Single-payer health care may sound appealing, but it’s complicated

Robert H. Frank/NYT

For years, Bernie Sanders preached the virtues of single-payer health care to empty congressional pews. But the proposal he released Wednesday has the backing of key progressive groups, many Democratic lawmakers, and several 2020 presidential hopefuls.

There’s only one thing missing: details. Sanders’ bill is long on promise and short on specifics, especially when it comes to the cost of the plan and the trillion-dollar tax increase it would likely require. That may be fine for now; after all, it’s not as if the Democrats can advance this cause with Republicans in control of Congress and the White House.

But there’s a risk that comes with vague promises. Done wrong, the Democratic push for single-payer could end up like the Republican effort to repeal and replace Obamacare: a sweet-sounding idea that collapses when the true costs and compromises come out.

Moving to single-payer would indeed require difficult decisions and real sacrifices. A tax increase too big to be foisted exclusively on the wealthy, for one thing. Plus, with single-payer, the government will be making decisions about which health care services you can get.

Maybe American voters are ready for such a dramatic change, especially given the successful track record of single-payer systems around the world, which have enabled universal coverage and lowered overall costs. But it’s hard to know for sure when many of the trickiest decisions are left out of current plans.

With single-payer, the toughest question isn’t “should we or shouldn’t we?” but rather “how would we get there?” Doing so would require a stunning transformation, and there are powerful forces ready to resist.

What is single-payer health insurance?

Single-payer is a clunky phrase, which is why proponents increasingly refer to it as “Medicare for all.” And thinking in terms of Medicare can help clarify things.

The US Medicare system works like a single-payer system. It’s a government-run insurance program available to everyone over age 65, which you could easily imagine opening to people age 64, or 54, or 4.

Simplicity is part of the virtue. You go to the doctor, the government gets the bill. A new drug comes to market, the government decides whether to cover it and how much it should cost. No need to pick an insurance plan, no worries about the enrollment period.

But around this core idea, there are a lot of variations. Even with Medicare, the single-payer label doesn’t quite stick. In true single-payer systems, private insurance isn’t allowed. But the US federal government allows seniors to purchase supplemental, private plans called Medicare Advantage. That makes it more like a multi-payer system, akin to what they have in France.

Another alternative would be the UK approach, where the government not only provides insurance but actually manages the whole system: hiring doctors, running hospitals, etc. We have a system like that, too: the Veterans Administration — though for now no one is talking about “VA for all” as a model for the future of US health care.

What are the costs and benefits?

By international standards, the US health insurance system looks deeply dysfunctional. We pay more for care, cover fewer people, and generally end up with poorer outcomes.

That suggests we could learn a lot from other countries. Looking around, it does seem that the most efficient health care systems have lots of government involvement. Not least because governments are stiff negotiators, with unparalleled leverage to demand lower prices.

Across most of Western Europe, governments cover about 80 percent of all health care spending; in the United States, it’s more like 50 percent.

But government-guaranteed health care is not a slice of utopia. It has real costs.

For one thing, you can’t have hefty public spending without hefty taxes. That often includes a kind of souped-up sales tax we don’t really have in the United States — a value-added-tax, or VAT.

And single-payer systems can be pretty spartan — depending on how they’re organized. They don’t just cover everything, like some beneficent benefactor. Patients usually are responsible for some portion of medical expenses. There’s little or no coverage for treatments deemed non-essential or ineffective, which frequently includes things like dental care, mental health care, and nontraditional approaches like acupuncture.

Sanders’ current plan is generous beyond virtually anything offered in the rest of the world, eliminating co-pays and covering practically all non-cosmetic treatment. That approach would make the whole system vastly more expensive for taxpayers.

Is there a path to single-payer?

Even if you believe the US health care system would be improved by switching to single payer, you still need a plan for getting there. And that’s where Democrats seem shortest on consensus.

Take the taxes needed to fund a single-payer system here. Roughly, we’d need an additional $1 trillion a year, which would require about a 25 percent increase in everybody’s tax bill.

Why the big tax hike? Because the government would be responsible for covering all the medical costs currently handled by private insurance, which run above $1 trillion annually. And while we might be able to cut costs over time, it wouldn’t happen immediately.

Some of this you might get by raising tax rates for the top 1 percent of earners, but the right-leaning Tax Foundation found that you’d need to nearly double the top income tax bracket to get just a third of the trillion dollars. Sanders acknowledges this reality, including atop his list of funding options a 7.5 percent payroll tax, which would likely hit workers via wage cuts.

To be clear, more taxes wouldn’t necessarily mean less pocket money. Because for many people the larger tax bill would be more than offset by a decline in insurance premiums. And with employers off the hook for providing coverage, there would also be a pot of new money available for raises.

But as with any complex trade-off, there will be losers, too. This possibly includes senior citizens, who could see their taxes go up despite the fact that they already have guaranteed government insurance.

What next?

Right now, Sanders’ single-payer bill doesn’t really matter, except as a statement of conviction. Democrats have no power in Congress, and little prospect of winning back power soon.

But it’s worth watching to see when and whether Democrats start to move from an endorsement of the single-payer ideal to a serious consideration of the details.

Some, more cautious members, are already pushing an alternative approach, a way of slouching towards single-payer, rather than sprinting. Start by letting individuals and companies buy into Medicare if they choose. Then gradually make that option more appealing, until Medicare becomes the dominant force in the US insurance market. At that point, you could decide whether to abolish the shrunken private insurance industry or let it linger as a kind of supplement.

That would take time, but it might also make the transition less traumatic and less contentious.

Whether you favor the gradual path, or something quicker, the really striking thing about this political moment is the sudden ascendancy of Sanders, and single-payer.

Increasingly, the party as a whole seems ready to leave Obamacare behind and embrace a single-payer approach. The only real question is: sooner or later.