Universal Healthcare: What are the main differences?
Civitas Staff | January 23, 2008
There are four key differences between a single-payer system and a market-based system.
- Funding. A single-payer health insurance system is funded by tax money via appropriations from the state Legislature. In a private health insurance system consumers pay for their own insurance in the form of premiums, either directly – as with car insurance – or indirectly via employee/employer contributions.
- Coverage. Under a single-payer system, the state Legislature would decide what medical conditions and treatments the plan should cover. Since the government holds a monopoly, it is difficult for them to exclude contested or controversial medical procedures, such as abortion or “sex reassignment” surgery. A private health insurance market allows each insurance buyer to find and purchase the plan that best meets his needs, preferences and budgets. Consumers who think abortion is murder, for example, can choose to buy a plan that does not cover abortions.
- Physician choice. A single-payer system, in which the state funds the entire plan, also leads to a government monopoly over the supply of medical professionals. Under such a system, the state regulates the number of medical specialists and can also require patients to have a referral from a general practitioner (also known as a gatekeeper) before they can see a specialist. In a market system, private plans often let patients decide to see a specialist without a referral. Medical specialists will decide what insurance plans they accept based primarily on what reimbursement rates the plans offer. Insurance buyers can take into account what specialists accept a plan when they choose what plan to buy.
- Supply constraints. Single-payer systems in Europe and Canada tend to constrain the supply of medical services in order to rein in costs. This leads to long waiting periods, especially to see a specialist. The Canadian Supreme Court ruled in July 2005 that Canada’s single-payer insurance system was unconstitutional because of such long waiting lists. A market-based system does not have these kinds of problems. To the extent that a private plan restricts access to medical specialists, it is because the plan does not pay such specialists enough. While a cheap private health insurance plan may not offer its buyers access to a full range of specialists, the free market does give the buyer opportunities to choose his own plan.
Finally, a statewide single-payer system in North Carolina would have to have a budget large enough to pay for all the health expenditures in the state. At present, that amounts to $53 billion, all of which would have to come from North Carolina taxpayers. This equals exactly $10,000 per working age North Carolinian per year.
