At a time when local governments confront structural deficits, both the city of Meadville and Crawford County could save millions of dollars with single-payer health care.
What is single-payer?
It’s health insurance — or the payment of health care — through a single, nonprofit public entity like the federal government — as in Bernie Sanders’ Medicare for All plan — which would be the “single-payer” of your health care and cover everybody as a right, making it “universal.” In effect, it would eliminate the need to buy health insurance.
How does it work?
Everybody would be covered by a comprehensive package that would allow you to choose your doctor. That’s right! Contrary to popular belief, single-payer provides more choice than the for-profit system. That’s because private insurance companies now get to determine what hospitals and doctors are “in-network” and which procedures to cover, leading to thousands of rejected medical claims each year. By contrast, single-payer would let you, not your insurance company, decide where to get care.
So, what’s the cost?
The starting point of any conversation about cost has to be that Americans already spend more on health care than any other country. In 2018, we spent $10,600 per person; the next highest country (Switzerland) spent $7,300 per capita, and no other country spent more than $5,300 per person.
Why do we spend so much?
Because our system is highly inefficient. We’re the only capitalist country where the market plays a substantial role in delivering care. Consequently, we have a bunch of private insurance companies (nearly 6,000) offering a variety of plans, each with their own specific rules and procedures — all of which increase administrative costs.
In fact, 25 percent of hospital care in the U.S. goes toward administrative costs, more than twice as much as any other country, and overall 30 percent of what Americans pay for health care goes toward processing paperwork and billing. The reason? Private insurance companies make their money by denying you coverage; they literally staff thousands of people (so-called denial nurses) to limit or deny you coverage. The result is $500 billion a year in billing-related costs.
How is single-payer funded?
Private insurance is funded by premiums. Public insurance is funded by taxes. But health insurance premiums are a lot like taxes — they’re mandatory and they reduce your wage. The difference is that they’re paid to private companies instead of the government.
Another difference is that taxes, unlike insurance premiums, are based on your ability to pay — they rise and fall based on income. By contrast, insurance premiums are regressive — cashiers and shopworkers pay the same amount as executives.
Proposals like Medicare for All would change that by replacing insurance premiums with taxes based on your ability to pay. This means large income gains for most workers.
For example, workers making less than $180,000 a year would pay LESS for health care under Sanders’ Medicare for All plan, according to economists Emmanuel Saez and Gabriel Zucman. That’s because insurance premiums would be replaced by taxes that are fair and progressive (the rich would pay more).
Another study by PERI at the University of Massachusetts found that “Medicare for All could reduce total health care spending in the U.S. by nearly 10 percent,” resulting in more than $5 trillion in savings. Even the conservative Mercatus Center estimates that Medicare for All would save $2 trillion in federal health spending by 2031.
What about Crawford County?
The savings are significant here, too. Consider the Pennsylvania Healthcare Plan, which is one of 20 single-payer bills that have been proposed in state legislatures. Under that plan, every Pennsylvania resident would be provided health insurance at a cost of 3 percent of income for individuals and 10 percent of payroll for businesses.
This might sound steep, but remember: Payments into a single-payer system would REPLACE your current premiums, co-pays, deductibles and out-of-pocket expenses.
The savings are substantial.
80 percent of Pennsylvanians now spend over 3 percent of their income on health care, and Americans on average spend 8 percent. Businesses, meanwhile, spend approximately 13 percent of payroll on health insurance.
Where public employers are concerned, local governments and school districts pay anywhere from 20 to 50 percent of payroll to private insurance. The Pennsylvania Healthcare Plan would require contributions of 10 percent.
In Crawford County, this translates to taxpayer relief.
In 2018, the county spent $25.9 million on payroll and $6.4 million on health care. If you do the math, under the Pennsylvania plan, expenses would drop to $2.6 million, saving the county $3.8 million — enough to cover the deficit that led to the unpopular tax hike in 2019.
Similarly, Meadville's total payroll for 2018 was $2,567,073 and total health care expenses were $764,989. With single-payer, the city’s contributions would drop to $256,707, which would save city taxpayers half a million dollars — again, enough to cover the last deficit.
So, here’s the deal: We can continue to give our money (and taxes) to private insurance companies, or we can reduce our health care costs while providing universal coverage.
If we want to save money and get comprehensive care, we need to support Medicare for All and the Pennsylvania Healthcare Plan.
Joe Tompkins is a board member of HealthCare4ALLPA (www.healthcare4allpa.org) and a professor at Allegheny College.