Say that the USA goes full single-payer, like Canada or the UK or wherever. Every US citizen gets their health care provided free of charge by the government, minus a few small fees here & there. What kind of federal appropriations are we talking about? In the trillions? And how would that be funded? I imagine the tax increases would have to be pretty substantial.
DISCLAIMER: Obviously it’s going to be hard to talk about this with only facts, but let’s do our best to keep it GQ.
The tax increases will be ameliorated by the fact we will no longer paying premiums to the health insurance companies. So, instead of paying $12,000/year in health insurance premiums in addition to taxes you might be paying an additional $8k or $10k in taxes BUT because you won’t have those health insurance premiums you’d come out 2k-4k ahead of where you were.
An approximation could be extrapolated from California’s assessment:
California has roughly 1/8th of the population of the US. So we can multiply the cost for California’s proposed single-payer by 8 to get a rough estimate. That cost as estimated was $400B. That would make the cost nationwide about $3.2T. That’s almost doubling the annual national expenditures. In other words, you’d have to more than double annual tax rates on ALL FEDERAL TAXES to pay for it.
Now, a couple caveats: First of all, California was trying for a best of all worlds scenario, specifically, no rationing of care. That’s unlikely to be tried anywhere (for precisely the cost reason). Secondly, not all of the proposed cost would be an increase, because of course to the extent that the federal government pays for Medicaid, that would just be blended in.
As I stated in another thread;
France: Taxes = 20-24% of GDP. Health Expenditures 11.5% of GDP.
So they could spend half their budget on it and have plenty left.
USA: Taxes = 18-21% of GDP*. Health Expenditures 17.1% of GDP.
So on the USA side, we spend nearly 50% more of our GDP on health expenses. We could not do this with current -or- future levels of taxation without cutting those expenses by at least 1/3rd. This would be relatively easy if we had the political will to do so, but as so much of that excess cash goes straight to our politicians to prevent it, it would take some serious change on our side.
To run it year on year providing the same level of care as say, France, UK, Spain etc. would cost about the same per capita as those countries.
The amount that the USA spends per capita on public healthcare alone (i.e. the bit that only covers a fraction of your population) is the same amount that the UK, France, Australia and Japan spend on full public coverage and private spending added together.
So the short answer is…it would costs the USA less. Probably about 25% less to replicate say the UK, cover all your people and be effectively free at the point of use whilst still retaining a private healthcare market.
There is no reason why the running costs can’t come from the existing tax take. The funding isn’t the problem, it would in fact be cheaper. The political will to take that step is the real issue and the willingness to weather the initial storm of protests and resistance in order to set it up.
The cost will depend on the exact details of the mechanics.
A large part of why the ACA has been problematic costwise, is because it dealt with a corrupt pricing system which was already made up of artificial charges unrelated to the cost of the actual procedure, “insurance company” manipulations of those charges, which are in turn manipulated in response by the providers, to the point where nothing in the actual fees charged to the patients have anything directly to do with the true cost of their care…and simply forced everyone to support that mess.
If all that a single-payer system does, is switch from having patients support a flawed so-called insurance model, to having the government do the same thing and tax everyone to do so, the cost will be tremendous. Since that’s what opponents of single payer WANT such a system to be, that’s the only one they will base their calculations on.
Canadians don’t get healthcare for free and they DO pay insurance premiums. Please don’t misunderstand!
But we are all part of a province size group, so the risk of high cost patients is spread over such a large group it doesn’t really drive up premiums. We pay our health insurance, as does our employer, based on income.
Premiums are very low because there are not several layers of profit being accommodated. The poor, students, seniors all get subsidized coverage for their premiums, just like means testing.
But it’s NOT free! We pay, all of us, including all employers. We don’t get bills for care, because it’s almost all covered by the universal plan.
Stop saying it’s free. It’s not free. We just pay in a different way, and operate a very different system.
Well, Medicare and Medicaid in total come to less than a trillion, and Medicare recipients need more healthcare than the average person due to age. Due to this, something tells me that the California numbers are inflated somewhere. In order to add up to 3.2T, you’d need to almost quintiple the current federal healthcare costs which are already largely spent on the sickest individuals. Which isn’t to say that it wouldn’t top 1T extra, just that I think 3.2T extra is too high.
Well, you can’t just assume cost savings, because that’s subject to voter expectations. If voters still want overtesting and the newest treatments, then that limits the amount of cost savings you can achieve. Vermont and California’s assumptions are pretty reality-based.
So yeah, $3.2 trillion. The most likely routes to pay for it would probably be:
And it wouldn’t replace all premiums. Unions aren’t giving up their gold plated plans to be covered by the national system. Given that reality, rather than the basket of taxes most European countries use, you’d probably need one big fat payroll tax that unions would be exempt from.
California’s problems might be the willingness to cover illegals. That raises costs substantially for California but is a non-starter here. Well, it’s really a non-starter for California too, but California’s unique politics makes it necessary for them to promise to cover illegals, which in turn makes it impossible for them to implement single payer. But that’s how politics works, the politicians would rather not have single payer than have it “wrong” by excluding illegals.
Unfortunately, if the USA went single payer, the costs would of course skyrocket. The government makes bad, self-and friend, pocket lining deals all the time.
Just the nepotism involved in administering such a system would destroy any proposed budget, no matter how high.
The US Federal government couldn’t successfully manage a McDonald’s franchise, no matter which flavor of corrupt party was in power, you really think they could handle universal healthcare?
The costs to run such a system would be nothing compared to the costs of getting from where we are now to such a system. Nye Bevan famously said of hospital consultants that he “stuffed their mouths with gold” to gain their cooperation in creating the NHS. In America, 70 years later, there are many, many more mouths and their appetite is insatiable.
In the best case scenario option, it is thus.
Currently about 60% of medical costs are covered by government. Medicaid, Medicare, VA, aca exchanges, local programs, tax credits for employers to buy health insurance, etc. Maybe 20% are insurance costs and 20% are private costs.
A well run aca system may be 20% cheaper than baseline. So you’d only need 80% of current funding. So dump the 60% government funds into single payer, eliminate the 40% in insurance and private spending, and add taxes to get the extra 20%.
That 20% figure (of health care costs) would add up about 4% of gdp. That is an additional $720 billion a year in taxes.
A payroll tax split between employees and employers, combined with a progressive income tax would meet that. Maybe increase the Medicare tax from 2.9% up to 8% (which is split between employees and employers) and a progressive income tax.
The higher Medicare tax alone would add about $400 billion a year in tax revenue.
Canada v. USA numbers, with link to WHO stats. http://boards.straightdope.com/sdmb/showpost.php?p=5456070&postcount=10
Medicare and medicaid are single payer programs. Medicaid has some issues due to low reimbursement but both programs are much cheaper than private insurance.
True, although 64% of hospitals lose money on Medicare patients, and most hospitals lose money on each Medicaid patient they treat. If the US goes single-payer, there won’t be any patients to shift the losses to, so costs will have to rise back to their current level where insured patients make up the difference. TANSTAAFL.
So basically we would need to raise taxes to replace whatever we are spending on insurance premiums now.
And the increased availability, especially of preventative services, would increase costs overall -
Cite.
Regards,
Shodan
Not sure which province Elbows is in. Most province, AFAIK, dropped premiums for health care a long long time ago. I recall realizing somewhere around 3rd or 4th year university that technically I should have been paying OHIP premiums of $22 a month. (Single person, 1975). Never did, they stopped collecting that eventually. It’s all out of general revenues now.
I made in the $C80,000 range and paid about 28% in taxes for provincial and federal. (Marginal rate 42%). I don’t think this is onerous for all governmental services.
Make no mistake. Single payer like the Canadian system is socialism. The government sets a fee schedule, and doctors either take it or lump it. (If understand correctly, just like US Medicare). However, there is no other game in town. Patients who see doctors outside of our system do not get reimbursed for their treatment, so a doctor who chose not to participate would rely on customers who could afford to pay out of pocket. Typically these would be boutique services for the really rich and organizations like sports teams.
Canada has carefully avoided allowing a separate system like the UK where the better off have a separate paid service. Companies do NOT provide health care insurance for anything covered by the provincial plans. Everyone relies on the one system.
However, doctor offices run just like the USA - doctor(s) runs an office, hires receptionist and nurse, etc. Patients present their provincial health plan number, and the doctors bill the provincial plan for each treatment. To a certain extent the doctors’ provincial group tries to negotiate fee schedules. But make no mistake, the doctors in Canada make a decent living, but do not make anywhere near what they could make in the USA.
Hospitals are essentially paid for and managed by the provincial health authority. No need for $10M a year CEO’s. (I read somewhere the head of a provincial health authority responsible for everything for over a million people, made $C500,000 a year, and the VP’s less than $C250,000.)
There can be a wait for optional services, and the system is by no means perfect. But I still wouldn’t trade it for the mess down south.
My general impression on numbers - health care is a huge part of the provincial budget; plus it includes large “transfer payments” from the federal government to help cover the costs. I think that what the USA spends on military, the civilized countries with health care spend on that health care instead, thus can’t afford larger military.
The real losers will be the CEO’s of health care companies when their lucrative highway robbery evaporates. With single payer, all citizens covered, a single simple established list of what treatments are covered, the paperwork is far simpler. They avoid the back and forths about whether this insurance will cover that treatment.
(Another problem is that due to congressional paralysis, the USA has happily racked up spending and specific tax reductions while failing to increase any taxes to pay for these.)
That kind of thinking reflects 30+ years of Republican propaganda. “The government is inefficient and can’t manage anything effectively” is an excuse to privatize and more importantly, Profitize everything.
Moderator Note
Given the topic, it’s probably going to be pretty much impossible to keep politics out of this thread. That said, let’s all try to keep the political commentary to a minimum and focus on the facts, please.
Given that the US is such an outlier in overall expenditure as a % of GDP, it seems to me as identified above that you’d have to start with identifying transparent and realistic costings per “patient journey” or course of treatment. I don’t know what happens elsewhere, but the UK has the National Institute of Clinical Excellence to maintain an expert professional oversight of what is both clinically and cost-effective, and the NHS’s internal shadow market identifies a national tariff for each type of treatment. I suspect you might be able to shake out a lot of over-charging by simply not charging per item of service but using block tariffs of this kind - of course not every patient’s journey through a course of treatment is going to be exactly standard in terms of what they actually cost, but the larger the population involved, the greater the prospect of the variations in demand balancing out.
The question is, though, is that best done on a gradualist basis as professional advice for a few years before phasing in government-controlled budgeting, or go in for a big bang?