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What is a single payer health insurance plan?

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A brief overview...
  • Single payer health insurance refers to the funds used to pay medical costs for policyholders
  • Single payer systems are part of the design for universal health insurance in which everyone gets covered
  • A single payer system uses one source of money to cover billings and make payments for medical costs for everyone
  • Section 1332 of the Affordable Care Act permits innovative healthcare systems such as single payer health plans

Single payer is a fund that pays healthcare costs for a group. In national healthcare settings, single payer funds pay medical costs for every eligible resident of a state or nation. The single payer fund can work with many types of medical care arrangements.

Single-payer national health insurance is an option for the US healthcare system as the nation once again considers healthcare reform.

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What is single payer health insurance?

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The single payer refers to the money used to pay medical costs for all members of a group. A single-payer health insurance system uses one organization to manage payments, and it fits with systems for universal insurance coverage.

The single payer model is the opposite of systems that only use private insurance companies to insure policyholders and manage payments for subscribers.

Universal Healthcare

Most advanced nations have universal healthcare — the US does not. Obamacare was not universal healthcare because it did not offer to insure everyone. It used a combination of mandate and Medicaid expansion to cover nearly everyone, and it defined Medicaid Expansion as insurance coverage.

The mandate is a widely used feature of universal coverage, and it can work with public options or private medical care delivery systems.

The Individual Mandate

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The individual mandate is a standard type of government policy to promote universal participation in a national health care program. The US approach offered a choice between a tax penalty and enrolling in qualified coverage. There was a deep controversy in the US concerning a mandate to purchase private insurance.

Several advanced nations with universal health coverage use mandates to buy private insurance. The below-described policy choices also affect the single payer model.

– Guaranteed Acceptance

Universal acceptance is a vital part of national health insurance; in the US, it involved banning the use of pre-existing conditions to deny coverage. Mandates also work well with public options.

– Premiums, Deductibles, Coinsurance, and Copays

Many single payer universal health systems dispense with consumer costs such as premiums, copays, and deductibles. Some retain cost sharing as a flat ratio of covered to uncovered expenses.

Medicare Part B is an example of this approach; Part B Medical Insurance typically leaves 20 percent of covered benefits to the consumer’s account.

– Out-of-Pocket Limits

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The plan limits for out-of-pocket expenses are vital to controlling costs and preventing burdensome medical debt. The distinctions in private coverage favoring network resources over outside medical care can defeat the protections of the expense limit.

Consumers can deliberately or accidentally encumber large medical debt by using outside providers that do not qualify for cost sharing from the insurance payer.

Single Payer Options

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The single payer is a type of funding system. It describes the management of funds to pay medical costs for the group of beneficiaries. In universal healthcare systems, the single payer covers the medical costs for everyone. Single payer funds can pair with public or private medical care such as:

  • Public healthcare delivery system such as the British NHS.
  • Private healthcare delivery system using private insurance companies, hospitals, doctors, and other medical care providers.
  • Hybrid mix of public and private delivery systems.

Obamacare and the Single Payer

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Obamacare provides an option for state governments to set up and operate single payer systems. The section 1332 waiver process is the provision in Obamacare that authorized state innovations in payments and coverage.

Several states have used the waiver, and they have worked with single payer models to reduce costs and improve services.

Demonstrating Change

The State of Washington offers an example of state innovation in Medicaid delivery systems that use a single payer hybrid model. The focus is on improving services to system users while reducing costs. Private insurance priorities would be the reverse, and their efforts would demonstrate profitability in the plan design.

Healthcare Reform — The Single Payer Option

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A single payer healthcare system has a single entity in charge of the money. It is a publicly managed system that relies on the private sector to deliver medical services. The single payer controls prices and the flow of payments, and it has a powerful leverage to keep prices low.

During the passage of Obamacare, the insurance industry opposed it. The single payer is a viable concept for US healthcare reform.

Medicare for All

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One trend in the discussion of healthcare reform is the concept of Medicare for all. Medicare is an example of a single-payer health plan. Original Medicare is a system that pays all medical costs from a single fund.

Medicare sets prices for services on an annual basis or more frequently. Participating medical care providers agree to accept the Medicare payment or to establish an agreement to pursue the balance from the consumer directly. The consumer is not constrained in this system; consumers can choose the type of services and provider as they wish.

Medicare for all could use a standard ratio of covered to uncovered costs so that consumers could make wise choices on their healthcare spending.

Single Payer in the Future

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As a nation, the US can benefit from the costs savings potential of a single payer system. The single payer would displace the insurance industry as the dominant force in pricing.

Unlike the insurance industry, the public single payer organization would not have investor profits as its primary responsibility. The single payer entity would have patient care as its top priority followed closely by cost controls, and improving consumer value.

The Single Payer Health Plan

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Medicare is an example of the single payer health plan. Medicare sets prices for services across the entire spectrum of medical care and procedures. Doctors and hospitals can agree to accept Medicare patients and the prices that Medicare agrees to pay.

The leverage from price setting authority is an effective control over medical costs. The enormous size of the Medicare system involves nearly every hospital, clinic, and medical service provider.

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