Annals of Internal Medicine IDEAS AND OPINIONS

Single-Payer Reform: The Only Way to Fulfill the President's Pledge of

More Coverage, Better Benefits, and Lower Costs
Steffie Woolhandler, MD, MPH, and David U. Himmelstein, MD

P resident Donald Trump and congressional Republi-

cans have vowed to repeal and replace the Patient
Protection and Affordable Care Act (ACA). Repealing it
12.4% versus 2.2% in traditional Medicare (2). Reducing
overhead to Medicare's level would save approxi-
mately $220 billion this year (Table) (3). Single-payer
is relatively easy. Replacing it with “something great” is reform could also sharply reduce billing and paperwork
much trickier. The president has promised universal costs for physicians, hospitals, and other providers. For
coverage and reduced deductibles and copayments, example, by paying hospitals lump-sum operating bud-
all within tight budgetary constraints. That is a tall order gets rather than forcing them to bill per patient, Scot-
and unlikely to be filled by proposals that Republicans land and Canada have held hospital administrative
have offered thus far. costs to approximately 12% of their revenue versus
Speaker of the House Paul Ryan's blueprint (1) 25.3% in the United States (4). Simplified, uniform bill-
would rebrand the ACA's premium subsidies as “tax ing procedures could reduce the money and time that
credits” (technically, the subsidies are already tax physicians spend on billing-related documentation.
credits) and offer them to anyone lacking job-based All told, we estimate that single-payer reform could
coverage— even the wealthy—reducing the funds avail- save approximately $504 billion annually on bureau-
able to subsidize premiums for lower-income persons cracy (Table). Any such estimate is imprecise; however,
in the United States. He would allow “mini-med” plans this figure is in line with Pozen and Cutler's estimate
offering miniscule coverage and interstate sales of in- ($383 billion, updated to reflect health care inflation)
surance, circumventing state-based consumer protec- (5), which excludes potential savings for providers
tions. And he would augment tax breaks for health sav- other than physicians and hospitals. Additional savings
ings accounts, a boon for persons in high tax brackets. could come from adopting the negotiating strategies
Speaker Ryan would also end the long-standing that most nations with national health insurance use,
federal commitment to match states' Medicaid spend- which pay approximately one half what we do for pre-
ing, substituting block grants that state governments scription drugs.
could divert to nonmedical purposes. Moreover, de- Of course, single-payer reform would bring added
coupling federal contributions from actual medical ex- costs as well as savings. Full coverage would (and
penditures amounts to a sotto voce cut. For Medicare, should) boost use for the 26 million persons in the
he would trim federal spending by delaying eligibility United States who remain uninsured despite the ACA.
until age 67 years; replace seniors' guaranteed benefits And plugging the gaps in existing coverage (abolishing
with vouchers to purchase coverage; and tie the vouch- copayments and deductibles, covering such services as
ers' value to overall inflation, which lags behind health dental and long-term care that many policies exclude,
care inflation. and bringing Medicaid fees up to par) would further
In sum, Speaker Ryan's proposal, and a similar one increase clinical expenditures.
from Secretary of Health and Human Services Tom Studies provide imperfect guidance on the proba-
Price, would shrink the coverage of poor and low- ble magnitude of changes in use under single-payer
income persons in the United States while maintaining reform. Microlevel experiments indicate that when a
(or expanding) outlays for some higher-income groups. few persons in a community gain full coverage, their
That approach might save federal dollars by shifting use surges (6). But when many persons gain coverage,
costs onto patients and state budgets. But containing the fixed supply of physicians and hospitals constrains
overall health care costs requires denting the revenues community-wide increases in use. For example, when
(and profits) of corporate giants that increasingly dom- Canada rolled out its single-payer program, the total
inate care—an unlikely outcome of policies that expand number of physician visits changed little; increased vis-
the role of private insurers and weaken public oversight. its for poorer, sicker patients were offset by small de-
Although Republicans' proposals seem unlikely to clines in visits for healthier, more affluent persons (7).
achieve President Trump's triple aim (more coverage, Despite dire predictions of patient pileups, Medicare
better benefits, and lower costs), single-payer reform and Medicaid's start-up in 1966 similarly shifted care
could. Such reform would replace the current welter of toward the poor but caused no net increase in use (8).
insurance plans with a single, public plan covering ev- Despite some uncertainties, analysts from govern-
eryone for all medically necessary care—in essence, an ment agencies and prominent consulting firms have
expanded and upgraded version of the traditional concluded that administrative and drug savings would
Medicare program (that is, not Medicare Advantage). fully offset increased use, allowing universal, compre-
The economic case for single-payer reform is com- hensive coverage within the current health care
pelling. Private insurers' overhead currently averages budgetary envelope (9). International experience with

This article was published at Annals.org on 21 February 2017.

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 IDEAS AND OPINIONS Single-Payer Reform

Table. Estimated Administrative and Prescription Drug Savings Under Single-Payer Reform, 2017

Sector 2017 Spending Savings With Savings Available to Expand and

Without Reform, Single-Payer Improve Coverage Under Single-
$ (billion) Reform, % Payer Reform, 2017, $ (billion)
Insurance overhead and administration of public programs 323.3* 68.0 220.0†
Hospital administration and billing‡ 283.9 52.6 149.3
Physicians' office administration and billing§ 187.6 40.1 75.3
Total administration§ 1091.7 46.1 503.6
Outpatient prescription drugs 362.7* 31.2兩兩 113.2
Total administration plus outpatient prescription drugs – – 616.8
* From National Health Expenditure Amounts by Type of Expenditure and Source of Funds: Calendar Years 1960 –2025 in projections format
(www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE60-25.zip).
† Based on the assumption that insurance overhead would decrease to 2.2% (overhead in traditional Medicare program according to the 2016
Medicare Trustees' report) and that the share of expenditures covered by insurance would increase from the current value of 74% to 80%.
‡ Based on data from reference 4 applied to the national health expenditure accounts estimate of 2017 hospital spending.
§ Based on data from reference 3 applied to 2017 national health expenditure estimates. Total administration estimates include additional admin-
istrative savings for nursing homes, home care agencies, nonphysician practitioners, and employers.
兩兩 Assumes no savings for Medicaid, U.S. Department of Veterans Affairs, and other federal government programs that already receive discounts;
50% savings on brand-name drugs; and no savings on generics, which account for approximately 28% of prescription drug spending.

single-payer reform provides further reassurance. It has Requests for Single Reprints: Steffie Woolhandler, MD, MPH,
been thoroughly vetted in Canada and other nations 255 West 90th Street, New York, NY 10024; e-mail,
where access is better, costs are lower, and quality is swoolhan@hunter.cuny.edu.
similar to that in the United States.
Current author addresses and author contributions are avail-
The potential health benefits from single-payer re-
able at Annals.org.
form are more important than the economic ones. Be-
ing uninsured has mortal consequences. Covering the Ann Intern Med. doi:10.7326/M17-0302
26 million persons in the United States who are cur-
rently uninsured would probably save tens of thou-
sands of lives annually. And underinsurance now en- References
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National Health Program, an organization that advocates for single payer cost? A summary of studies compiled by Ida Hellander,
single-payer national health insurance. They have received no MD. 2016. Accessed at www.pnhp.org/facts/single-payer-system
financial compensation from that organization and have no -cost on 2 February 2017.
financial conflicts of interest regarding this commentary. 10. Newport F. Majority in U.S. support idea of fed-funded health-
care system. Gallup. 16 May 2016. Accessed at www.gallup.com/poll
Disclosures: Disclosures can be viewed at www.acponline.org /191504/majority-support-idea-fed-funded-healthcare-system.aspx
/authors/icmje/ConflictOfInterestForms.do?msNum=M17-0302. on 2 February 2017.

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 Current Author Addresses: Drs. Woolhandler and Himmel- Author Contributions: Analysis and interpretation of the data:
stein: 255 West 90th Street, New York, NY 10024. S. Woolhandler, D.U. Himmelstein.
Drafting of the article: S. Woolhandler, D.U. Himmelstein.
Final approval of the article: S. Woolhandler, D.U.
Himmelstein.
Collection and assembly of data: S. Woolhandler, D.U.
Himmelstein.

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