With health care reform (or repeal depending on your point of view) in full swing, there has been a lot of talk about expanding Medicare to everyone. "Medicare for all," they say.
I've noticed among various discussions on blog posts and in the media that several people were referring to Medicare as a single-payer system. It's not only the general population who believes this, but also well-known journalists (e.g., Paul Krugman) and politicians (e.g., John Conyers Jr.). Even the Wikipedia page devoted to this system refers to Medicare as an example of such administrative structure, although only for people above 65.
Coming from a country that is known to have a single-payer system (as seen in the quotes further below), I couldn't understand why people were referring to Medicare as a single-payer entity. Therefore, I decided to look into it in greater detail to demystify the myth from reality. To help in this regard, I'll actually compare the Medicare program with the one used in Canada.
Since I already pointed out the Wikipedia page, let's see how the article (which lacks proper citations) defines the system:
- "Single-payer health care is medical care funded from a single insurance pool, run by the state. Under a single-payer system, universal health care for an entire population can be financed from a pool to which many parties - employees, employers, and the state - have contributed."
Slight variations of this definition have been used on different websites, as seen here. You'll notice that this definition doesn't address who is the "single payer." We'll get to other definitions below, but first let's look at the Medicare program to answer the question:
Is Medicare a "single-payer" system?
As discussed above, Medicare is a health insurance policy for people above 65. The program also covers qualified people under 65 who have certain disabilities or have an End-Stage Renal Disease (ESRD). The public insurance is divided into four parts:
- Part A - Hospital Insurance
- Part B - Medical Insurance
- Part C - Advantage Plan (for vision, hearing, and dental among others)
- Part D - Prescription Drug Coverage
Since I'm comparing Medicare with the Canadian system, I'll focus my discussion on Parts A and B, which are also the two primary components covered by the public health insurance up north.
The main characteristics of Part A are as follows (taken directly from the Medicare.gov website):
- "Medicare Part A (Hospital Insurance) pays for inpatient hospital stays, skilled nursing facility care, and some home health care. No premiums if the person (or the spouse) has over 40 quarters of Medicare-covered employment. (There is a prorated monthly premium, however, if the person does not complete the 40 quarters.)"
- "Medicare Part A pays all covered hospital, skilled nursing facility and home health care benefits for each benefit period except for the deductible. For 2011, the deductible is $1,132 for any hospital stay 60 days long or less. For any hospital stay lasting longer than 60 days, a Medicare copayment will apply. For stays lasting 61 to 90 days, you will have to pay a Medicare copayment of $283 per day. For stays of 91 to 150 days, you will have to pay $566 per day. For any hospital stay that lasts longer than 150 days within a single benefit period, you will be required to pay the full cost for each day after the 150th day. For people on Medicare who receive care in a skilled nursing facility, a Medicare copayment of $141.50 per day will apply to days 21 through 100. Medicare will cover days 1 through 20 in full. You will be required to pay in full any days after the 100th day."
The key characteristics for Part B are:
- "Medicare Part B (Medical Insurance) pays for physician services, outpatient hospital services, certain home health services, and durable medical equipment. Monthly premiums vary from $4.90 to $161.50 (or more) depending on annual household income."
- "Medicare Part B includes a yearly deductible of $162 in 2011. This deductible will be applied to health care costs that involve physician services, outpatient hospital services, certain home health services, and durable medical equipment. Once the deductible is met, you will be required to pay only 20% of the Medicare-approved amount charged by providers for your health care services. In 2011, because of the new health care law, many preventive services will be provided at no cost to you. These free benefits will not be affected by the deductible."
I'm not sure about you, but I think a patient who paid taxes (or pay premiums for Part B) to get medical coverage after turning 65 certainly has to pay a lot of money for a hospital stay or outpatient hospital services. Both parts actually have very high deductibles, copays and coinsurances (the 20% described above). As a bonus, Medicare won't pay anything if you stay too long in the hospital. Good luck if you end up in a coma…
Based on what we've seen so far, the payment structure can be illustrated in the following chart:
With the chart, it starts to become clear that we don't have one, but two payers: Medicare and you, the patient. Change the names "Medicare Part A" or "Medicare Part B" above with "Blue Cross Blue Shield" and we have the same characteristics as my medical plan (paid for by myself and my employer). I have yet to hear anybody referring to BCBS as a single-payer system.
I'm sure some of you may dispute this point, but I suggest that you perform a keyword search with the terms "single-payer" or "single payer" on the Medicare website. Looking at the results, you'll notice that not once does Medicare refer to itself as a single-payer. In fact, the keyword results show that Medicare is characterized as a multi-payer system! For instance, the results indicate that the payment structure is characterized as a system of "primary" and "secondary" payers.
Don't believe me? Check out this Medicare document.
We know that Medicare doesn't cover all medical expenses. In fact, the program provides a service to U.S. citizens to help cover their entire medical costs by referring them to private medical insurance companies. This plan is known as Medigap.
Here are two examples of "supplemental Medicare insurance":
- "Blue Cross Blue Shield: We offer a choice of seven Medicare Supplement Insurance plans: Plan F, Plan F High Deductible, and Plan G pay the Medicare Part A hospital deductible and coinsurance, the skilled nursing facility coinsurance and foreign travel emergency care. Plan K and Plan L are low-cost, cost-sharing Medicare Supplement Insurance plans that require you to pay a higher percentage of the costs in return for reduced premiums."
- "Medicare Supplemental Insurance: Welcome to MedicareSupplementalInsurance.com where we strive to offer information, helping you receive the best Medicare supplemental insurance policy possible. While every person has different needs we try to outline policies that fit you best. Medicare Supplemental Insurance is a policy provided by private insurance companies that fill the gaps in coverage that your basic Medicare Part A and Medicare Part B do not cover. Parts A and B, while covering close to 80% of your medical bills and expenses certainly do not cover them all."
Given this additional piece of information, we can now define the payment structure of the Medicare program as follows:
I'm sure you'll agree with me that we're getting steadily further away from a single-payer entity.
Remember when I was talking about different definitions of "single-payer" above?
Below are different sources I found that properly describe the attributes of a "single-payer" system.
The Physicians for a National Health Program (PNHP) provides a very detailed definition for people who have limited knowledge on this topic:
- "Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or "payer." In the case of health care, a single-payer system would be set up such that one entity-a government-run organization-would collect all health care fees, and pay out all health care costs…. individuals would receive no bills, and copayment and deductibles would be eliminated."
What's interesting is that not once does the PNHP use Medicare as an example of a single-payer system.
- "Single payer system: a type of health care in which there is only one purchaser of health care services. Canada uses the single-payer system."
- "Health care system, in which all medical services are paid by a single reimbursement agency. See Canadian plan."
- "An approach to health care financing with only one source of money for paying health care providers."
Does anyone notice a common characteristic among these definitions?
If not, let me help you:
- All health care providers are paid by one single entity. Not two, not three, not four, but only one payer.
Unsurprisingly, many of these definitions refer to the Canadian health care system as an example of a single-payer system.
I'm sure you're interested to learn about how the payment structure works in my homeland (for the equivalent of Medicare Parts A and B).
Well, here it is:
When a patient who lives, say, in Timmins, Ontario, shows up at the emergency room, and/or requires surgery, and/or stays a long time in a hospital bed*, or goes for a regular medical visit to a doctor working in a private practice, the patient doesn't pay anything, since all the fees have been collected in the form of taxes. No copays, no coinsurances or third-party payments to a private insurance company. Furthermore, the patient doesn't receive any statement about the medical service received. How's that for a cost cutting measure? All the paperwork travels between the government and the health care provider. Pretty cool, eh?
Maybe we're playing semantics here, but the reason why I'm raising this issue is that the current Medicare program works exactly like a private health care insurance provider. The only difference is the size of the insurance pool combined with lower overhead costs. This means that the structure of the program is actually designed to prevent people from getting all the medical assistance they require. The copays, deductibles and coinsurances have a huge effect on poor people and their access to medical services, which explains why the PNHP doesn't want to use them (copays, etc.) and the Canadian health system doesn't have any.
The bottom line is this:
Medicare is a public insurance program, but is NOT based on a single-payer system.
If you want to see a real single-payer system in the U.S., read my post about the U.S. Military Health System.
*The provincial insurance covers all the medical expenses/treatments and basic hospital room accommodations. The insurance usually won't cover upgrades for a single room with full access to a TV or other perks for instance. The patient will need to cover these extras (which should not be confused with copays, deductibles or coinsurances described above) if he or she wants them.
Thanks to Anna_Bird and Taste_is_Sweet for their input.
For those interested to know about what happened to the national health care expenditures when Medicare and a 'real' single-payer system were introduced in the U.S. (blue line) and Canada (red line), respectively, can see the results here: