Healthcare Debates: Single-Payer vs. Multi-Payer

A gap in American health coverage has created an inequitable, fragmented, expensive, inefficient, and profit-driven landscape. Over 26 million Americans remain uninsured. According to The New England Journal of Medicine, more money is spent on administrative costs than on heart disease and cancer. But among a group of rich countries, these problems are unique to the United States. To some, the root of the issue lies in the American use of a multi-payer healthcare system, when the majority of the wealthy modern world has moved towards single-payer systems.

Simply put, a single-payer system of healthcare is where a single entity is responsible for collecting the funds that pay for healthcare on behalf of an entire population. A multi-payer system, by contrast, allows multiple entities (e.g., insurance companies) to collect and pay for those services.

In reality, the term single-payer is more complex than that, with considerable variation. When compared to our global counterparts, the single-payer system in some wealthy economies (Germany, the Netherlands, and Switzerland) allows people to enroll in multiple insurance plans managed by both private companies and non-profit organizations. Other countries, such as the United Kingdom, have government-run hospitals and employ physicians. Each system is the result of many iterations and a long evolution.

Dr. Stephanie Woolhandler is a distinguished professor of public health at the CUNY School of Public Health at Hunter College, with joint appointments at the CUNY Graduate Center and Silberman School of Social Work. A renowned expert in health policy, she researches healthcare finance, access disparities, the uninsured, and administrative burdens within the U.S. system.

Dr. Woolhandler earned her MD from Louisiana State University and her MPH from UC Berkeley after completing undergraduate studies at Stanford University. She co‑founded “Physicians for a National Health Program” in 1986 and has authored over 150 publications advocating for single‑payer healthcare reform.

MHAOnline.com: What’s the difference between single-payer and multi-payer?

Dr. Woolhandler: A single-payer system means that 100 percent of the population is covered in a single plan that would resemble traditional Medicare. You pay your taxes, and when you get sick, you’re automatically covered for all medically necessary care. We believe it should be without co-payments and deductibles, because people may not have the money when they’re sick. It’s a kind of system they have, for instance, in Scotland or in Canada.

A multi-payer system is what we currently have in the United States, where a patient might arrive at my office with no insurance or one of literally dozens of different insurance plans with different coverage rules, different prior authorization requirements, and different drug formularies. This creates a tremendous bureaucracy for me, and of course, there’s a tremendous bureaucracy at the insurance company level because things are so complicated.

MHAOnline.com: What are the biggest political and economic barriers to implementing a program like this in the US?

Dr. Woolhandler: The biggest political barriers are the giant corporations that are making money off of the current dysfunctional healthcare financing system. This includes not just the insurance industry, which is making tens of billions of dollars every year in profits off of just administering healthcare, not delivering it, but also the pharmaceutical industry that has exploited the fragmentation of the US payment system to raise prices way above the prices paid by any other nation.

There are also a lot of people making a lot of money off of the actual delivery of healthcare. Private equity is running in and buying doctors’ practices and hospitals just to extract a cheap profit and then leave. We are going to get some opposition from those kinds of folks, but the main opposition is going to be private insurance companies and the pharmaceutical industry.

MHAOnline.com: Where do you think we’re going to be in 10 years? Do you think that we’re going to make any kind of reform towards single-payer system?

Dr. Woolhandler: The current situation is intolerable for many Americans. There’s profound dissatisfaction with the healthcare system, and even affluent people are finding they’re being asked to wait for routine appointments.

I spend part of my time in the Boston area, and just try to find a primary care doctor in Boston. You may be waiting six months or a year. Things are not going very well, even for people who have insurance and can afford to pay. You can have a lot of money and still be shocked by how unaffordable healthcare can be.

I think this high level of dissatisfaction is going to force change, and part of what we need to be doing is educating the American people about what kind of change is most likely to solve their problems with the healthcare system.

If the U.S. wants to transition to a single-payer system, it has a long way to go. But it’s not starting from zero, either. Despite its current commitment to a multi-payer system, single-payer healthcare has a long history in the U.S. President Harry Truman endorsed such a system in 1945, which would’ve funded national health insurance through payroll taxes. When those proposals failed, a new single-payer system (Medicare) took its place.

Initially offered to the elderly, Medicare was designed to eventually be rolled out to the rest of the American population. A similar system, Medicaid, was developed for low-income families. But between these two groups (those of low-income and the elderly) a large gap in coverage has remained. President Obama’s Affordable Care Act sought to put the first steps in place towards covering that gap, but it’s been met with resistance.

The debate between single-payer and multi-payer healthcare continues to rage in the United States and remains a largely partisan issue. Many Democratic candidates in the recent 2024 election built a platform centered around Medicare-for-All. Meanwhile, Republican candidates rally their base with commitments to undo any legislation remotely resembling the single-payer model.

But the issue of healthcare itself cuts across party lines. Over half of Americans worry “a great deal” about the affordability and availability of healthcare. According to January 2023 poll, 57 percent of Americans want the government to ensure affordable healthcare, but the way such a plan would be enacted remains divisive. The main conflicts center around cost, care, and complexity. There are valid points to be made on each side.

Two main questions haunt the conversation around a single-payer system:

• How much will this cost?
• How are we going to pay for it?

But the answers aren’t unknowable. They’re just complicated.

The question of how much a single-payer system would cost has a wide range of answers. If something like long-term care were included in a single-payer plan, for example, the costs could rise significantly. If citizens were asked to pay a premium, meet a deductible, or pay a copay along with their services, the costs could drop. Overall, the unspecified cost of a single-payer proposal is often attacked as a weakness by its critics.

As to the question of how it will be paid for, it’s clear that any form of single-payer healthcare would require new taxes. But does that mean higher payroll taxes, income taxes, or sales taxes? Each has its own set of consequences and its own set of vocal opponents. Senators Elizabeth Warren and Bernie Sanders have proposed increasing taxes on the top one percent of the country in order to provide medical coverage for every American. Still, little can rile the average American more than the T-word from the mouth of a politician. Even though the out-of-pocket costs would be comparable (or less) than what people pay now, the average American may have more of a problem paying their government than they would a private company for the same service.

The retort to both of these questions is that a single-payer system saves people money in the long run. By eliminating for-profit private insurers, a single-payer model would cut the administrative costs of medical facilities. The government would pay something closer to an at-cost price. Currently, under the multi-payer model, the U.S. spends the most out of a list of rich countries and its health outcomes are also some of the worst. Reducing administrative costs to levels on par with single-payer systems in Scotland and Canada could save the U.S. over $150 billion annually, according to a study published in Health Affairs.

Americans are right to see cost as a critical issue with healthcare. But a single-payer system seeks to alleviate, rather than exacerbate, the problem. A single-payer system could ensure that no one goes broke fighting cancer or that no one goes into bankruptcy from a workplace injury. But it would require each American to dig just a fraction deeper into their pockets, invest in their future, and save everyone money over the long run.

America is the child of revolution, and distrust of governmental authority runs deep within our blood. Anyone who’s stood in line at the DMV could justifiably raise an eyebrow at turning healthcare into a similarly government-run proposition. While a profit-driven company may not have its customers’ savings at the forefront of its mind, it will be motivated to provide efficient and effective services to its highest-paying clients.

Under a multi-payer model, the more you pay, the better service you get. Wealthy citizens on premium plans can get better care and a wider array of options. The fear for many opponents of single-payer systems is that a routine trip to the doctor’s office could eventually resemble a trip to the DMV: long lines, long waits, and increased bureaucracy.

Non-essential and cosmetic services would not be covered by a single-payer insurance plan and would thus be exposed to higher costs. But the bogeyman of single-payer causing a steep drop in the quality of care is largely bogus. In 2018, Public Health published a review of 49 studies on multi-payer versus single-payer systems found no difference in the quality, effectiveness, or efficiency of care. What it did find, however, was that single-payer systems were vastly more equitable.

This is the crux of what single-payer healthcare seeks to promote: equitable health services for the people who need it most. But there are valid concerns about how it looks in practice. The single-payer system for veterans in America, for example, has been met with strong rebukes as to the quality and efficiency of its care. But veterans largely report themselves to be highly satisfied with their care—higher than their satisfaction with private hospitals, in fact. How a single-payer system provides its care is largely a function of its design, which can vary drastically.

Each single-payer system across the globe is tailored to its own specific context. The single-payer system in Denmark differs from the system in Canada, which differs from the systems in Taiwan and the United Kingdom. The U.S. can’t simply plug in another country’s model and expect it to work. It needs to be rebuilt from the ground up.

Completely restructuring the country’s largest employer is a massive task, and it comes with seemingly endless technical questions. For instance, if a proponent of a single-payer system says the government should provide for all medically necessary services, what constitutes a “medical necessity?” Is dental care included? How about the cost of prescription drugs or gender reassignment surgery? Technicalities can quickly become extremely contentious and partisan points of division.

For proponents of single-payer healthcare, the answer to all these questions is to build off of what’s already in place. Leveraging the infrastructure of both the Affordable Care Act and Medicare, a single-payer system could be rolled out to every citizen over the course of a decade, slowly lowering the age and loosening the admissions requirements for these programs. A slow and methodical rollout of existing systems allows for time to make adjustments along the way. Individual states could choose their own level of involvement and speed of adoption, increasing the ability to customize and hybridize a single-payer model that works for every context, every region, and every person.

For those who prefer the multi-payer model, the answer to these questions is to avoid them and work with the system we already have. While that would spare government resources, it would also do little to address the current gap in healthcare coverage and do nothing to assuage the valid concerns of a majority of Americans. Complexity may be a hurdle to fixing healthcare in the U.S., but it shouldn’t be viewed as an insurmountable barrier.

At present, a multitude of plans for a single-payer system (or a hybrid system adopting single-payer elements) exists at both the state and federal level. Public opinion is likely to change further as more options are put into the mainstream eye. A majority of physicians already approve of a switch to a single-payer system, but, curiously, only half believe that their colleagues would support such a switch. Meanwhile, 51 percent of Americans think the goverment doesn’t spend enough moeny on Medicare.

But those who stand to lose the most from a switch towards single-payer healthcare (health insurers and pharmaceutical companies) represent a powerful, and wealthy, lobby. Still, while it’s unlikely that a nationwide transformation to a single-payer model would occur overnight, top consulting firms like PwC are advising their corporate clients to focus on ways to add value while still positioning themselves for a possible systemic change towards a single-payer system.

The Affordable Care Act introduced a soft system of government intervention in the healthcare space and further propositions by individual states and senators allow for more flexibility—and more equity—in the American healthcare system. Few of these systems are outright single-payer systems with no private option: instead, they represent a hybrid option that allows freedom of choice for its citizens, one that builds upon existing infrastructure. The further hybridization of single-payer and multi-payer models will continue to change the landscape, and the language, of what’s possible.

Given that healthcare polls above any other issue as the most important for Americans, it’s no surprise that the Democratic Party has made it its top priority for the upcoming elections. As single-payer healthcare enters the national conversation, false analogies to socialism may give way to more nuanced debates about the manner and method of healthcare delivery. The U.S. may not be as quick to implement changes as its wealthier and healthier allies, but it’s also unlikely to give up on the cause.