Healthcare expenditure has been a major cause of concern across the globe. It is hard to compromise on well-being, something that is so dear to an individual and that is exactly the reason why we are willing to go to any lengths to maintain our health. These very lengths also cost us a huge amount of money. But what if there was a way to reduce that very burden? Well the idea to that has been in existence for a while now and it goes by the name Single Payer healthcare.
A single payer health scheme is one under which the healthcare costs are paid for by the government instead of the private insurance companies. This system has become a hot topic of debate after the US presidential candidate, Bernie Sanders proposed ‘Medicare for all’ plan as part of his economic agenda. This plan by Sanders has been backed by an analysis by Gerald Friedman, an economist at the University of Massachusetts at Amherst. Friedman has estimated there to be a total expenditure of $40.9 trillion for the next ten years that is 2017-2026, should this scheme be implemented. It should be noted that in the year 2015, only $4.81 billion dollars was allotted to public health by the government of India. This scheme is thus an expensive and a major change for the United States. The expenses are expected to be paid out with a progressive increase in the taxes in such a way that no one person under any economic stature is burdened. The specifics for this payment would be a 2.2% health care premium paid for by the citizens, a 6.2% healthcare payroll tax paid by the employers and estate tax levied on the wealthiest Americans. The major feature for the plan is that health care would no longer include co-pays, premiums or deductibles.
It is assumed that the plan will be most beneficial to the citizens by reducing their expenses on healthcare as well as on highly expensive insurance. They would have the power to choose their doctors and also to have access to all of the facilities provided by the hospitals. This scheme is also expected to bring down the prices of drugs making them affordable.
According to a paper written by Gerald Friedman in 2013, this plan is highly reasonable as all of the costs can be accounted for with the changes in taxes. He states that the United States could save an amount of almost $592 billion by removing the money spent on account of private insurance industry ($476 billion) and by reducing the prices of the drugs to those in European countries (116 billion).
While Sanders and Friedman have laid out many advantages on account of this plan, experts have come to a conclusion that this plan is largely superficial.
Kenneth Thorpe an economist at the Emory University argues that the single payer plan is unrealistically optimistic. It does not accurately measure the expenditures that the country stands to face in the upcoming years. The health expenditure in almost every country has been on the rise with an increase in the expenditure on equipment, medication and also on salaries of the workers. Under the Single Payer system, this would mean that the government would have to take up this task. The government would focus on how best to reduce costs. This very thinking would lead to an imbalance in the economy compared to the way it is today. If the private institutions were to take a hike, it would mean that the salaries that are paid owing to the higher rates would diminish. This in turn would lead to people losing their interest due to lack of motivation. The result of this would be shown through poor services and ultimately a disastrous failure of the plan
The ‘Medicare for all’ plan is planned to be upheld through increase in tax collection. This increase however is not a small sum. The people earning $250,000 to $500,000 annually would be taxed at the rate of 37% and those earning $10 million or more would be charged at 52%. Such heavy taxation was proposed on the basis that the taxpayers would be saving a lot of money in such a health care system with an estimate that the average American family would save $3,855 to $5,173 in annual health care costs. This very savings is what, according to Sanders and Friedman, would fund the Medicare for all plan. However, the plan also implies that the people who have already taken up private insurance would stand at a huge disadvantage as they would have to incur excessive expenditure.
The biggest disadvantage of all includes the fact that the estimates put in by Friedman are based largely on predictions which means that the economy could go either way. This puts the entire scheme in jeopardy. An estimate shows that if the plan does not bring about the expected growth in the health sector, the federal spending could just about increase by another 64% or more.
If we look at this plan in an unbiased manner we can see that it has chances of either transforming a country into an epitome in the field of health care or it could bring the economy come crashing with an immense increase in expenditure which generates no returns. However what really needs to be considered is how such a big change would be carried out. It is a highly challenging task to carry out a change at such a massive scale as the process would imply that you have to depend on the efficiency of many other people to make it a success. Unless the needs of all the people affected by the change are met this plan cannot be a success. However if all that is promised is accounted for, this plan could indeed be a means of economic growth and development of the country.
We can also look at the Single Payer plan with regard to India. According to a study conducted in 2012 on Universal Health India was among 9 countries which were said to have been making progress in terms of Universal Health Care. However the funding model we adopted was that of Private Insurance. Under this model the premiums are paid by the employers, associations, families or individuals thereby ensuring that the risk pertains to their own self. However, the private insurance excludes cases which are expensive and are covered by the country’s health care system.
However, this does not mean that the Indian healthcare system is completely void of the single payer model. The government has implemented many schemes for improving the health conditions of the country. One of the major schemes in this accord is the Rashtriya Swasthya Bhima Yojana which today is seen as ‘India’s flagship platform’ for introducing universal hospital insurance. The scheme offers an amount of Rs. 30000 per beneficiary and is highly prevalent among people below the poverty line and a few above the poverty line. It charges an amount of Rs. 30 for registration and not a single penny more has to be paid by the people below poverty line. However the people above poverty line do have to pay a premium. The problem with this scheme has been that there never is sufficient funding for it to function effectively. Over the years, it has been noted even after the implementation of this scheme health expenditures are still scaling the walls owing to the lack of coverage. The scheme is not being extended to the secondary and tertiary healthcare units. This setback is on part of execution on ground level. The plan is still very promising if carried out well and can also be put into practice on a larger scale.
The RSBY could be extended to include the entire population of the country, in which case the government would be funding the healthcare of all its citizens thereby making it inclusive in the Single payer model of universal healthcare. Let us do the math here. The current population of India on an estimate is 1.31 billion people which is around 131crores. Considering the minimal amount as is in play, Ceteris Paribas, the total amount needed would be 39,30,000 crores which is 118 times the budget which was allocated for healthcare in the union budget for 2015-16(Rs. 33150 crore). While this amount might be shockingly large, one should also consider the kind of potential revenues can come. With better health conditions, India will have a larger working population which would ensure more taxpayers and also more revenue. For all this to be possible many more ground breaking changes have to be made in more than just the health sector.
Thus, while a Single payer model of healthcare is a possibility in India as well as the United States, there are many more aspects that need to be reflected upon before its effective, efficient and successful implementation. It is not impossible and definitely not a far-fetched dream. It is a budding idea meant to be turned into a reality.