Sanders' Single Payer Plan: How Would it Work
By Michelle XiongPublished March 23, 2016With the 2016 Presidential election around the corner, the debates between the candidates vying for the party nomination have become more heated—one of such topics being hotly contested is the future of the U.S. Health care system. Soon after the Democrat debate in South Carolina, Senator Bernie Sanders released the details of a new U.S. healthcare service financing plan.
Senator Sanders proposed the conversion of our current health care system from a multi-payer system to a single payer system—a model that reflects an approach to financing medical procedures and services that completely eliminates the financial strain that prevents individuals seeking health care coverage in a cost effective way that reduces U.S. medical spending rates for the future.
The single payer system that Sen. Sanders plans on implementing would be, in the simplest terms, a way for the federal government to provide expanded coverage at the lowest possible cost--"Medicare for all". One of the largest objectives of this proposal calls for the elimination all out-out-pocket burdens, such as deductibles and copay that the individual must pay out of pocket in order to maintain coverage — issues that inevitably arise with the current multi-payer nature of the U.S. health care financing system.
In the U.S. Health care system, under the Patient Protection and Affordable Care Act (ACA), there are 3 primary sources of financing U.S. health care providers: the Federal Government through government-provided health care programs; third party payers that include private insurance companies; and out-of-pocket payments by the individuals themselves. Most out-of-pocket payments, however, occur due to unexpected medical emergencies those unable to afford the constant fees needed to remain covered and often forces individuals to draw from meager savings accounts and or take out loans that have driven many toward bankruptcy.
The single payer plan aims for expanding the eligibility and benefits of Medicare to those who remain uninsured. In exchange for the total elimination of private insurance and any accompanying copay or deductible required to receive and maintain health care, Sanders proposed that there be a 6.2% payroll-based premium paid by employers and a 2.2% income-based premium paid by working families. These increases alone are projected to contribute $840 Billion annually toward funding the single payer plan. Additionally, the plan plans on implementing a progressive marginal income tax upon higher earning households, starting at a 37% tax on income on households earning more than $250,000 annually. These progressive taxes are expected to raise $110 Billion per year. The ending goal of all of the proposed taxes would result in making costs associated with subsidizing health care obsolete, saving $310 billion annually.
Additional impacts that the single payer system anticipates include a more streamlined health care system in which all providers are managed by one uniform payer. Sanders cites the ability of the single payer plan to curb the ever-growing health costs and inefficiency of the U.S. health care system through eliminating inconsistency of reimbursement rates charged by the numerous private health insurances that fund patients. Current U.S. medical costs add up to $2.6 trillion and makes up about 17.6% of GDP annually. The single payer plan, according to Sanders, would cost over $6 trillion less that the current health care system in ten years.
Although the single payer plan boasts the ability to expand eligibility of coverage and improve savings with the operations of the U.S. health care system, many are skeptical of its projected benefits and speculate irreparable damage on many fronts that the single payer plan has failed to mention.
The largest opponents of the single payer plan include hospital systems, physicians, and providers. The plan proposes payments comparable to rates that currently exist in Medicare. However, these rates are significantly less generous than those of private insurances and practitioners rely heavily on private insurance pay rates to be able to treat Medicare recipients. Eliminating the source of higher pay threatens to cut as much as 20% of physicians' income and the plan could face delays due to lobbying from medical interest groups such as American Medical Association.
The promises in fiscal savings that the single payer plan proposes has undergone much scrutiny. According to research conducted by Emory University researchers, the plan's costs were under-calculated by about $1 trillion annually. In addition, the campaign's generous Medicare expansion in eligibility as well as expanded benefits requires, after further research conducted by Emory university, a 20% increase in income-based taxes rather than the proposed 8.4%.
In addition to all of the skepticism of financial promise, Sanders faces apprehension from his own party—opposing Democrat presidential candidate Hillary Clinton has expressed concern that attempting to implement the single payer plan would undo all of the progress made with the ACA, which was launched merely 8 years ago after much debate.
Given the amount of dissent over the potential realities of the single payer plan and backlash from the health care sector itself over fear of losing benefits, Sanders may have to rethink his plan to change from something as drastic as moving away from a health care financing system that is strongly rooted within its ability to compensate its participants generously. Until the single payer plan can find a more gradual way to introduce its different features into the U.S. health care financing system, there is still a ways to go until it gains enough momentum to support it.