeing, no matter the actual source, that same money can be traced back to having come from you and I.

So, supposing we switched gears to having these same health care providers be paid what they are today by some notion of a Single-Payer. It too is a financial pipe; money out must roughly match the revenue in, no matter what the source of that money today. Said slightly differently, if Single-Payer exists, whatever is required to pay for the health care of we American citizens, there must be at least an equal amount in revenue. That revenue comes from all sorts of sources today. Single-Payer's revenues may or may not hold to that mix – that new mix is our decision after all – but, nonetheless, money out must be nearly equal to money in. It follows that Single-Payer is not some notion of free health care for all. And neither is it some completely new form of taxation, just for the purpose of paying health care. Today's health care dollars are sourced from somewhere today; they will be sourced from somewhere for Single-Payer. It's your job to decide how to help define the mix of sources.

Queuing Effects and Basic Capitalism

Various implementations of Single-Payer around the world take an occasionally justifiably bad rap concerning long waits for health care service. But is this really a function of Single-Payer?

We have all heard the phrase concerning “supply and demand” to the point that it becomes trite. So, consider, what happens with commodities when the supply is insufficient to meet demand? Prices typically go up on that commodity, forcing some number of consumers to cease their demand. What happens if the supply of health care providers and health care institutions in an area become too small to meet the demand? Prices there too can increase. Even so, if demand then does not slack, the health care consumers wait longer for service.

Now consider what happens in an area if health care providers and health care institutions don't get paid or paid enough to cover their expenses. They remove their service from the market; they go out of business. You all know of regions of our country for which this is the case. In case you haven't, consider:

The demand does not necessarily drop, it just gets transferred to another site, with those sites seeing delayed service as a result.

So, how does one fix this issue? If unpaid services are causing the problem, would paying for services solve it? Would the number of health care providers in an area actually increase still further if they are also assured of sufficient revenue to meet expenses and have a relatively comfortable living?

Inflationary Health Care Costs

Most of us point at drug companies whose executives boost the cost of commonly used drugs when they are protected as the only maker. That certainly is a concerned requiring to be addressed, and a side-effect of Single-Payer can help address it.

But another effect stems from those of us who seek and get health care when uninsured and/or have no way of paying. Consider … Who among us will turn away an ambulance trip to the emergency ward, along with necessary in-hospital aftercare, after an accident even if we cannot afford that care? Who among us have not heard from the young and healthy that they don't intend to buy insurance since they don't need it now, can't afford it in any case, and that emergency rooms are required to take them in any case? And then the subsequent bill for 10s of thousands is treated as irrelevant since there is no way for it to be paid.

But no health care is really ever free is it? Every health care provider or health care institution's income must exceed its expenses or they will not be able to provide health care services for long. Those uncompensated expenses do get paid however; those expenses get passed on to those of us capable of paying, this as higher bills for most everything, bills which we pass on to our health insurers. Completely reasonably, our health insurance companies pass that additional cost onto us and our employers as higher premiums. These inflationary health insurance premium prices put more economic pressure onto us and our employers, with the result being an increasing number of both ceasing to pay for insurance or for enough insurance to actually pay the medical bills. As a result, the pool of those incapable of paying grows, and the cycle of health care cost and premium inflation continues.

So, folks, we need to be asking ourselves what would break all of us out of this cycle of ever increasing health care costs, health insurance premium costs, and of insurance insufficient to meet the needs? If we had done that decades ago, would the pain many – if not all – of us are experiencing budgeting for health care be the problem that we have now? If we don't do something about it in the relatively near term, what is the likely outcome to be for our future?

And, finally, with all this in mind (and not advocating for or against the Affordable Care Act) would the ACA have been perceived more positively if it had been advertised to us as a means of ensuring that our health care providers were paid for their services by arranging for – indeed requiring – more people to pay at least something for health insurance? That may well have been the reason for the term “Affordable”.

The Options … and Now You Get to Determine the Details

Employer Subsidies for Health Insurance

Far and away most of us have some form of health insurance. Of these, most of us receive our health insurance through our employer, an employer who subsidizes the payment of our insurance premiums. Have you ever wondered why, or for that matter ever been thankful that you are among those who benefit? A very considerable percentages of us, even of we who are working full time, don't. So why, and why this difference really? And what does this mean to your notion of Single-Payer?

Let's start with some comparisons. I happen to have through my employer a fairly comprehensive plan, buying insurance covering roughly 90% of my health care costs, with a relatively low deductible, and that costs me personally $715/year. That is a good deal for me and for many of you. More generally, from eHealth Insurance Resource Center, if I did not benefit in this way,

     “Premiums for individual coverage averaged $321 per month while premiums for family plans averaged $833 per month.”
     “The average annual deductible for individual plans was $4,358 and the average deductible for family plans was $7,983.”

That is on average, for an individual plan, $3852/year, almost $10K for a family, and that with a higher deductible. Or, as another view, consider this article from CBS News – Your employer's health plan will cost more in 2019 – where annual premiums are described as being $6896 for individuals and $19616 for families with employees contributing $1185 and $5547, respectively.

Even against this average – and my individual coverage is better than average – my company is effectively paying premiums on my behalf well above an extra $3137 per year. The CBS News article suggests that employers are on average contributing yearly $5710 and $14069, respectively, for individual and family plans. This is effectively a fringe benefit over and above normal yearly salaries. You are not seeing it directly, or even necessarily in your W2s, but your employers definitely know it is there. So, thank you employers. If you don't know already and are among those receiving this employer subsidy, ask your own employer how much they are paying for your health care.

For those of us buying their own individual health insurance, the eHealthInsurance web site includes the following table (from 2016), showing average monthly health insurance costs by age

I happen to be in the oldest category, and so would be averaging over $6960/year if I were required to pay, and I am paying only $715/year. This is roughly 10%. There is something comparable for most of us. Someone, largely your employer, is certainly paying this difference. Or from the point of view of those taking on the entire load, someone in my age group is paying 10X more than me. I'm glad, but part of me feels like apologizing.

Employers providing group policies average these costs over the full set of employees; a younger average work force would seem to cost them less for your health insurance subsidies than an older work force.

Since not all employers provide or can even afford to provide such subsidies, why do any? It is an added expense. Indeed, the employers providing the subsidy could just as easily add a portion of that subsidy to your salary and have you purchase your own health insurance on the private market. Indeed, many do. Or, looking at it differently, if they did not have the expense of your health insurance, wouldn't that have decreased their overall costs and thereby made them both more profitable and more competitive, especially in today's world market?

So why does it happen at all? A good historical answer can be found in the article Why do employers offer group health insurance?. I encourage you to read it, but here are the high points:

A couple key points to note here:

  1. By making such health insurance subsidies tax free to the employee, the government is not perceiving it as revenue from income taxes. So, in effect, sans those tax dollars, our government is also paying for the health insurance of those receiving this subsidy.
  2. Personal income routed to purchase group health insurance is used by the employer as leverage in any effort to control health insurance costs for them. Those without such leverage see lesser control of insurance premium cost. Or said differently, since total insurer revenue must exceed insurer expense, others purchasing insurance see relatively higher premiums to make to up the difference.

Many of us receiving this benefit are also aware that, as health care insurance costs continue to increase, with employers naturally still desiring to control their own costs, the increased insurance costs are being passed onto employees as higher dividends, higher deductibles, and lesser choice. More on this can be found here: The Decline of Employer-Sponsored Health Insurance.

Along these same lines, suppose that your employer did with employer-provided health insurance what many did with retirement plans; in the retirement plans employers switched off of annuity-based pensions and onto lower cost employee-matching 401Ks. Dropping pensions was intended to save employers the cost of paying for those annuities, thereby lowering their cost of doing business. Switching this same intent to health insurance, what would your reaction be if employers en masse switched off of providing subsidized health insurance and onto cash assistance alone. You would suddenly find yourself doing what many Americans are already doing, going onto the private market and paying partially subsidized insurance premiums. You'd likely balk big time, right? Suppose, though, that using the subsidy, you lucked out and found a policy of equal value with no more direct cost to you? Just like you, I too would prefer to avoid this hassle, but would we be up in arms? OK, fine, so let's now subtly change this picture; let's have your employer's assistance be paid not to you but to a Single-Payer entity. If your own expense where not changed and you could choose instead among options provided by Single-Payer – rather than options provided by your employer – does it look and feel all that different to you? Is there any reason to be upset?

So, for this section, what are your thoughts? You know that revenue – whatever the source – into the Single-Payer entity must be at least equal to what gets paid for all of our health care, so …

Equal or Progressive Costs …

Let's start simple, sort of, with an example math exercise. Let's take the entire cost of health care in this country for just one year. Now divide that by the total number of Americans in this country. Merely to get a point across, assuming no other revenue sources, let's then say that that result (the quotient for math majors) is the amount that each and every American is responsible for as payment into Single-Payer on a yearly basis. If we wanted absolute equality in the payment of the expense of American health care, this amount would be your share. And if you are the income source for your family, multiply that number by your family's size and that is your total responsibility each and every year. This is a basic health insurance model. So how much is that? (Again, just for this exercise, we are assuming that we Americans are the only source of health care revenue.)

Back in 2016, this number slightly exceeded $10,000 per person per year. From PBS New Hour in 2016,

“National health expenditures will hit $3.35 trillion this year, which works out to $10,345 for every man, woman and child. The annual increase of 4.8 percent for 2016 is lower than the forecast for the rest of the decade.”

At 2.58 people per household on average, this would seem to mean that your average family is responsible yearly for $26,690 of the nation's health care. The bill gets higher if your family is larger than 2.58 people; if you are married and have even one child, it certainly is.

You likely already know that you and your employer are even today paying a significant fraction of this in insurance premiums and taxes. Lacking your employer's subsidy, if your family's yearly income is at the median or less ($59,039 in 2016) that would mean that your share is – let's call it – in excess of half of your family's income, more if you make less. Not likely to happen, right? So, if you want complete equality among all Americans, far and away most of us will be expected to pick up a bill for health insurance far in excess of what we are now paying. A slightly less dire, perhaps more believable, analysis can be found below at American's Income Distribution, but it tells a similar story.

Note that that statement is independent of any implementation of Single-Payer. This is a statement of today. Most of us are not today paying our fair share if “fair” means absolutely equal payments.

Still, Single-Payer's revenue, if it becomes reality, must be funded with something nearing this total revenue on a yearly basis. So perhaps you won't prefer absolute equality under Single-Payer. Fine. A reasonable opinion. So, if it is not equal, equal without any other sources of revenue, who and what does pay, and how much? Fortunately, we are not done looking at revenue sources, but the question stands … What is the formula for deciding how much we all individually and as families contribute to paying for health care insurance? (Don't fret yet. Much more to come.)

And of those who today are not paying premiums for their own health care, but who nonetheless receive some form of health care, what is their responsibility? Should health care be free for anyone? It is clearly not free for everyone.

Your job is to determine what you consider the truly “fair” means of raising this money on a yearly basis. Again, this is not new money; our country is today raising (and borrowing) this amount, for this is what we did actually pay in 2016 for health care in this country. It will be more in the future. You are now being asked, if what we have today is inefficient and unfair and inflationary, what is the preferred way of producing the revenue for Single-Payer? The next section on Revenue Sources may help you to consider how you would fund this amount.

Revenue Sources …

Most of us likely picture the entity which is Single-Payer to be some hopefully largely independent portion of our federal government. It could be different and potentially much more complex. But, even if lightly tied into the government, you are also likely picturing that its revenue is achieved from some form of government taxation, where the term “taxation” is being used very broadly here. So let's look at some potential examples of taxation used to fund Single-Payer.

If some form of sales or consumer tax is being considered, note that today the federal government does not levy taxes on many consumables, the states do. The states today also manage a portion of health care funding via a form of insurance for the poor called generally Medicaid. Within Single-Payer, a separate program such as Medicaid would seem unnecessary. But the form(s) of state revenue used to fund Medicaid would seem to have some applicability to Single-Payer. If you picture Single-Payer as a federal entity, and if you picture some state-managed consumer tax as being a portion of the revenue targeted to Single-Payer, then each state is also providing some of Single-Payer's revenue. You decide, but picture some expectation of revenue from each state proportional to the population of that state. Based on recent census, States such as California and Texas would be expected to contribute the most, with Wyoming and Vermont contributing the least. (We also need to consider how US territories with US citizens like Puerto Rico – which would be 29th by population – would fit into Single-Payer.) Said differently, you might decide that a portion of the needed revenue will be coming from the states – as some does today – and these states might decide to raise their share of that revenue via various forms of consumer taxation.

Again, the question for you to answer is “Should anyone be able to benefit from Single-Payer if they do not in some way contribute to the health care funding of Single-Payer?” If so, is a consumer tax an appropriate means of taxation and/or sufficient portion of revenue from those who will nonetheless benefit from Single-Payer? We'll also be looking more at insurance premiums again shortly.

Bottom line, we have a large mix of revenue sources, the total mix of which, however distributed, must be sufficient on a yearly basis for Single-Payer total health care expenses. If you have other forms of revenue generation, bring those to the table. Again, you need to help decide. What do you consider fair for you? (For now, express your opinion in terms of rough quality metrics. In some near future, you might expect a means of voting via on-line dashboards and dials. Whatever the knobs used to specify the mix of revenue, however that revenue gets generated, the result must equal the cost of health care for we Americans.

Finally, also keep in mind that a large percentage of all health care is already being paid for via our government(s). Medicare, which we'll look at next, is sourced largely by a form of taxation. Other health care payment stems from general taxation as well as a non-trivial amount of federal debt. Ideally, all health care which is now the responsibility of our federal government then becomes the responsibility of the Single-Payer entity. I am sure that you can come up with all sorts of related examples. Even so, I suspect that we can all agree that no part of the revenue associated with Single-Payer should be deemed as having been funded via federal government deficit spending. Indeed, a side benefit of ensuring the money-in-equals-money-out for Single-Payer is that the percentage of the federal budget used today to fund health care can be considered isolated outside of the federal budget. As such, health care spending would no longer be considered as a contributor to the federal debt. [For more on this point see Policy Basics: Where Do Our Federal Tax Dollars Go? later in this document.]

As before, read on.

Of Medicare-For-All, Personal Cost-Benefit Trade-offs …

Before getting into what many are calling Medicare-For-All, let's touch on what constitutes Medicare. Who but the AARP would be able to clearly describe what can get rather complex? So consider …

As some form of a summary for reference:

As to cost, refer to 2018 Medicare Costs and Medicare 2018 costs at a glance. In short, …

Pretty much standard concepts for most health insurance, right? But stating a couple obvious points

These current costs – costs associated with individuals – are reasonably in line with what individual employees getting employer-based subsidies might pay, but also tend to be what you might expect for an older population. Keep in mind as you read here about Medicare that Medicare-For-All is intended for the entire population, from cradle to grave, and their families.

Let's next do a comparison of this with what it takes to instead buy insurance on the open market. Companies offer all sorts of packages, typically based on cost-benefit trade-offs, typically based on variations trading off, benefits, premiums, deductibles and co-pays and restrictions in access to providers. The variations on the open market can be almost infinite in their diversity if you want to shop around, but let's take a look at three variations actually available on the open market as of early 2018. We'll just call them the following, even though more than the deductible is changing: High Deductible, Middle Deductible, and Low Deductible.

You choose. None of this is cheap or even necessarily affordable. Still, choosing successfully can save you annually thousands of dollars. Choosing wrong with the wrong health situation for you can cost you tens of thousands of dollars. Again, these are real examples from the open market. (So real, in fact, that I must choose among these for a while.)

You might now want to compare this to Medicare. From a basic cost point of view, is there really a choice? We'll get into why this difference is possible in a moment, but also observe that this insurance company is not trying – at least much – to try to gouge you here. This really does represent the contribution this insurance company perceives is necessary from each individual customer to cover all of the insurance company's medical and business costs (and profits). And, yes, you get far more options, but that is often a function of the cost; if you can save a lot, perhaps you are willing to give on some benefit. If the cost is not nearly that high, as it is with Medicare, is dickering over the benefits as justified for you?

So lower, yes, but how? And, yes, those buying into some form of Medicare-For-All would very much appreciate the lower cost, but is the means by which this lower cost was achieved applicable to Medicare-For-All?

To get your head around the answer, observe again that Medicare's premiums are more in line with what employees pay in employer-subsidized plans. But these insurance plans are not really any cheaper, they are just subsidized; recall that the actual cost had to be enough on average to pay for all of our health care. So where did the money come from that is acting as the “subsidy” for Medicare? Most of us will point at our federal government as the source for this money – and, of course, that is not really much of a solution for Medicare-For-All. But a larger truth is that YOU paid it, or more to the point you are paying for it. Recall that Medicare is only really open to the over-65 folks who have paid Medicare taxes while they were employed. If you prefer, and you are getting Medicare now, you can think of the Medicare tax you paid as having been used to buy an annuity on your behalf and that money is now being used to subsidize your own Medicare. A closer truth, given the way that our government manages money, is that those currently working and paying this tax are subsidizing the Medicare for those currently receiving this benefit. Both statements can be true. (Recall also that the ratio of today's workers paying the Medicare tax today compared to the number receiving Medicare is shrinking. Even for this problem alone, we need to create a solution.)

What the heck, right? Medicare funding is already largely coming from you. But that is kind of the point being made here concerning Single-Payer. Why play all of these games with all sorts of plans for paying for the health care of we Americans? If most of the funding for our nation's health care is already largely coming from you, can we more equitably spread the costs – where “equitably” is also defined by you – and the benefits of health care in this nation and actually get control of health care costs and our national debt in the process?

So, back to Medicare-For-All. I think you might agree that this particular subsidized funding model is not completely applicable, but there are aspects of it that are, which we will get to shortly. And it is on these on which you get to weigh in.

Still, those who are using the term “Medicare-For-All” are not really selling the funding model, they are pushing how it gets perceived by the individual today receiving Medicare. I, and I suspect far and away most of us, would be much more willing to pay what Medicare asks of me than I would to pay the premiums mentioned above from the open market. As an employee of a company providing me employer-subsidized health insurance, my own personal costs are not really all that different from Medicare. Both ways, I win. But that is the basic problem for those not today receiving employer-subsidized health insurance. Many of these folks

And when this large percentage of our population end up requiring health care, it is often you who pays again. And, by the way, those using the term Medicare-For-All, their quite appropriate intent is to also have it subsume Medicaid. In this sense, Single-Payer should as well.

You get to choose. One model for Single-Payer says that all Americans should enjoy the advantage available both to the folks on Medicare and to we who receive employer-subsidized health insurance. Either way, the premiums you pay are well less than what is really required. But in this model, you are paying them. So, additionally, this same model says that everyone should have some responsibility to pay some notion of health insurance premiums. This model is based upon the reasonable premise that patients completely shielded from the costs of health care may be inclined to welcome any medical service – perhaps to excess – that has any chance of doing some good. In this model you get a Medicare Card, something that uniquely and securely identifies you, you pay some form of premium monthly, and you pay something when you actually require service.

If you like this model (we will look at another in a moment), you will also want to weigh in on the distribution of premiums. For example:

The last of those brings us to another set of options for you to consider. If anyone is getting away with minimal or even free Medicare-For-All premiums, should we all? Asked differently, what do you want to have done when some portion of our population refuses or is incapable to pay even these more moderate premiums? (In this light consider Tens of thousands of Medicaid recipients don't pay their premiums.) Or taken further, what do you want to have done when they further refuse to pay their deductibles, or co-pays, or co-insurance? Or what if they simply forgot; after all, we have said nothing about how that premium got paid (e.g., Medicare is actually deducted from Social Security). Recall again that the numbers shown are for individuals. Certainly, because of generally subsidized premiums, we have increased the number of folks paying – via premiums – to the nation's health care bill, and that's good. But if it is optional, well, failure to pay breeds more failure to pay.

Let's pause for a moment to consider the punishment aspects of non-payment. And again, this is for your consideration; I take no position. Here is what Medicare says about it:

Still, this relates to the relationship with Medicare and does not outline the impact on the service. At the time of service or purchase, every consumer provides their personally unique and secure Medicare Card. Single-Payer, to which the bill is sent, knows the financial status of the patient. If tested at the beginning of service, service could be denied if recommended by Single-Payer. Some services, though, can not really be denied. Think severe accident with emergency ward. Lack of payment for such could be ignored, but there may be an alternative. Single-Payer is a quasi-governmental entity capable of using the tools available to that government. For those making income tax filings and claiming refunds, those refunds could be open for seizure by Single-Payer. You can imagine that this enforcement could take a book-worth pages of a Single-Payer bill describing its creation, but you may want to weigh in on its implementation; after all, you might also decide that such a punishment is not necessary if you also prefer an approach as in the following section.

Going still further out on a limb in order to outline the options, recall that a lot of our interest is ensuring that health care providers are sufficiently compensated. Consider then deductibles and copays. Ask yourself again who is hurt if those amounts are not paid? Collecting that today remains the responsibility of the health care provider or institution. Should it? Interestingly, as you may see below (in Can We Decrease the Cost of Health Care? ), if this is not the responsibility of the business end of the health care providers, there is a direct downward effect on the cost of health care. So should the collection of lack of payment for this be an additional function of Single-Payer?

Recall that Single-Payer's incoming revenue sources are not limited to just these premiums. In fact, these premiums became more affordable simply because these additional revenue sources do exist; this after all is how the lower health care premiums are being subsidized. Indeed, the size of these personal premium values could be traded off against the size of these subsidizing revenue sources. Again, the total of all of revenues into Single-Payer must at least slightly exceed the total paid for the health care of all Americans. If you decide that premium sizes need to be still smaller or even non-existent, you can decide to boost the requirement for revenue on other sources. In doing so, if you additionally decide that even those on Medicaid today should take on more responsibility for their own health care, you may also prefer boosting the contribution, say, by way of consumer taxes and from there the contribution from the states.

You may have noticed that this last brought us to still another model. That new model says that there are no individual premiums, and perhaps no individual deductibles and copays. In this model, all health care is paid by Single-Payer. This being the case, all of this cost must have an equal source of revenue as well.

As was said in the very beginning of this page, the devil really is in all of these details. But all of these options appear merely as options for making Single-Payer a reality. You have likely already surmised that Single-Payer does seem feasible; the challenge is selecting among the options in a way that well all agree is consistent with the desire of we Americans.

Changing the subject, but still considering the similarity between Medicare and Single-Payer, it happens that some doctors opt out of taking today's Medicare patients, meaning that paying for services received from them is your responsibility. This could also be the case with Medicare-For-All, but then the number of patients remaining becomes a relatively small pool of those capable of paying for their own care. And as we've been seeing throughout this page, it is not enough to just say Medicare-For-All, it needs to be Medicare-For-All sufficient to cover costs of even non-profit institutions. Even the prestigious – and largely non-profit – Mayo Clinic puts up cautionary flags about staying in business given the way that Medicare and Medicaid currently pay. Consider …

Mayo Clinic: Privately insured patients to get priority over Medicaid, Medicare patients

It is not that Medicare and Medicaid patients will be refused here, it is just that to stay in business, the income from today's employer-based privately-insured patients may need to be treated preferentially, slowing the service to others if queuing effects require it. This happens to be a moral quandary throughout health care and limitations elsewhere may be more restrictive. Again, some may decide that to remain in business, Medicare and Medicaid can not be accepted. Consider …

Should You Accept New Medicare Patients?

So, although we have been focusing on how to ensure sufficient revenue flow into Single-Payer, it remains important that the funds available for compensating our health care institutions and health care providers is sufficient to maintain efficient and quality care in this country. We saw this effect earlier in the section titled Queuing Effects and Basic Capitalism. Quite outside of the discussion we have been having here, there is the related question of how to get more control over health care costs. Is it really true that you get the quality that you pay for in health care, or are their other means and processes which can lower the cost of health care?

Medicare Supplemental Insurance …

This section assumes that you prefer a premium-based Medicare-For-All approach. Fine, read on. We have been looking at Medicare, or some notion being called Medicare-For-All, as a model for Single-Payer. Many people today, because of the costs of health care that Medicare does not cover, still purchase privately Medicare Supplemental Insurance as a presumed necessary add on. Although Medicare defines rules for this type of insurance, it is nonetheless purchased on the private insurance market. Of course, this too is an option open only to those capable of affording such a supplement.

Some feel that Medicare does not quite cover enough, and so they feel they need more coverage. The question then is should that be assumed for Single-Payer? That is, can/should the benefits of Single-Payer pay only a portion of medical expenses, suggesting that those who can afford to buy more might be motivated to buy more. Or, should/could Medicare-For-All pay for a base class of services and drugs, requiring private insurance to cover services outside of this base class? So, outside of this base class, and without such insurance, you are responsible for paying.

As usual, that is not for me to say, but let's look at some trade-offs.

Let's start with prescription drugs. You might have noticed that you were on your own there in any case. Medicare proper does not really help. There are a lot of options available, most choose-able via Medicare web sites, but it is actually private insurance providers through which you get this insurance. Additionally, since your prescription drugs may vary from year to year, there is an expectation that you will want to check and reapply each year to try to minimize your costs. Strictly speaking, this is not a supplement, but Medicare – and so perhaps Medicare-For-All – did not cover this expense. It follows that if you did not purchase this insurance, you are also completely on your own to pay the cost of your own prescription drugs. (And, using food at a grocery store as a metaphor, if you don't pay for it, even if via food stamps, you don't get the food either.) So, folks, this is a workable financial model, but is it one that you would want in your notion of Medicare-For-All?

Let's next look at hospitalization. For Part A, for $1340/year as a deductible, you pay nothing for up to 60 days of hospitalization. It may be that there is no real need for supplemental insurance if you feel that over 60 days of hospitalization is unlikely. If you disagree, that you feel it is likely to be hospitalized for between 61-90 days (at $335/day) or over 90 days (then paying $670/day), and that Medicare-For-All should not pick this up, then yes, you might want to have this risk covered by private insurance, if, that is, you can afford it.

What about Part B-related outpatient costs? Medicare covers 80% after the first $183, leaving you 20%. Given a smallish bill of – say – $1183, your bill is $200. Would you really need supplemental insurance for that? But if the bill is $50000, now we are talking about $10000 as being your responsibility. Can you afford that, and just as important, can you afford the supplemental insurance to cover that amount if you can't?

As additional reading, consider the following:

A lot more could be provided here if our purpose was to educate on how to actually sign up for Medicare Supplemental insurance, but that is not really what this is all about. All of the above is to provide background for you to weigh in on how any Single-Payer option should work. Here we played with Medicare and tried to extend it to whatever a Medicare-For-All might become. But how do YOU want to play this? (Yes, I know, my brain is hurting by now too. Still, even from a philosophical point of view, what do you prefer?)

One clear intent of Single-Payer is to ensure that if medical services are used, then the providers of those services are compensated for those services. Another may be that those requiring prescription drugs get and then pay for the drugs for which they receive prescriptions. You saw that, for as much as Medicare does cover, there is a fair portion of it left up to the individual. Indeed, there is an entire industry associated with supplemental insurance for covering what Medicare does not. That supplement is effectively purchased on the open market just like any other health insurance. And, if you don't, you are on your own for the extra costs. Granted Medicare covers quite a bit, much more than if it did not exist and you did not purchase your own private insurance, but we are back to private insurance again. We are also back to the question of what should happen if the consumers of health care do not pay for their now smaller portion of their health care costs. As usual, I have no intent to dictate the answer to that question, but what is it that YOU want to have done?

Health Savings Accounts (HSA) …

Health Savings Accounts. Good idea, right? You protect yourself financially by putting away early a bucket of money close to what you are very likely going to need to pay as deductibles and co-pays in any case. Indeed, for budgeting reasons, you might want to do that anyway. But the real beauty of HSAs is that the government rewards you for doing it.

But the government rewards you for doing it. For those of us taking advantage of this, our taxes are lower. But the inverse of that is that the government has less revenue for doing anything else. In effect, this is another place where the government is paying for our health care. And if they are paying for our health care that revenue is not available for something else, meaning that that something else is paid for via higher taxes, but more likely, higher debt.

Still, it is a good idea. But now, for your consideration, if the country institutes some form of Single-Payer, should our government continue to take on the added responsibility of HSAs?

Citizens …

This paper has generically referred to the beneficiaries of Single-Payer as being Americans. But there are many others benefiting from the health care providers of this country. Think tourists to our beautiful country or perhaps diplomats and foreign business people. How do these people pay? They do today and likely should be allowed to continue to use the financial resources available to them today. For comparison, we can reference Advice for overseas visitors to London. You will see there that visitors may well be charged and occasionally be expected to pay in advance. Canada provides health coverage for protected persons or refugee claimants via their Interim Federal Health Program (IFHP). As to tourism in Canada, you are not covered by their national plan – Canada Welcomes Visitors, But Not Their Health Bills: What You Need.

For all of these visitor, there remains an assumption that our visitors will leave AND that they are capable of paying for their health care. We Americans, those of us who intend to remain, would in some future have personal and secure Medicare cards representing us and our ability to pay. But what of our “visitors” who tend to stay and/or are incapable of paying for their health care via external means?

At this point I will stop writing on this subject. Given the complexity and emotion over such issues, I am not going to make recommendations here, but this very definitely is a subject requiring Americans to weigh in before Single-Payer becomes reality. I will observe again, though, that some form of nationwide and unforgeable form of identification for this and Social Security might be worthy of consideration. Canada, for example, requires a similar health insurance card to get health care in Canada.

Do You Trust Our Government? …

Let's start by observing that the Social Security Trust Fund has been borrowed against for decades for the purpose of minimizing the appearance of a larger debt in the remainder of the federal budget. Or more precisely, from Let's debunk this Social Security myth

“ This surplus has been invested in special U.S. government bonds that are legally obligated to pay the stated, market rate of interest, and then repay the principal when they mature.

These special bonds are just part of the federal government's overall funding. The assets in the Social Security trust fund represent about 15 percent of total government debt in 2016.

If the Social Security trust fund didn't invest in these special bonds, the U.S. Treasury Department would need to sell more bonds to the public at large to finance the federal government.

Did Congress spend the proceeds of the special bonds held in the Social Security trust fund? Of course!

In effect, what we think of as the Social Security trust fund is really just a set of promissory notes backed by the federal government, something that we ultimately pay with our taxes. Partly because there is as a result not really any trust fund, those receiving Social Security today are benefiting from the Social Security taxes being paid by today's workforce. It is partly because this workforce is shrinking relative to the number of those receiving Social Security that it is said that the trust fund, of which there is none, will run out on some future date. Many consider this financial sleight of hand proof that we should not create another means for our federal government to reallocate funds away from their intended purpose. In the case of Single-Payer, where it is necessary that the input revenue is equal on a yearly basis the output paid for our health care, allowing our representatives in Congress to raid such a fund in such a manner would mean that there is not enough money available to pay our health care providers and drug companies. The entire purpose of Single-Payer would become a farce.

I am not going to comment on the validity of this fear, but given that a sizable number of us would use this as a reason to scuttle Single-Payer before it gets started, then it seems entirely necessary that whatever entity is created to manage Single-Payer be constituted in such a way as to ensure that this cannot occur. Since it is the Congress itself that is not being trusted, you might want to weigh in on whether a Constitutional Amendment defining the Single-Payer entity's separate nature is necessary along with its creation. Whatever the entity is, it must be assured that its revenue is used only for health care.

You might also want to weigh in here on the importance of minimizing the hand that our politicians have in minimizing the payments being made to our health care institutions and health care providers. Some may be motivated to claim that health care providers are paid too much in an effort to curry favor by decreasing tax revenue flowing into Single-Payer. Yes, our Congress should absolutely have a hand in improving the efficiency and quality of health care, thereby decreasing its entire cost. We should certainly expect our government to ensure that drug pricing does not enter the realm of price gouging. Perhaps we can expect that they aid in decreasing the cost of medical education, thereby decreasing the need for salaries sufficient to pay down education debts, and from there decreasing health care costs. And it seems an obvious sub-function that the Single-Payer entity assures that provider-based and consumer-base fraud is minimized, and where necessary, punished. You get the idea, and I am sure that you can suggest even more. But politicians telling we voters that they can control our costs by arbitrarily setting pricing may be something that we want to remove from their ability.

Technology …

Throughout this page Single-Payer has been referred to as a federal government-associated “entity”. But the only thing definite about this entity's association with the federal government is that much of Single-Payer's revenue stems from various sources normally called taxation. Aside from that, what constitutes this entity could be some public form of non-profit organization.

Take for example the very recently (1/30/2018) announced partnership between Amazon, Berkshire Hathaway, and JPMorgan Chase …

Amazon, Berkshire Hathaway, and JPMorgan Chase to partner on US employee health care

Their announcement letter includes the phrase

“…will pursue this objective through an independent company that is free from profit-making incentives and constraints.”

As with Single-Payer, their interest is to get better control of health care costs. They intend to produce the means through better technology to concurrently enhance patient satisfaction and outcomes. At the moment, they are focusing on employee-based family outcomes, but they go on and say their ultimate interest is health care and health care funding for all Americans. Whatever technology that this institution comes up with, it feels like something that the Single-Payer entity should have a close association with and indeed encourage.

Related, a January, 2017 report from the OECD report called Tackling Wasteful Spending on Health claims that a considerable part of what we out here view as health care costs actually makes little or no contribution to improving people's health. This percentage happens to be roughly twice as high for we Americans relative to other countries. Excess testing due to the lack of data sharing, inappropriate emergency room usage for seeking health care, excessive and higher priced prescriptions, and wide variations in administrative costs are mentioned examples. Another synopsis can be found here: Shocking truth: 20% of health-care expenditures wasted in US and other nations. The point, appropriate tooling, strategically applied, both in the delivery and the administration of health care can decrease its costs.

You, as Americans, also want this entire process of seeking health care, achieving successful outcomes when you seek it, and of paying for this result in as simple a manner as is possible. You might want to weigh in on just what you would want from a user's point of view. Indeed, it would seem that the overlap in what you want, whether Single-Payer or this new partnership would be almost the same.

Background Information

Policy Basics: Where Do Our Federal Tax Dollars Go? …

A lot of the negative perception of health care funding in the US today stems from the large portion of our federal budget that is already tied directly or indirectly into health care. From the web page Policy Basics: Where Do Our Federal Tax Dollars Go? we find the following:

You are absolutely correct when you point out that the latter three of these are not exclusively health care related, but it is also true that a portion of all of them are. Within Social Security, typically thought of as an income source for older citizens, a portion of this same bucket is also used to fund the Social Security Disability Insurance (SSDI). Under Safety net programs is the Supplemental Security Income (SSI). [For a nice, and yes still confusing, comparison of both SSDI and SSI see What's the Difference Between SSDI and SSI?]

Under veterans-based funding, we have funding for the Veteran's Health Administration (VHA) which is 2017 was $68.5B, or from my calculations, 1.6% of the federal budget. Also associated with our military, there is the notion of Tricare, formerly CHAMPUS (Civilian Health and Medical Program of the Uniformed Services). Tricare provides civilian health benefits for former military personnel and their dependents. Tricare is the civilian component of the military health system.

As another point of view on this, you can see more like that in the page FY 2017 President's Budget for HHS.

It is completely acceptable for you to quibble over the precise percentage of our federal budget associated with health care, but I suspect that we can all agree that it is a large percentage. Would we be in general agreement if we said that roughly 30% of our entire federal budget is health care-related?

It is also worth noting that a quite sizable percentage of our yearly federal budget is being funded by deficit spending. From our 2017 United States federal budget, over 12% of that is deficit spending. If I did my math right, the proposed budget for 2018 has that number growing to 22%. Again, let's call a roughly 30% portion of this budget – and so its debt – as being associated with health care.

It seems to follow that, simply to get some control over our yearly federal deficit, and ultimately getting control of our total federal debt – with over 6% of our budget every year used exclusively to pay interest on that growing debt ( now representing about 80% of our GDP ) – we want to get control over the health care portion of our federal budget. If through something like Single-Payer we can arrange for all medical expenses to have an equal amount of revenue, and in doing so isolate this from the remainder of our federal budget, that portion of the budget and so that portion of our deficit would no longer be an issue.

American's Income Distribution …

We saw earlier the cost of purchasing individual health insurance on the open market. We know that a large percentage of those without health insurance claim that they don't because it is too expensive. So let's put that assertion to the test.

Once again, here is a distribution of monthly average costs of individual health insurance from 2016 by age:

Next, the following graphs represent the distribution of income, both by individual income and by household income. It is slightly tough to interpret, so you will find a break down below.

Individual Income Distribution Household Income Distribution

Using an individual income (left graph):

Using 2016 household income (right graph):

Again, this is household income, each household containing one or more individuals. With each individual there needing health insurance, the average family size in the United States is 3.59. The average children per household is 2.4.

Now go back and compare these numbers to the cost of health insurance – sans deductibles and copays. Choose your own cases to test, but I will make one up to provide a pattern. Let's create a family of 4, two adults over 35-44, and two children under 18. Total insurance purchased on the private market per year … $10,920 = (3636 X 2 + 1824 X 2). For a household making $40,000 per year – with 34% of households making less than this – this represents over 25% of the household's budget, over 35% for 25% of US households.

We might prefer that all Americans are insured today, allowing each of us needing health care to also pay for it, but given these unsubsidized health insurance costs, what is your estimation of the probability that that will occur? Given that health care costs increase as they have, resulting in health insurance costs growing apace, and incomes not keeping up, what is your estimation of the percentage of people who will continue to afford health insurance into the future? It might have been in the long past that far and away most of us could afford health insurance, but health care and its insurance are too high for many and will continue upward (until we control the causes of its inflation). Indeed, if most of us were to loose our employer-based subsidies, even the remainder of us would consider this a major strain on our budget.

We may all prefer that every citizen pays for their own health care, with far and away most of us using health insurance to do that, but how likely is it for that to occur? And given that we all would prefer that health care isn't ultimately free for anyone, it becomes necessary for us to determine what and how we all are to pay for that health insurance.

Job Transitions …

Is there any doubt that the economy does not always expand? And when the recessions occur, real people's jobs are lost, with the majority of those having had the benefit of employer-subsidized health insurance as a fringe benefit. Suddenly the FULL cost of health insurance is dropped onto these folks – read that us – just when they/we are least able to afford it.

Or for those of us who consider this just the right time to seek additional education to upgrade our skills, taking on the additional cost of education, can we handle the further big bump of health insurance on top of that? Indeed, doesn't our society recognize the value of its citizens upgrading skills? Certainly our employers are constantly seeking people meeting their company's needs for skills, and, indeed, new skills for the coming new economy.

We have also all heard of the coming shake-ups as our economy as well as the world's economies transition to being more knowledge and artificial intelligence-based. So, more broadly, with our nation expecting of ALL of us the flexibility to transition quickly from job to job, often with periods of short unemployment between them, should the full cost of health care – often the health care of your entire family – be used as a detriment to such job transitions? (Isn't the alternative a large increase in unemployment payouts?)

What of the Next Recession? …

A base assumption for Single-Payer as described here is that for every dollar that Single-Payer spends on our nation's health care, there must be a dollar of revenue. A lot of techniques have been described, some based on employee count, some based on income, and others based on even consumer taxes to name a few. And when the economy is good, when income and purchasing are up, the needed money flows in. But there are always down times, always periods of dropping employment, always recessions of various strengths. The money flowing in tends to be variable.

From our own recent past, consider this slightly partisan discussion on safety nets in general. Single-Payer's protections happen to be one of them.

Come the Recession, Don't Count on That Safety Net

So, folks, how do we protect Single-Payer against these natural variations. Having a diverse set of revenue sources, including the federal government itself, would tend help level the incoming revenue. Perhaps some form of protected trust fund as well? As usual, you will want to weigh in on this effect.

Can We Decrease the Cost of Health Care? …

This entire debate on government's involvement in health care funding is really largely about the cost of health insurance. As we've seen, health insurance is a function of the cost of health care. Strictly speaking, Single-Payer is about the insurance and payment end of health care, but we would all win if – outside of Single-Payer – there existed efforts to decrease the cost of health care as well.

First, be assured that that is a hot topic in the health care industry. The section on technology earlier also alluded to that effect. Still, outside of the scope of Single-Payer, there are places where government proper can assist in enabling this decrease. If you know of some, please weigh in with your ideas.

Start by considering reviewing web sites such as the following:

Interesting stuff, right? But that is a book in and among itself, and is rather outside of the scope of this page.

Still, I am going to call out two classes of potentially controllable costs that would seem to change under an umbrella of Single-Payer: Malpractice Insurance and Pharmacy Benefit Management (PBM).

Malpractice Insurance… I am not here commenting on whether or not – or how much – those appropriately deemed as harmed by providers in some way should be compensated, but is there any doubt that this cost – or more to that point the cost of malpractice insurance – gets passed onto we health care consumers? Estimates range through roughly 2 – 10 % (See National Costs Of The Medical Liability System ). I will, though, quote from that report's conclusion as the following paragraphs are pertinent:

Some aspects of federal health reform may reduce medical liability costs. Extending health insurance coverage to the uninsured may reduce their need to file malpractice claims to recoup medical expenses occasioned by injuries caused by malpractice.

Additionally, in states that have adopted “collateral-source offsets” – meaning that costs covered by health insurance cannot be recovered by malpractice plaintiffs – greater prevalence of health insurance will mean more frequent offsets, lower total indemnity payments, and less “double payment” of medical expenses. A farther-reaching reform that merits discussion would be to impose a federal collateral-source offset in connection with the move to universal coverage. In these respects, health reform and liability reform may have unexpected synergies in bending our cost curve down.

Pharmacy Benefit Manager (PBM)… What had been intended as a means by which consumer group size could help control pharmacy costs, has become something considerably less positive. Rather than explaining here the complexities which resulted in this transition, and avoiding presenting my own opinion, consider reading through the following few articles (and videos) describing the problem:

Bottom line, if true and if I am reading this correctly, this profit-based system – supporting a function which could be a sub-function of any Single-Payer entity – has the unfortunate side effect of increasing drug prices as seen by the consumer.

What Is The Transition Plan, If Any? …

I do not have much of an answer for this at all, but is there any doubt that it would be tricky at best – and probably fatal – to throw a switch and say that our nation is suddenly running under a Single-Payer funding model? I have not seen much on this aside from some half-step proposals, but consider this from the California Budget & Policy Center, Three Key Principles That Should Guide Efforts to Create a Single-Payer Health Care System in California.

Additional Reading …