FAQ test

“Single Payer” refers to a way to pay for healthcare. Instead of having hundreds of different private health insurance companies and thousands of different insurance policies, coverage would be standard and there would be one agency that would pay the bills. That agency could be a public or quasi-public agency or a private corporation acting as a subcontractor to the public agency. (For example, private contractors administer Medicare claims – Learn about Medicare Administrative Contractors – and they are incentivized to keep costs lean while maintaining accuracy and timeliness.)

In single payer systems, medical treatment is provided by doctors and hospitals who remain independent of the agency paying the bills. This is different from the UK’s National Health Service, and the US Veterans Administration, where doctors and hospitals are employed by the public agency that pays the bills.

Medicare is a federal health insurance program that covers people who are age 65 or older, as well as certain younger people with disabilities, and people with End-Stage Renal Disease. Medicare is a form of “single payer” health care, meaning that there is only one payer – the Medicare Trust Funds – for healthcare services. Medicare is mainly funded by payroll deductions, employer contributions and income taxes.

Medicare does not limit people to specific doctor networks. People on Medicare can go to any doctor who takes Medicare, and do not need a referral to see a specialist. Around 90% of doctors accept Medicare, with variation by state and medical practice. Click here to learn about Medicare patient access

Medicare has different parts. For example, Medicare Part A pays 100% of most hospitalizations (after the patient pays a “hospital insurance deductible”). No Part A premium is charged for people who have paid Medicare taxes for at least 10 years of work. Medicare Part B pays 80% of most medically necessary doctors’ services, preventive care, durable medical equipment, hospital outpatient services, laboratory tests, x-rays, mental health care, and some home health and ambulance services. Most people pay a small monthly premium (about $100) for Part B coverage.

Like private health insurance, Medicare does not cover everything. For example, Medicare does not cover hearing aids or dental care.

Click here to learn more about Medicare

Most people who have Medicare also purchase supplemental insurance. The most common is “medi-gap” insurance, that covers the 20% that Medicare Part B doesn’t pay. But they can also purchase supplemental insurance for vision, hearing and dental care.

Click here to learn about Medi-Gap coverage

People eligible for Medicare can choose to have “Original” Medicare (the regular public insurance option where the government pays the bills) or “Medicare Advantage” (a private insurance alternative where insurance companies pay the bills).

“Medicare Advantage” plans differ considerably from “Original” Medicare in that they impose narrow doctor networks, a requirement for a referral to see a specialist, co-pays, and more. Limiting patient choice is how the private health insurance companies make money on their plans. In return for patients giving up their free choice of doctors, some plans offer limited additional coverage, such as vision or hearing.

Differences between Original Medicare and Medicare “Advantage” Plans

Millions of Americans and HEAL California agree that an ideal healthcare plan for the United States would be an improved and expanded version of Medicare that would cover everyone from birth on. “Improved” means that Medicare Part A and B would cover 100% of all doctor and hospital services. “Expanded” means that Medicare would cover all our health needs, including vision, dental and hearing. And “for All” means that Medicare would automatically cover everyone who lives in the country, for life.

Representative John Conyers (MI) has introduced the Expanded and Improved Medicare for All Act (HR 676) in the House of Representatives. Learn more about Improved Medicare for All & HR676.

To promote equality in healthcare, improve access and save money, HEAL California supports an Improved, Expanded Medicare for All “single payer” system with the following features:

• All doctors and hospitals would be included, so patients would have complete free choice. No doctor networks! No out-of-network charges!

• Coverage would be standardized and as broad as possible, so patients would know what is covered. No gaps! No surprises!

• Billing would be standardized and simplified, which would save billions in administrative costs. No administrative waste!

• Costs would be fair and based on income, with no upfront costs (like co-pays or deductibles) that keep people from getting the care they need. No barriers!

There is no difference – both terms describe the same legislation. The Affordable Care Act was nicknamed “Obamacare” by people who opposed healthcare reform and came up with the term as an insult. But President Obama himself embraced the term, stating in 2012 that his “opponents are right, I do care.”

Here are highlights, in a nutshell:

• Obamacare was intended to reform the health insurance industry and promote better health security for Americans.
• It established a regulatory overlay on the existing system.
• It mandated that Americans obtain health insurance, or pay a penalty.
• It established Insurance Exchanges to make it easier for them to do so.
• At the same time, it improved the insurance product by outlawing the most egregious practices of the health insurance industry.
• And it expanded Medicaid eligibility to millions of low-income Americans in states that accepted the expansion.

It was the same as we have today – health care as a business (instead of a service) with hundreds of different payers and thousands of different insurance policies. In spite of all these payers and policies, we have millions of uninsured people and even more under-insured people. The mandate to buy insurance and the establishment of insurance exchanges to sell private health insurance guaranteed the health insurance industry more customers. It did not guarantee that everyone would be able to access or afford the care they need.  US health care never included everybody, and it still doesn’t.

To be “uninsured” is to not have a health insurance policy. To be “under-insured” is to have a health insurance policy that does not adequately cover your health-related expenses. For example, your additional out-of-pocket costs (deductibles, co-pays, etc.) relative to your income may be so high that even though you have insurance, you can’t afford to seek medical treatment promptly when you need it. According to the 2014 Commonwealth Fund Biennial Health Insurance Survey, more than 31 million Americans are under-insured. This is about the same number of under-insured as in 2010, meaning that Obamacare did not solve the problem of high costs. 

A “payer” is an agency that pays medical providers for the healthcare services or products we need.  A “payer” is often called an insurer.  For example, Anthem Blue Cross, a for-profit health insurance company, is a private insurer that acts as a “payer.” Another “payer” is Medicare, a national non-profit, publicly administered health insurance program for persons 65 and older. Medicare is a public insurer. 

Public insurers are government agencies that cover those who are most likely to need care. For example, Medicare covers the elderly and disabled, Medicaid (Medi-Cal in California) covers certain people with low incomes, and the Veterans Administration covers military veterans.

Meanwhile, private insurers (e.g. health insurance companies) cover the people least likely to need care –people younger than 65 years old getting insurance through their jobs or on the health insurance exchanges (e.g. Covered California).

No matter who the payer may be, ultimately the money comes from us in the form of:

• Premiums we pay for health insurance
• Deductibles, coinsurance and co-pays we pay “out of pocket.”
• Taxes we pay to subsidize the purchase of private health insurance on the exchanges
• Taxes we pay to private health insurers to offset their losses for policies they sell on the exchanges.
• Taxes we pay to support Medicare, Medi-Cal and the VA
• Taxes we pay for the care of patients who have no insurance

Public Health Insurers – the Government: About 50% of Californians are currently covered by public health insurance programs:

Medi-Cal: 30% of Californians (over 12 million of us) are covered by the Medicaid program that insures low-income persons.

Medicare: Another 13% (5 million) are covered by Medicare

Veterans Administration: About 5% of us (1,850,000 military veterans) receive care under this federal program.

Note that overhead costs of public insurers are very low. Medicare’s overhead runs about 2%, for example. See below for info on private insurer overhead –

Private Health Insurers: There are hundreds of private health insurers across the country. Many are for profit and most of the nonprofits generate enormous surplus revenues.  Following are the biggest private health insurers in California, covering nearly 14 million of us:

Kaiser (with 42% of the private market),

Anthem Blue Cross (20%),
Blue Shield (15%),

Health Net (6%),

United Healthcare (5%),

Aetna (5%),

Cigna (4%),

All Other (3%)

Private insurers’ overhead runs 22.5% on average – ten times more than Medicare’s! Per current calculations, the US could save nearly $250 Billion over the next ten years if we could hold overhead to 2% across the board. This would be possible with a Medicare for All, single payer type system.

There are four basic healthcare systems in the world, and elements of each one appear in the US. The first two examples are types of single-payer systems. The third example is multi-payer.

British-type systems, like in Spain and New Zealand, where health care is both provided by and paid for by the government. The government employs and manages the doctors and hospitals. In the US, this is like the Veterans Administration.

2.) National Health Insurance systems, like Canada and Taiwan, in which the government pays healthcare costs but medical providers are independent and private. In the US, this is how Medicare works.

3.) Multi-payer insurance systems, in which private insurance companies finance treatment, and independent medical providers deliver care. Examples include Germany and Switzerland. In the US, this is the dominant model.

In European multi-payer systems, premiums and covered benefits are tightly regulated and insurance companies must operate as non-profits. Switzerland even limits health insurance executive compensation! In the US, commercial health insurance companies relentlessly pursue profits and fight regulation at every turn. 

4.) Pay-As-You-Go model, in which patients must pay for their health care out of pocket. In the US, this is the system for the uninsured, the under-insured, and the undocumented. As a result, low-income people often have very limited access to care while the rich get the best care available.

Multi-payer systems are the most expensive and fiscally inefficient unless they are very highly regulated. For example, the US multi-payer healthcare system is the most expensive in the world, consuming over 17% of our gross domestic product and costing us over $8500 per person every year.

Single payer systems are the least expensive and most efficient. For example, Canada spends around $4500 per person and France, $4100 per person, for health care with better outcomes, lower infant mortality and longer life expectancy than in the US.

Because they are more complicated to administer. Doctors and hospitals require large numbers of clerks to handle billing and collections. For example, Duke University has 900 beds and 1300 billing clerks! (The typical Canadian hospital has just a handful of administrators.) Insurance companies also maintain staff to make — or too often to deny — payments. In the US, we spend $350 billion per year to move the money around instead of spending it on actual health care. No wonder we lead the world in administrative waste!

No, it’s only one of the issues. Private corporations manage “the business of healthcare” with a primary focus on profits and shareholder dividends instead of patient care. When health care is treated as a market commodity rather than as a necessary service to the public, incentives are skewed.  “The consequences of this can be seen, not only in the fact that health care costs in this country are far above those of any other advanced country, none of which allow their providers and suppliers to set their own prices, but [also] in the complete irrationality of the prices of individual “items” of medical care amounting, in effect, to price gouging.” (Leonard Rodberg, PhD, Queens College, City University of New York)

It means that health care is distributed according to what people can pay, rather than what they need. In the US private health insurance market, profits are made by collecting more premiums than are spent on treating people. Payments made for care are deemed “medical losses.” The market is incentivized like other commodity markets, with a focus on profit rather than on people’s needs.

Health insurers enjoy a revenue stream from premium payments, and from investment income. They limit their obligation to pay for treatment by limiting access to care, imposing cost-sharing mechanisms and by denying treatment.

• The way insurers limit access to care is by creating narrow networks of doctors and hospitals, making it hard for many of us to find a doctor in-network.
• The way they share costs is by passing back to patients some of the costs of care with copays, deductibles and coinsurance. (We pay premiums up front, but are often unprepared for these shared costs when we actually seek care).
• The way they deny treatment is to set up medical review boards that determine the “medical necessity” of what your doctor ordered.

Health care would be a service, for example, like the fire department, park service, public schools, public library and so on. No industry would profit from limiting people’s access to care or denying treatment. There would be nothing between you and the doctor of your choice. You wouldn’t need to buy an insurance policy, or navigate a doctor network, before going to get care. You would simply go to the doctor, get treated and the doctor would bill the appropriate agency.