Differences Between Universal Coverage and Single-Payer

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Health care reform has been an ongoing debate in the U.S. for decades. Two terms that are often used in the discussion are universal health care coverage and single-payer system. They're not the same thing, despite the fact that people sometimes use them interchangeably. 

And while single-payer systems generally include universal coverage, many countries have achieved universal coverage without using a single-payer system.

Let's take a look at what the two terms mean, and some examples of how they're implemented around the world.

Universal Coverage

"Universal coverage" refers to a health care system where every individual has health coverage. According to the U.S. Census Bureau, there were 28.1 million Americans without health insurance coverage in 2016 (this was a sharp reduction from the 46.6 million who had been uninsured a decade earlier; the reduction was due to the implementation of the Affordable Care Act).

In contrast, there are no uninsured Canadian citizens - their government-run system provides universal coverage. Thus, Canada has universal health care coverage, while the United States does not (it's important to note that the 28.1 million uninsured in the U.S. includes an estimated 4.7 million undocumented immigrants. Canada's government-run system does not provide coverage to undocumented immigrants).

Single-Payer System

On the other hand, a "single-payer system" is one in which there is one entity—usually the government— responsible for paying health care claims. In the U.S., Medicare and the Veterans Health Administration are examples of single-payer systems. Medicaid is sometimes referred to as a single-payer system, but it's actually jointly funded by the federal government and each state government.

So although it's a form of government-funded health coverage, the funding comes from two sources rather than one.

People who are covered under employer-sponsored health plans or individual market health plans in the U.S. (including ACA-compliant plans) are not part of a single-payer system, and their health insurance is not government-run. In these markets, thousands of separate, private insurance companies are responsible for paying members' claims.

In most cases, "universal coverage" and a "single-payer system" go hand-in-hand, because a country's federal government is the most likely candidate to administer and pay for a health care system covering millions of people. It is difficult to imagine a private entity like an insurance company having the resources, or even the overall inclination, to establish a nationwide health care coverage system.

However, it is very possible to have universal coverage without having a single-payer system, and numerous countries around the world have done so. Some experts have suggested that the United States should incrementally reform its current health care system to provide a government-funded safety net for the sick and the poor (sort of an expanded version of the ACA's Medicaid expansion), while requiring those who are more fortunate health-wise and financially to purchase their own policies.

The political gridlock that has been in place over the Affordable Care Act over the last several years makes it difficult to imagine such a proposal gaining enough traction to pass. But it is technically possible to construct such a system, which would provide universal coverage while also having multiple payers.

While it is theoretically possible to have a national single-payer system without also having universal health coverage, it is extremely unlikely to ever occur because the single-payer in such a system would undoubtedly be the federal government. If the federal government were to adopt such a system, it would not be politically viable for them to exclude any individual citizen from health coverage.

Socialized Medicine

"Socialized medicine" is another phrase that is often mentioned in conversations about single-payer and universal coverage, but it's a system in which single-payer is taken a step further. In a socialized medicine system, the government pays for health care and also operates the hospitals and employs the doctors and other medical professionals. In the United States, the Veterans Administration (VA) system is an example of socialized medicine, as the government owns and operates that VA hospitals, and also pays the bills. 

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 in Canada, 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.

Health Coverage Around the World

According to data from the Organization for Economic Cooperation and Development, several countries have achieved universal coverage, with 100 percent of their population covered. This includes Australia, Canada, Finland, France, Germany, Hungary, Iceland, Ireland, Israel, the Netherlands, New Zealand, Norway, Portugal, the Slovak Republic, Slovenia, Sweden, Switzerland, and the United Kingdom. In addition, several other countries have achieved near universal coverage with more than 98 percent of their population insured, including Austria, Belgium, Japan, and Spain.

In contrast, only a little over 91 percent of the U.S. population was insured in 2016, and Gallup tracking indicated that the percentage of Americans with health coverage had dropped to under 88 percent by late 2017. 

Let's take a look at the various ways that some countries have achieved universal (or near universal) coverage:

Germany

Germany has universal coverage, but does not operate a single-payer system. Instead, everyone living in Germany is required to maintain health coverage. Most employees in Germany are automatically enrolled in one of more than 100 non-profit "sickness funds," paid for by a combination of employee and employer contributions. Alternatively, there are private health insurance plans available, but only about 11 percent 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 between 7 and 9.5 percent 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 that are on a government-approved list. In addition, the government directly subsidizes the cost of health care itself (rather than the cost of insurance, as is the case with coverage purchased through the ACA-created exchanges in the U.S., for example), so that the amount people have to pay for their care is much lower than it would otherwise be.

Japan

Japan has universal coverage, but does not use a single-payer system. Coverage is mainly provided via one of 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's also an option to buy private, supplemental health insurance. 

The United Kingdom

The UK is an example of a country with universal coverage and a single-payer system, and as noted above, the UK's system can also be described as socialized medicine, because the government owns most of the hospitals and employs the medical providers. Funding for the UK's National Health Service comes from tax revenue. Residents can purchase private health insurance if they want to, and it can be used for elective procedures in private hospitals, or to achieve faster access to care, without the waiting period that might be imposed by the NHS for non-emergency situations.

Sources:

Gallup. U.S. Uninsured Rate Held Steady at 12.2% in Fourth Quarter of 2017. January 16, 2018.

Organization for Economic Cooperation and Development. Measuring Health Coverage. May 2016.

U.S. Census Bureau, Health Insurance Coverage in the United States, 2016. published September 2017.

U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States, 2005. Published August 2006.