Moirenc Camille/Hemis via ZUMA
Single-payer health coverage is back in the news these days. But what is it, anyway? Here’s a very brief primer on the five basic forms of health insurance:
- Socialist: The government owns the hospitals and directly employs the doctors. Britain’s NHS is the best known example. In the United States, VA health care works on this model.
- Single-payer: Doctors and hospitals are mostly private entities, but are paid exclusively by the government. Canada is single-payer, with each province acting as the sole source of payment to doctors and hospitals. In the US, Medicaid and traditional Medicare are single-payer.
- Multi-payer: Same as single-payer, but doctors and hospitals are paid by multiple sources: the government, regulated sickness funds, regulated insurers, etc. There’s a continuum in multi-payer systems, from those that are almost single payer (France) to those where other payers play larger roles (Germany, Belgium, the Netherlands, etc.). This is the most common form of universal health care, and its advantage over single-payer is that it offers a little more flexibility in coverage. In the US, Medicare Advantage is basically multi-payer.
- Subsidized private: People are required to be covered by private insurance, but the government provides subsidies to make coverage affordable. Switzerland uses this system. In the US, this is the Obamacare model.
- Private: In the rich world, this is used only in the United States. Employer health care in America is essentially entirely private, although government is involved indirectly via the tax code, which allows employees to receive health coverage free of taxes.
All of these except the last are universal health care systems. They differ only in how they deliver services and pay for them, and they can all work well. France, often cited as the best health care system in the world, is technically multi-payer, but really only a hair’s breadth away from single payer. In practice, this is a semantic distinction for most of us, since there’s usually little difference between universal single-payer and universal multi-payer. Because of that, in America we tend to refer to all universal systems as single-payer.
None of these systems cover literally every dime of health care coverage. Canada, for example, is single-payer but doesn’t cover all prescription drugs. Different provinces have different rules. In most countries, it’s possible to purchase supplementary insurance to cover the gaps in the national system, something that’s necessary because they all have various copays and exceptions:
You can put all this together to get a single number that represents how generous a national health care system is. For example, Switzerland covers about 65 percent of all medical costs. Canada covers about 70 percent. France covers about 78 percent. Medicare in the US covers about 80 percent. Denmark and Germany are the most generous, covering about 84 percent.
UPDATE: I originally used the wrong OECD table above. The correct one for our purposes is the table for “basic” care provided by tax-funded health coverage or compulsory social health insurance. The more expansive table, which I used initially, includes coverage from supplementary policies purchased by individuals. Sorry.
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