How Much Does Single Payer National Health Care
Physicians for National Health Program
PNHP newsletter, October 1999
National fiscal studies performed on single payer.
December, 1998: Two estimates for the Massachusetts Medical
* Lewin Group
* Solutions for Progress/Boston University
School of Public Health (SFP/BUSPH)
(The full text of these studies are posted at: www.mms.org/
"In early 1997, the Massachusetts Medical Society, retained
the services of two consulting teams to independently analyze
the relative costs of a Canadian-style single-payer system, and
the current multi-payer health care system in Massachusetts."
"While Lewin and SFP/BUSPH reports differed in their
orientations and methodologies, they reached similar conclusions.
First, a single-payer system would achieve significant administrative
savings [between $1 .8 and $3.6 billion] over the current multi-payer
system. Secondly, these savings are of such a magnitude that the
available funds would be sufficient to insure universal coverage
in the state and provide comprehensive benefits including outpatient
medications and long-term care and eliminate all out-of-pocket
payments (co-payments, deductibles)."
"The major difference in the studies findings had to
do with the timing of achieving the cost savings. SFP/ BUSPH estimated
that the savings could be in the first year of implementation
of the system. Lewin felt the savings would begin in year six."
-Massachusetts Medical Society House of Delegates Report 207,
May, 1991, Physicians for a National Health Program
"[A] national health program could reap tens of billions
of dollars in administrative savings in the initial years, enough
to fund generous increases in health care service not only for
the uninsured, but for the underinsured as well .... We suggest
a funding package that would augment existing government health
spending with earmarked health care taxes. Because these new taxes
would replace employer-employee insurance premiums and substantial
portions of cur
rent out-of-pocket expenditures, they would not increase health
costs for the average American." ("Liberal Benefits,
Conservative Spending," Grumbach, Bodenheimer, Himmelstein,
and Woolhandler, JAMA, May 15, 1991).
June, 1991 General Accounting Office
"If the US were to shift to a system of universal coverage
and a single payer, as in Canada, the savings in administrative
costs [10% of health spending] would be more than enough to offset
the expense of universal coverage." ("Canadian Health
Insurance: Lessons for the United States")
December, 1991 Congressional Budget Office
"[I]f the nation adopted ... [a] single-payer system
that paid providers at Medicare's rates, the population that is
currently uninsured could be covered without dramatically increasing
national spending on health. In fact, all US residents might be
covered by health insurance for roughly the current level of spending
or even somewhat less, because of savings in administrative costs
and lower payment rates for services used by the privately insured.
The prospects for controlling health care expenditures in future
years would also be improved." ("Universal Health Insurance
Coverage Using Medicare's Payment Rates")
April, 1993 Congressional Budget Office
"Under a single payer system with co-payments .... on
average, people would have an additional $54 to spend....more
specifically, the increase in taxes ... would be about $856 per
capita .... private-sector costs would decrease by $910 per capita,
the net cost of achieving universal insurance coverage under this
single payer system would be negative."
"Under a single payer system without co-payments people
would have $144 a year less to spend than they have now, on average...consumer
payments for health would fall by $1,1 18 per capita, but taxes
would have to increase by $1,261 per capita to finance this plan."
("Single-Payer and All-Payer Health Insurance Systems Using
Medicare's Payment Rates")
July, 1993 Congressional Budget Office
"Enactment of H.R. 1300 [Russo's single payer bill] would
raise national health expenditures at first, but reduce spending
about 9 percent in 2000. As the program was phased in, the administrative
savings from switching to a single-payer system would offset much
of the increased demand for health care services. Later, the cap
on the growth of the national health budget would hold the rate
of growth of spending below the baseline. The bill contains many
of the elements that would make its limit on expenditures reasonably
likely to succeed, including a single payment mechanism, uniform
reporting by all providers, and global prospective budgets for
hospitals and nursing homes." ("Estimates of Health
Care Proposals from the 102nd Congress")
December, 1993 Congressional Budget Office
S 491 (Senator Paul Wellstone's single payer bill) would raise
national health expenditures above baseline by 4.8% in the first
year after implementation. However, in subsequent years, improved
cost containment and the slower growth in spending associated
with the new system would reduce the gap between expenditures
in the new system and the baseline. By year five (and in subsequent
years) the new system would cost less than baseline. ("S.49
1, American Health Security Act of 1993")
June, 1998, Economic Policy Institute
"In the model presented in this paper, it is assumed
that in the first year after implementing a universal, single-payer
plan, total national health expenditures are unchanged from baseline.
If expenditures were higher than baseline in the first few years,
then additional revenues above those described here would be needed.
However, these higher costs would be more than offset by savings
which would accrue within the first decade of the program."
Universal coverage could be financed with a 7 percent payroll
tax, a 2 percent income tax, and current federal payments for
Medicare, Medicaid, and other state and federal government insurance
programs. A 2 percent income tax would offset all other out-of-pocket
health spending for individuals. "For the typical, middle
income household, taxes would rise by $731 annually. For fully
60% of households, the increase would average less than $1,000.
For another 20%, the increase would average about $1,600...costs
would be redistributed from the sick to the healthy, from the
low and middle-income households to those with higher incomes,
and from businesses currently providing health benefits to those
that do not.
"Even more important, greater efficiency and improved
cost containment would become possible, leading to sizable savings
in the future. The impediment to fundamental reform in health
care financing is not economic, but political. Political will,
not economic expertise, is what will bring about this important
change." ("Universal Coverage: How Do We Pay For It?"
- Edie Rasell, M.D. PhD.)