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Why Clinicians Support Single-Payer — and Who Will Win and Lose

Article · January 17, 2018

Tom Jenkins, MD, a primary care physician practicing in Cookeville, Tennessee, is convinced: “My problems will all go away with single-payer.” Jenkins wants to spend more time with patients, yet he and his staff are often fighting insurance companies over denied claims, prior authorizations for services, and figuring out how to comply with multiple sets of rules, he says.

Jenkins is part of a growing wave of medical providers backing a single-payer health system. While there’s little consensus about what a single-payer program would look like, and therefore less understanding about the possible impact, Jenkins envisions an arrangement in which all Americans get traditional, fee-for-service Medicare. “Medicare has rules, and if you follow the rules you get paid,” he says. Jenkins isn’t concerned that Medicare pays lower rates than commercial insurance does, and says he’s willing to take reduced fees if it means fewer headaches and administrative costs.

For years, even the staunchest supporters of a single-payer system kept their battle cry to a whisper, acknowledging that the political timing was off. But there’s been renewed interest as health care cost, access, and quality issues persist, and Democrats look for a solution they can get behind. Senator Bernie Sanders, I-VT, elevated single-payer as a possibility during his 2016 presidential campaign, and is now pushing Medicare-for-all legislation in Congress.

The concept sounds simple, given that a single-payer system could be modeled on an existing arrangement such as Medicare, or follow the Canadian or British systems. But the public has a weak understanding of what single-payer would mean in the United States, says Mollyann Brodie, PhD, Executive Director of Public Opinion and Survey Research at the Kaiser Family Foundation. “About half think they’ll be able to keep their current insurance,” she says — which is flatly false.

A single-payer system also could contain some common, but controversial, elements, including budget caps. “In Canada, they manage costs with global budgets. If [the money is] gone, people wait for surgery, says Michael Sherman, MD, MBA, Senior Vice President and Chief Medical Officer at Harvard Pilgrim Health Care, headquartered in Quincy, Massachusetts. “There’s no evidence Americans would stand for that.”

Still, support for the concept among the public and some parts of the health care community is growing, and medical providers are showing particularly strong enthusiasm. In a recent NEJM Catalyst Insights Council survey of executives, clinical leaders, and clinicians, nearly half of respondents (49%) identify single-payer as the best outcome for future payment reform. Support is greatest among clinicians (55%), whereas only 39% of health care executives say they want it.

NEJM Catalyst single-payer survey results

In a recent NEJM Catalyst Insights Council survey of executives, clinical leaders, and clinicians, nearly half of respondents (49%) identify single-payer health care as the best outcome for future payment reform. Support is greatest among clinicians (55%), whereas only 39% of health care executives say they want it. Click To Enlarge.

The finding for clinicians is consistent with a recent survey conducted by the consulting firm Merritt Hawkins for The Physicians Foundation, in which 56% of physicians support single-payer. That’s an increase from the firm’s 2008 survey, when 42% of physicians backed single-payer.

The provider view on single-payer is related to their frustration with the current system, says David Cutler, PhD, the Otto Eckstein Professor of Applied Economics at Harvard University. “Today’s payment system is unpredictable, complicated, and hard to comply with,” he says. Providers “may get rewarded for 17 measures of diabetes quality, but none of them are the same. . . . We don’t know what works, and there’s a lack of harmonization across payers.”

What Would Single-Payer Look Like?

While the details of an American single-payer plan have yet to be worked out, some common features are already being debated — especially those aimed at controlling costs.

Single-payer systems generally manage to a budget, and that can mean spending limits and trade-offs. The exception is Sanders’ Medicare-for-all proposal. Traditional Medicare, which already covers 38 million seniors and people with disabilities, is an entitlement program and pays for as many covered services as enrollees use.

Under Sanders’ proposal, all Americans would get public, comprehensive health care for free, and could choose any providers they wished. “No more fighting with insurance companies when they fail to pay for charges,” according to Sanders’ website. The federal government would negotiate with drug companies for “fair prices” and “make smart investments to avoid provider shortages.”

Outside the United States, budgeting for single-payer takes a variety of forms, based on strict limits, cost effectiveness, and other factors. The National Health Service (NHS) in England, which provides mostly free, universal care, imposes a global budget that cannot be exceeded. The budget has been largely flat in recent years, although demand has been rising. The result has been “some deterioration in quality of care — notably waiting time targets,” according to a 2016 Commonwealth Fund report. The report lists several cost-control strategies pursued by NHS, including reduced payments for hospital services. About 11% of the population also has private insurance, which buys policyholders faster and more convenient care.

General practitioners in England are largely private contractors who serve as gatekeepers, and most operate under negotiated contracts. Physicians receive capitated payments to provide essential services, but also some fee-for-service and performance-related payments.

Canada also imposes a global budget, for hospitals and regional health authorities. It negotiates fees for providers and drug formularies, restricts new investment in capital and technology, and limits the number of physician and nursing students, according to the report.

About two-thirds of Canadians also buy private insurance to cover services such as dental care and prescription drugs. Most physicians are self-employed and receive fee-for-service payments, although some provinces are experimenting with alternative payment models.

Australia, meanwhile, has a hybrid system of public and private insurance, and revisits its budget annually. President Donald Trump recently singled out Australia’s universal health care as better than the U.S. system. The federal government in Australia primarily funds and indirectly supports states and health professions, and subsidizes primary care providers.

But about half of Australians purchase private coverage to receive a better choice of providers and faster services. Indeed, the government encourages private coverage through tax breaks and penalizes higher-income individuals who don’t buy it.

In contemplating a uniquely U.S. system, policymakers are faced with major underlying questions, including whether and how to set budgetary limits. How would the government decide payment for providers, pharmaceuticals, and medical devices? Would stakeholders have a seat at the table, and would payments be based on cost effectiveness and performance? Would the system continue to encourage paying for value through such coordinated care mechanisms as patient-centered medical homes and accountable care organizations? Would payments be capitated, giving providers a certain amount of money to cover comprehensive services? Would health care providers work for the government or act as private contractors? And what about private insurers — do they continue to exist in such a construct?

Winners and Losers from Single-Payer

While an increasing number of physicians and other clinicians see benefits to single-payer, health care experts point to uncertainties around the impact on insurers, drug makers, and hospitals.

Depending on the blueprint, the role for health plans could change dramatically or even disappear altogether, although most public systems currently leave room for some level of private insurance. Even under Medicare, private health plans administer benefits for two-thirds of enrollees and take capitated payments to provide comprehensive care for the rest.

America’s Health Insurance Plans, the largest health plan association, cautions that single-payer would “eliminate choice, undermine quality, put a chill on medical innovation, and place an even heavier burden on hardworking taxpayers,” according to David Merritt, MA, Executive Vice President of Public Affairs and Strategic Initiatives. “We should build on private-sector successes.”

For drug makers, there are questions about how aggressively the government would negotiate pharmaceutical prices. Prices in other countries tend to be much lower, in large part because their governments insist on it. The Pharmaceutical Research and Manufacturers of America trade association hasn’t commented specifically on single-payer, but “ensuring patients have access to the medicines they need remains our top priority,” says spokesperson Holly Campbell. “We look forward to working with [Congress] on solutions to enhance the competitive market, ensure patients have access to affordable health care, and foster the continued development of new innovative medicines.”

But even among providers, where support for single-payer is strongest, private practice physicians and nurses are more enthusiastic than hospitals, largely because hospitals generally fare better with commercial insurance rates. On average, payments from commercial insurers covered 143.7% of hospital costs in 2014, while Medicare rates only covered 88.5% of their costs, according to an American Hospital Association survey.

It’s important to note, though, that commercial payments to hospitals vary wildly. “In Massachusetts, prestigious hospitals get paid an average of 50% more than average, and the less prestigious get paid 30% below average,” says Cutler. Those getting the highest payments “are not going to want to move to a more harmonized system.”

Physicians, meanwhile, received payments from Medicare in 2015 that were 78% of commercial rates for preferred provider organizations, the most common type of commercial insurance, according to the Medicare Payment Advisory Commission (MedPAC). Primary care practitioners, and especially those in smaller practices, tend to bring in the lowest commercial payments, while some specialties do much better.

That’s why the single-payer calculation could be a windfall for some physicians who receive lower commercial reimbursements, says Lawrence Casalino, MD, PhD, Professor of Health Care Policy and Research at Weill Cornell Medical College. Casalino practiced primary care for 20 years, and in a 2009 study put a dollar figure on the time that practitioners were devoting to administrative tasks. He estimated that physicians were spending 3 hours a week interacting with health plans (add another half hour for primary care), and that nursing and clerical staff spent 19.1 hours per week per physician. He estimated the national time cost at as much as $31 billion each year.

In his own practice, he calculated that administrative tasks cost each physician about 10% of what would have gone to his or her take-home pay. Some of the time spent working with insurers can produce benefits, but the current system is inefficient, he says.

While various stakeholders continue to debate the merits of a single-payer system, the politics shouldn’t be underestimated. “Senator Sanders had a successful primary bid, and single-payer was part of his rallying cry for the liberal arm of the Democratic Party,” says Kaiser Family Foundation’s Brodie. “This is both parties trying to figure out what the course is going forward. It’s part of a positioning of the Democratic party.”

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