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Single payer systems likely to save money in U.S., analysis finds

In all, 19 of 22 models predicted net savings in the first year after implementation, averaging 3.5% of total healthcare spending.

Jeff Lagasse, Associate Editor

A single payer healthcare system would save money over time, likely even during the first year of operation, according to nearly two dozen analyses of national and statewide single payer proposals made over the past 30 years.

The study, published in PLOS Medicine, comes as California Gov. Gavin Newsom has created a state commission to find ways to achieve universal coverage, possibly through a single payer system, and as the Democratic presidential candidates are debating "Medicare for All" proposals on the national stage.

The U.S. spends more on healthcare than any other country, yet is one of only a few developed nations that does not provide universal coverage. Under proposed single payer bills, such as "Medicare for All", a unified public financing system would replace private insurance, similar to the healthcare system in Canada and many other wealthy nations.

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WHAT'S THE IMPACT

To estimate what would happen if the U.S. adopted a single payer system, researchers from UCSF, UCLA and UC Berkeley examined 22 economic analyses by government, business and academic organizations of national and state-level single payer plans, including proposals made in Massachusetts, California, Maryland, Vermont, Minnesota, Pennsylvania, New York and Oregon.

These analyses were used by policymakers to evaluate the proposals, estimating savings the plans would create through simplified billing and lower drug costs while also taking into account increases in health spending that would arise as newly insured people sought healthcare.

The researchers found that 19 of the 22 models predicted net savings in the first year after implementation, averaging 3.5% of total healthcare spending.

The researchers were able to estimate longer-term savings by using cost projections made in 10 of the models, which looked as far as 11 years into the future. These studies assumed that savings would grow over time, as the increases in healthcare utilization by the newly insured leveled off, and the global budgets adopted by single payer systems helped to constrain costs. By the tenth year, all modeled single payer systems would save money, even those that projected costs would initially increase.

Savings from simplified payment administration and reductions in drug prices and other efficiencies ranged from 3 to 27%, with the largest savings found in plans that lowered drug costs.

Higher initial costs were associated with plans that had low co-pays or none at all, offered rich benefits, or that did not expect savings from lower drug and medical equipment costs.

The models were created by analysts from different political perspectives, and they provided a range of cost estimates in the first year of operation, from 7% higher to 15% lower.

The researchers found that the economic models that were supported by left-leaning funders or that were done by academics found slightly larger net savings. But analyses supported by more conservative funders or performed outside of academia still predicted single payer systems would yield savings.

THE LARGER TREND

Medicare for All -- which,if optional, would bring the U.S. a step closer to a single-payer system -- has been a hot topic among Democratic presidential hopefuls, particularly Sens Bernie Sanders and Elizabeth Warren.

Insurers oppose it for obvious reasons: It would eliminate private insurance, at least if it was mandatory. Providers also oppose it, saying it would ultimately result in lower reimbursement.

Sanders and Warren have been the most outspoken about their support for a mandatory Medicare for All system, whereas Buttigieg favors a Medicare for All opt-in that would retain private insurance models for those who want it. Former Vice President Joe Biden supports a public option such as Medicare for those who choose the coverage, offering premium-free access only for those who would otherwise qualify for Medicaid, but live in states that have not expanded Medicaid under the Affordable Care Act.

Traditional Medicare is fee-for-service, which is at odds with the value-based care paradigm being promoted by the Centers for Medicare and Medicaid Services, in which reimbursement is tied more to care quality than to volume.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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