What is a Single Payer Healthcare System?

What is a Single Payer Healthcare System? Simply put, a Single Payer Healthcare System is any healthcare system in which citizens pay the state via taxes to cover healthcare costs. This stands in contrast to a market-based system where private insurers compete for the business of providing healthcare services to individuals. This type of system can be seen in countries such as Canada, which delivers healthcare through a publicly-funded system. Single-payer healthcare is also commonly known as “universal healthcare.”

How is a Single-Payer System Run?

Some people believe that under a single-payer system, the government is granted the power to make medical decisions. In reality, under single-payer systems, medical decisions are left exclusively in the hands of the patients and doctors. The public determines how single-payer systems are run through the election and appointment of agencies and individuals that represent the will of the public. These agencies manage issues relating to budgets, such as doctor fees. So, while public agencies determine budgeting and provision matters, clinical decisions such as treatments and diagnostics remain the sole responsibility of patients and their doctors.

Is a Single-Payer Healthcare System Affordable?

According to Physicians for a National Health Program (PNHP), a single-payer system keeps costs down by enabling sick and injured individuals to seek help early on for treatable illnesses. This prevents these illnesses from developing into more expensive problems that require more resources to treat. Single-payer systems also have a range of cost control methods that have been proven highly effective in countries that already have single-payer systems. These include measures such as fee schedules, inflation controls, and the ability to negotiate prices with pharmaceutical companies, which are free to price-gouge patients under market-based systems. According to PNHP, single-payer systems also sharply reduce administrative costs by replacing unnecessary bureaucratic structures with a more centralized and efficient management system.

How Does Medical Innovation Happen under a Single-Payer System?

Under a single-payer system, medical research is funded mainly by the government. Most countries already have some level of government funds available for medical research, but in market-based systems, marketing and distribution rights for medical innovations are left in the hands of private pharmaceutical companies. There are numerous examples of breakthrough innovations in medicine coming out of countries with single-payer medicine. This effectively disproves the myth that market competition is the only path towards medical innovation. In fact, market-based systems offer their own obstacles to research and development by only prioritizing research deemed to be marketable by private companies. This often results in the development of redundant drugs and treatments that differ from one another only superficially.

The Takeaway

A Single Payer Healthcare System depends mainly on the public sector. Canada has had a single-payer system since 1984, and as such, it stands as a good example for anyone looking to learn more about how single-payer healthcare systems function in Western democracies. However, the exact nature of a single-payer system will always be somewhat variable in order to reflect the interests of voters in representative democracies.

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