A Beginners Guide to Health Insurance: Is America in Need of a Single-Payer System?

A Beginners Guide to Health Insurance: Is America in Need of a Single-Payer System?

What is a Single-Payer system?

Single-payer health insurance is a system that all tax paying citizens contribute to, and ensures that all citizens have their essential health care needs paid for. 

How health insurance works in the United States

In the last few years there has been a lot of buzz about a single-payer health insurance system by politicians, health care providers, and the general public. Single-payer systems have been implemented, to great success, in major countries of the world including: Canada, Australia, Norway, Japan, Sweden, and the United Kingdom. The push for the United States to change to single-payer health system and ditch the current for-profit system comes at a time when health insurance and medical care costs are at an all time high. There has been some push back from many who oppose the single-payer model by claiming it does not work, there are long wait times, and less freedom to choose your own doctors. In order to understand the benefits of a single-payer system, we must first look at how health insurance currently works in the United States. For most Americans, there are three types of available health insurance: commercial insurance, Medicare, and Medicaid.

Commercial Insurance

Commercial insurance is what the majority of American’s currently have. The major health insurance providers are: HCSC, United Healthcare, Humana, and Aetna as well as dozens of others. There is no denying that health insurance is a necessity, but what is it actually costing the insured? According to People Keep, in 2017 the average monthly cost of insurance for one person was $393 ($4,716 per year). For two or more people, also known as a family plan, the average monthly cost was $1,021 ($12,252 per year). These insurance policies are obviously expensive, but there are more costs on top of just your basic monthly payments. Almost all commercial insurance plans have a deductible and require co-payments. Deductibles can be anywhere between $1,000 and $10,000 depending on what “level” of insurance you have. What is a deductible? It is the amount of money you must pay out of pocket before your insurance will cover your medical expenses. Co-payments on the other hand are payments that must be made at the time of service. These co-payments can be between $10 and $500, again, depending on what level of insurance you have. You may be asking, “If I pay the insurance company monthly, why do I need to pay out of pocket for my medical bills?” The answer is simple: profit. In 2017, HCSC reported a $1.3 billion profit. How does an insurance company make so much money? The insurance company acts as a middle man for you and your medical bills. You pay the insurance company every month, and in turn, the insurance company pays your doctor or a hospital for your medical treatment, right? Not exactly. Once your deductible is met, your insurance company starts paying for your medical treatment, but, they do not pay the entirety of the bill. Let’s imagine that you visit your doctor to be treated for a minor illness, your doctor charges $250 for your visit and bills the insurance company that amount, your insurance company can then say, “We will not pay $250 for the visit, but we will pay $30” and that is what your doctor gets. This also depends on whether or not your doctor is approved by your health insurance company. If you go on vacation and need to visit an emergency room, your insurance company will not pay for the visit because the insurance company only allows you to go to doctors or hospitals in your area. All in all, you are paying thousands of dollars to a company who is paying out less money than you are paying them(or not at all) and they are keeping the rest as profit. Something doesn’t seem right about that, does it?

Overview: Paid for by businesses and employees.
                    High monthly costs.
                    High out of pocket costs.
                    Can only choose from select doctors
                    Cannot go to doctors or hospitals out of your area.
                    Small businesses struggle to pay for their part of the cost.
                    Insurance companies do not pay doctors and hospitals fairly.
                    

Medicare and Medicaid

Medicare and Medicaid are different, however. Medicare is generally used by citizens who are over 65, but if a person is disabled or is terminally ill they can receive benefits. Medicare is paid for by taking a minimal amount of money out of each paycheck received by working Americans. This is called FICA, and is a tax of 1.45% on up to $200,000 of wages. This money is then pooled together with all of the other FICA money collected and used to pay for Medicare expenses for recipients. It should be noted that Medicare only pays for 80% of the total cost of medical treatment, and does not cover dental, vision, or hearing. Unlike commercial insurance, Medicare has a set system of what it will pay for medical treatment. This ensures that hospitals receive equal payments for equal procedures, regardless of how big or small the establishment is. Medicaid is similar, in that there are fixed amounts that will be paid for the treatment given. Medicaid is paid for through taxes, but is based on income or disability, rather than age. Medicaid varies from state to state, but can be coupled with commercial insurance or Medicare for extra coverage.

Overview: Paid for by taxes.
                    Pay doctors or hospitals fairly.
                    Little or no out of pocket costs.
                    More flexibility with choosing doctors.
                    No service is out of network (Medicare)
                    Can go anywhere in the state for services (Medicaid)

The Challenges

Health insurance is a very complicated and expensive issue, but there may be an easier way: single-payer health care. The main obstacle facing the implementation of a single-payer system is big businesses. Routinely, companies that profit from the current health care system contribute hundreds of millions of dollars to various politicians to keep the system the way it is; or to enforce new and complicated rules to allow health insurance companies to refuse payment for any reasons. Because these politicians are being paid to keep the system broken, no real progress can be made in this area. However, there is one weakness these politicians have other than money: the American people. If enough people vote for the politicians that promise to make the changes necessary for progress, growth can finally be accomplished. Most anti-single-payer politicians use the word “socialism” to try and scare people into thinking America will shy away from its capitalist system to a socialist system. However, this is simply not the case. Socialism and capitalism help to balance the fragile economic structure the U.S. has. In fact, there are many socialist programs in use every day by Americans. Programs like public education, the postal service, fire stations, police, public transportation services, parks, libraries, and social security are all thanks to socialism. These socialist programs benefit the lives of every U.S. citizen–so why shouldn’t healthcare? If we look at healthcare as a human rights issue, and not a political issue, then most of us can agree that every single American deserves to have access to healthcare. Removing the stigma from the term “socialism” when applied to healthcare will help people with any political affiliation get on board with a single-payer system.

How Other Countries Do It

Each country puts their own unique set of rules for single-payer health care, but generally follow the same idea. Many countries that have single-payer also allow private insurance companies to contribute to patient health insurance at the discretion of the individual citizen. In a single-payer system, taxes are collected by the government and pooled together to give its citizens health care. Generally, these taxes are considerably less than the amount a citizen would pay per year to a private insurance company, and are used to pay for medical care and prescriptions. Doctors and hospitals are paid at the same rate for the same medical care, similar to Medicare and Medicaid. Since everyone has the same insurance, recipients are able to choose their own doctor and do not have to worry about out of network costs (commercial insurance does not pay for medical treatment given by providers not approved by the insurance company). Contrary to popular belief, wait times for specialist care are comparable to the US wait times. Single-payer insurance also ensures that every citizen has health coverage. In 2017, approximately 11% of Americans had no health insurance whatsoever. That percentage is estimated to rise significantly in the next decade. 

Overview: Can receive care anywhere.
                    No or very little out of pocket costs.
                    Doctors or hospitals are paid at a fair rate for services.
                    Ensures that all citizens have equal access to health care.
                    Can be less expensive than paying for private insurance.
                    No out of network costs.

The Future of American Healthcare

There is no denying that switching to single-payer healthcare is a massive undertaking, but in the end, it all comes down to what is best for the country as a whole. One thing is certain: the American people cannot sustain the current insurance model. American’s are retiring later in life, living longer than ever before, and the massive gap in wealth have all contributed to the need for a fair health care system. I encourage readers to pay close attention to the health insurance debates in the coming months and years and weigh the benefits of adopting a single-payer system in the U.S. The best way to create change is by educating yourself on the big issues American citizens face, as well as exercising your right to vote.

https://www.healthcare.gov/choose-a-plan/your-total-costs/
https://www.peoplekeep.com/blog/bid/97380/faq-how-much-does-individual-health-insurance-cost
https://www.beckershospitalreview.com/payer-issues/bcbs-parent-company-posts-1-3b-profit-in-2017-4-things-to-know.html
https://www.fraserinstitute.org/sites/default/files/health-care-in-canada-costs-typical-canadian-family-more-than-11000.pdf

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