Impact for Payers in a Single-Payer System

September 18, 2019 Health Ideas Staff

The Cascading Effects of a Single-Payer System

Any discussion on groups impacted by a single-payer healthcare system must include payers. ‘Payers’ is a general term, used intentionally to reflect the multitude of payers in the U.S. who will be greatly impacted by a single-payer system. The diversity of payers covers the most obvious–health plans–but also employers, the government and taxpayers. An entire white paper could be devoted to each of these payer types but here are some of the major consequences to consider.

Impact on Health Plans as Payers: A Weakened Role in Healthcare

Most current single-payer proposals pose a direct threat to health plans, as they severely limit or all-together eliminate these plans. This approach deviates from the cited influences inspiring these single-payer proposals, i.e. Canada and the U.K. Both countries value the role health plans can play in providing either supplementary coverage (Canada) or alternative coverage for those who desire a higher level of service (U.K.). These countries recognize the limitations of one-size-fits all models and instead leverage the advantages health plans can bring to their populations. However, most U.S. proposals seek to remove any role a health plan may play.

Single-payer proposals that eradicate or greatly weaken the role of health plans fail to appreciate the advantages these entities generate. For instance, health plans have led the industry in integrating and coordinating physical, behavioral and long-term care; and have become a superior model to the fee-for-service approach. These plans have been able to advance care management and treatment adherence, while most government plans continue to have trouble collaborating across divisions. It is counter intuitive to dispose of these entities and resort to a model that is less effective.

Health plans make significant investments in innovation to remain competitive. These investments in technology, analytics, patient engagement and care management have driven improvements in health outcomes. Under single-payer system the research and development of healthcare system advancements could be greatly stifled.

Health plans are also employers and without their existence, thousands will lose their jobs and benefits; sending ripple effects through the economy. The consequences of eliminating health plans extend far beyond “removing the middle man” of the equation.

Impact on Government Agencies as Payers: Infrastructure and Capacity Gaps

The government, while a prominent payer today, will become the sole payer in single-payer system. Because all spending shifts to the government in this model, it must adjust in order to manage and address the additional responsibilities and patient needs other payers currently handle.

An Urban Institute analysis, cites two Berensen papers that conclude fee-for-service public health care “’undermanages’ the care to their beneficiaries.” The present construction of Medicare and its supporting technology systems are not sustainable long-term nor equipped to handle an increase of people with varying health needs. Furthermore, the same Urban Institute analysis states, “shifting nearly all private spending for health care onto the public ledger necessitates higher spending and higher taxes” to care for, manage and monitor the current and influx of people to their infrastructure.

Beyond technological advances needed, single-payer will for the first time, pressure the government to meet the needs of an expanded base of consumers. The current systems will need significant upgrades to their capacity and infrastructure to handle greatly expanded data processing, health management and more. These upgrades will increase federal spending, while also likely leading to cuts in other federal programs and increases in deficit spending.

The U.S. government is not currently built for this type of administration, and it would require extensive resources and time to build out the systems that health plans already have in place.

Impact on Employers: More Taxes and Less Benefits  

Under a single-payer system, employers will be forced to sacrifice health insurance as a benefit, which has been a staple of benefit packages for decades.

For those who would argue that not providing healthcare to employees would correlate to a higher salary for employees, this is misguided. Employers will still have to pay a healthcare tax per employee under all the single-payer plans. According to estimates, that tax could be more than employers pay to provide healthcare to employees today.

Moreover, current single-payer proposals require employers to pay for healthcare without granting ways to control their costs. Employers will have to balance the cost of a new healthcare system with  the cost of paying taxes which could lead many businesses to relocate outside the United States; further damaging the economy in the process. Many situations could arise where employers not only do not raise employee salaries but instead consider limiting the number of people they employ altogether.

Impact on Taxpayers: Higher Costs and Lower Quality Outcomes

Another blog post in this series discusses the potential impacts of a single-payer model on patients, so it is not addressed here; however, the impact on individuals as taxpayers is worth noting.

While the intention of universal coverage models, including single payer, is to provide everyone with more affordable, quality healthcare, single-payer models may actually just shift costs for taxpayers, rather than reducing them. Consider that the cost of healthcare under the prominent proposals of Bernie Sanders, Pramila Jayapal, and Kamala Harris is estimated to be $32 trillion. Under these plans, the cost will be paid by a healthcare income tax; effectively, maneuvering away from premiums and cost sharing, but continuing to place high costs on taxpayers. In fact, some experts predict taxpayers could pay more under these plans.

On top of these cost considerations, single-payer systems also eliminate a taxpayer’s choice to direct their dollars elsewhere if they don’t like the service—in essence, costs will continue and choice will be limited.

The current U.S. healthcare system has numerous issues, including high costs, sub-optimal outcomes and uninsured/under insured populations, all of which need to be addressed. It is tempting to want to scrap the system and attempt to build a new one, but doing so without first examining the implications to all stakeholders can lead to substantial negative outcomes.


For a further look at additional single-payer implications, read other entries in this blog series exploring the single-payer model.

Blog 1: “Exploring the Single-Payer Model”

Blog 2“The Patient Consequences of a Single-Payer System” 

Blog 3: “Provider Instability in a Single-Payer System”

Blog 4: “Impact for Payers in a Single-Payer System”

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