Medicare is health insurance in the United States for people aged 65 years and older, as well as some younger people with certain medical conditions.
Some members of Congress and a portion of the U.S. population are interested in changing the country’s current healthcare system to one that would provide coverage for most residents, including those under 65 years of age. If this happened, the new system could be called “Medicare for All” or single payer healthcare.
Below, we discuss the meaning of the terms Medicare, Medicare for All, single payer, and universal healthcare. We also look at the possible benefits and drawbacks of the different options.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Single payer refers to a healthcare system in which only the government pays. The term “Medicare for All” means the same thing. Therefore, in this case, the two terms are interchangeable.
However, in the broader sense, single payer could refer to healthcare that a government other than the U.S. government finances. For instance, some other countries have a single payer system that is not Medicare. As one example, the United Kingdom has a single payer system under a different name: the National Health Service (NHS).
Medicare is the current federal health insurance program that funds hospital and medical care for older people in the U.S. Some people with disabilities also benefit from Medicare. The program consists of:
- original Medicare (Part A and Part B), which provides hospital and medical insurance
- Part C (Medicare Advantage), which is an alternative to original Medicare that private insurance companies administer
- Part D, which is for prescription drug coverage
Learn more about Medicare here.
Single payer vs. multiple payer
Single payer is a healthcare system that one entity, generally the government, is responsible for financing. In the single payer system, the government pays for medical services using money from taxes. However, as the government does not own or operate the system, it does not employ doctors and other healthcare providers.
Therefore, in a single payer system, there might be intermediaries between the government and healthcare providers. For example, with Medicare Advantage, private health insurance companies serve as intermediaries between the government, Medicare, and doctors and hospitals.
Currently, the U.S. uses a multiple payer system, which several entities finance. The funds for healthcare come from beneficiaries, employers, and the government. The system also involves private insurance companies.
Learn more about private health insurance here.
Single payer vs. universal healthcare
Universal healthcare would need a government ruling, and it would mean that everyone living in a particular area would get health insurance coverage. However, universal healthcare could come from a system that is single payer, multiple payer, or a mixture of the two.
With this in mind, universal healthcare and single payer are not interchangeable terms. In some instances, universal healthcare could be a single payer system, but this would not be true in every case.
There are several considerations to take into account in relation to the single payer healthcare system. Although some factors may be beneficial, people may consider others to be drawbacks.
Benefits of single payer healthcare
The main benefit of the single payer system is the provision of health insurance for everyone in the country.
In an average month in 2018, approximately 29 million people under the age of 65 years in the U.S. had no health insurance, notes the Congressional Budget Office. A single payer system could greatly lower this number, but the exact reduction would depend on the system’s design. For instance, people who are not citizens but lawfully reside in the country might not be eligible.
Experts have also noted that despite paying more for healthcare than those in other comparable countries, people in the U.S. have a shorter life expectancy and score lower on many other health measures.
The high price of the current healthcare system comes, in part, from its complexity, lack of price control, and administrative costs.
Drawbacks of single payer healthcare
Depending on the system, the possible downsides of single payer healthcare include the following:
Possibility of higher taxes
One of the possible barriers to a single payer or Medicare for All system is the possibility of people paying higher taxes rather than having employers pay for health insurance. While many predictive models find that individuals could save money under such a system, voters tend to be concerned about the high cost to taxpayers.
Stakeholder loss
Some significant stakeholders in the current U.S. healthcare system might experience losses if the country were to transition to a single payer system. These stakeholders include health insurance and pharmaceutical companies, who are significant lobbyists in government.
Medicare is a healthcare system for people in the U.S. aged 65 years and older. Some younger individuals with certain disabilities are also eligible.
Transforming the country’s multiple payer system to a single payer or Medicare for All system would mean that the government would pay for healthcare for everyone. Although there are clear benefits to extending healthcare coverage to everyone in the country, many people think that a Medicare for All system would come with financial drawbacks.