What Does “Single Payer” Mean?

piggy bank, stethoscope, moneyThere has been talk about a “single payer” system for health insurance. What does that actually mean? How does that relate to the Affordable Care Act? Here are some facts that answer these questions.

What does “single payer” actually mean?
According to the Physicians for a National Health Program, (PNHP), the phrase single payer means:

Single-payer is a term used to describe a type of financing system. It refers to one entity acting as an administrator, or “payer”. In the case of health care, a single-payer system would be setup such that one entity – a government run organization – would collect all health care fees and pay out all health care costs.

Does the United States have a “single payer” system now?
No. Right now, there are many private health insurance companies.

Does the Affordable Care Act create a “single payer” system?
No. The health insurance exchanges will include health insurance plans that come from several private health insurance companies. Consumers can use the exchanges to find an affordable health plan that comes from a private insurance company. Those who are eligible can sign up for Medicaid.

Are federally run health insurance exchanges a “single payer” system?
No. States that will have a health insurance exchange that is created and run by the federal government will have an exchange that includes many health insurance plans from private insurers. (It will also include access to Medicaid for eligible people). By definition, this means there would be multiple insurers that consumers would pay for health care, not a “single payer”.

What about the future?
The Guardian points out that many states, with Republican governors, have selected a federally run health insurance exchange for their state. The article says:

Republican objections made while the legislation was drafted saw states given the power to administer their own schemes, rather than entrust its operation to a remote federal bureaucracy. But furious opposition in many Republican-dominated states has flipped that intention on its head

Ironically, given the outcome, it was liberal Democrats who had argued for the larger pool and lower costs of a single, national insurance exchange – but whose arguments were fiercely attacked by Republicans claiming that states would be disenfranchised.

In other words, some are seeing the choices that so many Republican governors made – to have a federally run health insurance exchange for their state – as the first step towards a “single payer” system. As it stands right now, the Affordable Care Act is not a “single payer” health insurance system. Many changes would need to be made before the Affordable Care Act could become a “single payer” system.

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