Healthcare reform has been a topic of debate in the United States for decades. Two terms often used to discuss it are "universal healthcare coverage" and "single-payer" system. Yet "single-payer" as a definition doesn't always offer clarity when describing specific policy proposals.
Although it's often used to describe "Medicare for All" plans, or refer to a type of socialized health care, the truth is that it does not have a one-size-fits-all meaning. Single-payer systems generally include universal coverage, but manycountries have achieved universal coverage without a single-payer system.
This article delves into what the two terms mean, including their similarities. It offers some examples of how these healthcare delivery systems are implemented around the world.
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Pros and Cons of Universal vs. Single-Payer System
Universal coverage refers to a healthcare system where every individual has health coverage. This can be accomplished under a government-run health coverage system, a private health insurance system, or a combination of the two.
According to the U.S. Census Bureau, there were almost 26 million people in the U.S. who had no health insurance coverage in 2022. The Affordable Care Act (ACA) of 2010 has extended coverage to millions of people. But the U.S. does not have the sort of universal coverage provided in many other developed countries.
Single-Payer System
A single-payer system is one in which the government is responsible for paying healthcare claims, using money collected via the tax system. The government is the only "single payer." This is true in at least 17 countries, including Japan, Canada, United Arab Emirates, Italy, and Iceland.
Single-payer systems can be implemented without covering the entire population. A country can have one or more single-payer programs and still not achieve universal coverage. This is true of the U.S., with its combination of single-payer coverage for some people, private coverage for others, and tens of millions of people who have no coverage at all.
In the U.S., Medicareand the Veterans Health Administration are examples of single-payer systems.
Medicaid is sometimes referred to as a single-payer system, but it is actually jointly funded by the federal government and each state government. Although it's a form of government-funded health coverage, the funding comes from two sources rather than one.
Many people are covered under employer-sponsored or self-purchased health plansin the U.S., including those sold on the health insurance exchanges (Marketplaces). This means hundreds of private insurance companies are paying their members' claims, and are not part of a government single-payer system.
It's important to understand that while the ACA-created exchange/marketplace in each state is a government-run enrollment platform, the health plans available through the exchange are offered by private health insurance companies. If you buy a health plan through the exchange, you do not have government-run coverage.
But the exchanges in some states also allow people to enroll in Medicaid if they meet the eligibility guidelines, and Medicaid is a form of government-run health coverage. (In most states, the exchange—including the federally-run HealthCare.gov platform that's used in the majority of the states—refers eligible applicants to the Medicaid program, rather than enrolling them directly.)
Two-Tier Systems: Public Plans and Private Coverage
In most cases, universal coverage and a single-payer system go together: The country's government is the entity that administers and pays for a healthcare system that covers its entire population.
However, countries like Canada and France operate two-tier systems that provide basic care via a single-payer system. Secondaryprivate coverage is available for those who can afford a higher standard of care.
This is similar to Medigap policies sold to people covered under Original Medicare in the U.S. Many people with Original Medicare rely on private Medicare supplemental coverage (Medigap) to cover out-of-pocket costs (others rely on Medicaid or coverage from a current or former employer to supplement their Original Medicare).
What Is Original Medicare?
Original Medicare is comprised of Medicare Part A, which covers inpatient care, and Medicare Part B, which covers outpatient/physician services. Most Medicare enrollees get Part A without a premium, but there's a monthly premium for Part B. There is no cap on out-of-pocket costs with Original Medicare, which is why it's so important to also have supplemental coverage that will pay some or all of the out-of-pocket costs.
Socialized Medicine
Socialized medicine is another phrase that is often used in conversations about universal coverage, but this model actually takes the single-payer system one step further. In a socialized medicine system,the government not only pays for health care but operates the hospitals and employs the medical staff.
A country can adopt a single-payer approach, meaning the government pays for medical care, without fully embracing socialized medicine.
In the U.S., the Veterans Administration (VA) system is an example of socialized medicine, but Medicare is not. In the VA system, the government owns the facilities and employs the health care providers. But in the Medicare system, the government contracts with private health care providers (doctors, hospitals, etc.) who provide care to Medicare beneficiaries.
The National Health Service (NHS) in the United Kingdom is an example of a system in which the government pays for services and also owns the hospitals and employs the doctors.
But inCanada, which also has a single-payer system with universal coverage, the hospitals are privately operated and doctors are not employed by the government. They simply bill the government for the services they provide, much like the American Medicare program.
The main barrier to any socialized medicine system is the government's ability to effectively fund, manage, and update its standards, equipment, and practices to offer optimal health care.
Challenges in the United States
Some experts have suggested that the U.S. should incrementally reform its current health care system to provide a government-funded safety net for the sick and the poor.
In some ways, the approach is similar to a broader application of the ACA's Medicaid expansion adopted in most—but not all—states. It would mean that healthier, more affluent Americans would still need to purchase their own policies.
It is possible to have a U.S. single-payer system without also having universal health coverage. This has remained unlikely because the federal government would need to be the single-payer.
The political will in the U.S. has not favored a system in which an individual citizen would be excluded from health coverage in this way, or reached a consensus on whether healthcare should be "free."
Political gridlock over the Affordable Care Act in the U.S.limits how such a proposal might gain enough support for legislation to be enacted. It is technically possible to construct such a system, which would provide universal coverage while also having multiple payers.
A number of U.S. legislators have called for the establishment of "Medicare for All," a proposal introduced by U.S. Senator Bernie Sanders of Vermont during his presidential campaigns. For example, there were 121 cosponsors of the Medicare for All Act of 2021 in the U.S. House of Representatives.
The term "Medicare for All" is often used to describe a program under which the U.S. government would provide coverage to all American citizens. What different proposals have in common is that they would offer more robust coverage than the current Medicare program provides.
Although opponents of "Medicare for All" proposals typically label them as socialized healthcare, none of the recent U.S. proposals actually rely on or incorporate socialized medicine.
Health Coverage Around the World
The Organisation for Economic Co-operation and Development (OECD) includes 38 member countries. Most of them have achieved 100% coverage, with their populations served through the benefits of universal healthcare.
In 2023, the OECD reported that about 91% of the U.S. population was eligible for core healthcare services. This is lower than the OECD average of almost 98% among its member nations. Only Costa Rica and Mexico have a lower percentage of their residents covered for core health services.
Although government-sponsored health coverage is common in many countries, most OECD countries have private coverage available in addition to government-sponsored health coverage. The 2023 OECD report indicated that "Over the last decade, the population covered by additional private health insurance has increased in 20 of 24 OECD countries with comparable data."
According to recent U.S. Census data, a little more than 92% of the U.S. population was insured in 2022, while a little less than 8% were uninsured. The U.S. is near the bottom of the OECD countries in terms of the percentage of its residents with health coverage, but it also spends far more of its GDP on health care than any of the other member countries.
Various countries have achieved universal or near-universal coverage in different ways.
Germany
Germany has universal coveragebut does not operate a single-payer system. Instead, everyone living in Germany is required to maintain health coverage. Most employees in Germanyare automatically enrolled in one of more than 100nonprofit "sickness funds," paid for by a combination of employee and employer contributions.
Alternatively, there are private health insurance plans available, but only about 10% of German residents choose private health insurance.
Singapore
Singapore has universal coverage, and large health care expenses are covered (after a deductible) by a government-run insurance system called MediShield. But Singapore also requires everyone to contribute 4% to 10.5% of their income to a MediSave account.
When patients need routine medical care, they can take money out of their MediSave accounts to pay for it, but the money can only be used for certain expenses, such as medications on a government-approved list.
In Singapore, the government directly subsidizes health care rather than insurance costs. This contrasts with the more costly U.S. approach of subsidizing health insurance premiums with tax credits (obtained via the exchange/marketplace) and tax deductions for employer-sponsored health insurance premiums.
Japan
Japan has universal coverage but does not use a single-payer system. Coverage is mainly provided via thousands of competing health insurance plans in the Statutory Health Insurance System (SHIS).
Residents are required to enroll in coverage and pay ongoing premiums for SHIS coverage, but there is also an option to buy private, supplemental health insurance.
Japan's less burdensome single-payer model (rather than the separate government, private, and government-linked private health insurance mechanisms used in the U.S.), makes it easier to streamline their national healthcare delivery.
United Kingdom
The United Kingdom is an example of a country with universal coverage and a single-payer system. Technically speaking, the U.K. model can also be classified as socialized medicine.
Funding for the U.K. National Health Service (NHS) comes from tax revenue. Residents can purchase private health insurance if they choose. It can be used for elective procedures in private hospitals or to gain faster access to care, without the waiting period that might otherwise be imposed for non-emergency situations.
Summary
Universal coverage refers to any approach that ensures that all of a country's residents (in most cases, only those who are legally present in the country) have health coverage. The coverage can be provided under a government-run program or a system of private health insurance or a combination of the two.
Single-payer health coverage refers to a system in which one entity pays for residents' medical services. In most cases, the payer will be the country's government, using funds collected via taxes.
In the U.S., Medicare and the VA system are both examples of single-payer health coverage, as they're funded by the federal government. But the U.S. does not have universal coverage, nor does it have a single-payer system available to all residents.
It's common for the terms single-payer and universal coverage to be conflated. Keep in mind that single-payer means there's just a single entity paying for medical care, usually a country's government. Universal coverage means that all of the country's citizens (or all legal residents, depending on the country) have coverage, whether through public or private systems, or both.
Frequently Asked Questions
How much would taxes need to increase to cover single-payer insurance?
Taxes would increase but most U.S. citizens would see a net savings because of eliminated medical costs. Estimates vary, depending on the model proposal and underlying political position. Plans also would impact gross domestic product (GDP) and the economy overall.
Learn MoreHow Obamacare Changed Employer-Sponsored Health Insurance
Can undocumented immigrants get health insurance in the exchange?
The Affordable Care Act requires people to be "lawfully present" in the U.S. in order to enroll in a health plan through the exchange/marketplace. Documented immigrants and others with lawfully-present immigration status, including refugees, can enroll in health coverage through the exchange, and can receive income-based subsidies. Undocumented immigrants cannot use the exchange under ACA rules, but some states have started creating pathways for undocumented immigrants to obtain affordable health coverage.
Can I get help understanding if I am eligible for ACA coverage?
Yes, there are brokers, Navigators, and enrollment assisters throughout the country who can help you understand your health coverage options and enroll in the plan that best meets your need. The Navigator role was specifically created the ACA legislation.
Learn MoreWhat Is a Health Insurance Navigator?
