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“Net cost or savings in the first year of single-payer operation varies from an increase of 7.2% of system costs to a reduction of 15.5% (Fig 2). The median finding was a net savings of 3.5% of system costs, and analyses of 19 of 22 plans found net savings. Net costs reflect the balance of added costs due to higher utilization (by eliminating uninsurance and in some studies also capturing the increase due to ending underinsurance) and savings (via payment simplification, lower drug prices, and other factors). Higher utilization increases costs by 2.0% to 19.3% (median 9.3%). Total savings range from 3.3% to 26.5% (median 12.1%).

“The cost increase due to expansion of insurance coverage varies due to the number of newly covered individuals and generosity of coverage benefits, but also reflects policy components and expert assessment. For example, study estimates of increased utilization by newly covered individuals range from 25% to 80% of the costs for those already insured, reflecting varied assessments of uninsured individuals’ healthcare access and health status. Additionally, cost-control choices such as copays vary across plans.”

Source: Cai C, Runte J, Ostrer I, Berry K, Ponce N, Rodriguez M, et al. (2020) Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses. PLoS Med 17(1): e1003013. doi.org/ 10.1371/journal.pmed.1003013

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“The mix of projected savings from single-payer shows both consistent and variable elements across studies (Fig 3). All studies estimate lower costs due to simplified payment administration, but vary in the size of these savings and in the inclusion and magnitude of other savings. Administrative savings vary from 1.2% to 16.4% (median 8.8%) of healthcare spending. Savings from lowered prices for medications and durable medical equipment are included in 12 models and range from 0.2% to 7.9%. Savings from reduced fraud and waste are included in 10 models and range from 0.4% to 5.0%. Savings due to a shift to Medicare payment rates are included in 8 models and range from 1.4% to 10.0%. Over time, utilization increases are stable and projected savings grow, leading to larger estimates for potential savings.

“In the long term, projected net savings increase, due to a more tightly controlled rate of growth. For the 10 studies with projections for up to 11 years, each year resulted in a mean 1.4% shift toward net savings (Text A and Figs A and B in S1 Appendix). At this rate, the 3 studies that find net costs in the first year would achieve net savings by 10 years.”

Source: Cai C, Runte J, Ostrer I, Berry K, Ponce N, Rodriguez M, et al. (2020) Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses. PLoS Med 17(1): e1003013. doi.org/ 10.1371/journal.pmed.1003013

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“We identified 22 credible economic models of the cost of single-payer financing in the US, from a variety of government, business consultant, and academic organizations. We found that 19 (86%) predict net savings in the first year of operations, with a range from 7% higher net cost to 15% lower net cost. Increases in cost due to improved insurance coverage and thus higher utilization were 2% to 19%. Savings from simplified payment administration at insurers and providers, drug cost reductions, and other mechanisms ranged from 3% to 27%. The largest net savings were for plans with reductions in drug costs. Net savings accumulate over time at an estimated 1.4% per year. Of note, we excluded 2 widely publicized studies [20,24], both of which found net costs, on the grounds that these studies made assumptions that included private insurance intermediaries (i.e., not a single-payer) or lacked technical detail for evaluation.

“These analyses suggest that single-payer can save money, even in year 1, incorporating a wide range of assumptions about potential savings. More aggressive measures to realize cost reductions are projected to yield greater net savings. This implies that concerns about health system cost growth with single-payer may be misplaced, though costs to government are likely to grow as tax-based financing replaces private insurance premiums and out-of-pocket spending.”

Source: Cai C, Runte J, Ostrer I, Berry K, Ponce N, Rodriguez M, et al. (2020) Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses. PLoS Med 17(1): e1003013. doi.org/ 10.1371/journal.pmed.1003013

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Selected Resources On Single Payer / “Medicare For All”
A. P. Galvani PhD, et al., The Lancet, 2020: Improving the prognosis of health care in the USA

Cai et al, PLOS Medicine, 2020: Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses

Congressional Budget Office, 2019: Key Design Components and Considerations for Establishing a Single-Payer Health Care System

Political Economy Research Institute, 2018: Economic Analysis of Medicare for All

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Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and several other nations.

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Page last updated Jan. 14, 2021 by Doug McVay, Editor.