Single payer health care could provide universal coverage at lower costs than the current US system. Evidence from other countries shows that single payer systems lead to higher access to care, greater utilization of services, better health outcomes, and lower overall costs compared to the US multi-payer system. Administrative costs are much lower under a single payer system due to simplified billing and insurance processes. Taiwan's transition to a national single payer system improved health outcomes, especially for vulnerable groups, while keeping costs low.

1. Single payer health care
James G. Kahn, MD, MPH
Pharmacy Leadership Institute
Kaiser Permanente Development Program
Debate on Health Care Reform
13 September 2012

3. The single payer argument
When it comes to health care financing, there is a
free lunch awaiting us – single payer is cheaper &
better.
The evidence base: From the OECD and beyond …
universal coverage, with one comprehensive benefit
package & truly streamlined administration, leads
to higher access, greater utilization, better health
outcomes, and lower costs.

4. Key features of US Health Care Financing
 17.4% of GDP 2009 and rising, $2.5 T, 8,086 per capita
 Public – 43% (27% federal, 16% state/local)
• CMS (Center for Medicare and Medicaid Services)
 Medicare – federal, aged & disabled ($502 B)
 Medicaid – state/federal, poor & long term care ($374 B)
• Veteran’s Admin, Military, Indian Health Svc, …
• State and local safety net
 Private – 34%
• Employers – 21%
• Families – premium contribution – 13%
 Families – uninsured services & copays etc – 15%
 Other private – 7%
Martin Health Affairs 2011

5. U.S. vs Other OECD countries
 Spending per capita ~50% higher
 Generally fewer doctor visits and hospital
days
 Difference in spending due to:
• price (cost of doctor, procedure, drugs)
• Use of high technology
• Administrative costs (later)
 Health care outcomes same or worse

8. Number of Uninsured in the US
Source: US Census Bureau, Current Population Surveys
50
Millions of people
45
15.8% of
40 population
35
30
25
20
1976
1980
1985
1990
2000
2006

10. US standing on health care outcomes
Rank of 13 industrialized nations
Low birth weight %
(U.S. in Red)
Infant mortality
Years of potential life lost
Age adjusted mortality
Life expectancy @ 1 yr
Life expectancy @ 40 yrs
Life expectancy @ 65 yrs
Life expectancy @ 80 yrs
Average for all indicators
Poorest Best

11. Schoen 2005

12. Billing and Insurance-Related
Administrative Costs

13. U.S. Health Care Financing
Multi-payer health care financing
Funds Payers Providers
Public & Private
Many "pools"
Employer Multiple private payers Doctors
& many benefit plans Hospitals
Premium contrib. PPO vs capitated, Pharmacies
many blends/variants Device vendors
Income taxes Public: Medicare, Medi-Cal, Skilled Nursing Fac.
S-CHiP, VA, Indian Health,. Other
Out-of-pocket ~ 60 safety net programs
Admin costs of insurance 15%
Admin costs overall 30%

14. $400 billion annually in billing and
insurance-related (BIR) administration
= $1300 per person per year
~60% is at providers
>$250 billion is “excess” - avoidable

15. Elements of Provider BIR - 1
 Complexity of the insurance process:
multiple steps, often detailed &
demanding:
Contracting, maintaining benefits
database, patient insurance
determination, collection of
copayments, formulary and prior authorization
procedures, procedure coding, submitting
claims, receiving payments, paying subcontracted
providers, appealing denials and underpayments, negotiating end-
of-year resolution of unsettled claims, and collecting from patients, …

16. Allocation of spending for hospital and
physician care paid through private insurers
Insurer
cMLR
19.0% Hospital
BIR
3.9%
Physician
Medical BIR 5%
care
62.0%
Medical
care admin
10.1%

17. Major types of health reform
 Free market – empower individuals to buy health
insurance / care, subsidize the poor. Often called
“consumer driven”. Based on principles of moral
hazard and “skin in the game”
 Improved mixed system – regulate private insurance,
expand public insurance (PPACA). “Managed
competition”
 Single payer / universal – use a public fund to pay for
privately and publicly delivered care, with everyone
covered with good benefit package. Common in OECD
countries.

18. By What Criteria Should We Judge Reform
Proposals? The IOM Report: 2004:
 Health care coverage should be universal.
 Health care coverage should be continuous.
 Health care coverage should be affordable to
individuals and families.
 The health insurance strategy should be
affordable and sustainable for society.
 Health insurance should enhance health and
well-being by promoting access to high-quality
care that is effective, efficient, safe, timely,
patient-centered, and equitable.
US health care meets NONE of these criteria

19. Single payer health care financing
Funds Payers Providers
Public & Private
Employer / Employee Doctors
Single public pool, Hospitals
one benefit package. Pharmacies
Income taxes
FFS or capitated outpt Device vendors
Facility budgets inpt Skilled Nursing Fac.
Out-of-pocket (modest) Other
Admin costs of insurance < 5%
Admin costs overall 15-20%

20. Administrative Savings from
Single Payer - Principles
 Universal coverage: no eligibility determination,
marketing, underwriting.
 Single pipe for payment: fully standard benefit
package & reimbursement rates; single billing
process - transparent, simple, few errors; single
fiscal agent per office.
 Single clinical practice rules: formularies,
referrals, guidelines.
 Not-for-profit: public or private

21. Drastic Process Simplication
The 3 Cs
 Culling (e.g., enrollment and eligibility
determination)
 Consolidation (e.g., benefits, billing,
formularies)
 Community orientation (i.e., not-for-
profit payers)

22. Impact of single payer on administrative costs
100%
80%
Medical care
60% Other admin
Physician BIR
Hospital BIR
40%
Insurer BIR
20% This shift = 12.3%
0%
Current Single payer

23. Taiwan transformation
to single payer
 Taiwan established National Health Insurance (NHI) in
1995
 NHI covers >98% of population, generally small co-pays.
 Cost = 3.4% of GDP, satisfaction = 77.5%, admin cost
=1.49%, equitable financial burden
 Deaths from “amenable causes” fell faster with NHI, 5.83%
per year 1996 - 1999.
 Fewer deaths from circulatory disorders and, for men,
infections; reversed trend in female cancer deaths.
 Effect highest among the young and old, and lowest for
working age, consistent with changes in coverage.
 Little change in non-amenable causes (0.64% per year).
Yue-Chune Lee BMC-HSR 2010