Single-Payer System Could Reduce Health Care Expenditures

As politicians continue to debate various approaches to health care, a recently published study shows that a single-payer system has the potential to reduce health care expenditures in as little as one year.

“Some candidates are advocating for Medicare for All, while others argue for preserving a role for private insurance,” said lead study author Christopher Cai, University of California San Francisco, in a statement to The Mercury News. “We found consensus that replacing private insurance with a robust public system will save money long-term.”

The study, published in PLOS Medicine, consisted of analyzing 22 proposed, credible economic models of single-payer financing in the United States including government, business consultant, and academic organizations from the last 30 years, and found that 86% predict net savings in the first year of operations, with a range of 7% higher net cost to 15% lower net cost.

Calculations of longer term costs also showed decreased health care expenditures.

“The largest source of savings was simplified payment administration (median 8.8%),” explained Mr Cai and colleagues in the study, “and the best predictors of net savings were the magnitude of utilization increase, and savings on administration and drug costs (R2 of 0.035, 0.43, and 0.62, respectively).”

The study authors also explained that, “To achieve net savings, single-payer plans rely on simplified billing and negotiated drug price reductions, as well as global budgets to control spending growth over time.”

A single-payer system, more commonly referred to as Medicare for All would take the place of private insurance and exist without deductibles and copays, as it would be funded by taxes.

The data was collected from an expert panel, PubMed, Google, Google Scholar and preexisting lists for formal economic studies of the projected costs of single-payer plans for the United States or for individual states.

The authors of the study note that their analyses had several limitations but initial data shows that concerns about cost growth might be misplaced. —Edan Stanley