Health Insurance Public Policy

Can single payer systems work?

Much of the discussions of the pros and cons of single payer systems are ideological.  Single payer advocates will say they are fair, potentially can leverage economies of scale, and more equitable.  Single payer opponents will argue that they are inefficient, and restrict choice.

An interesting paper from Tomoki Fuji (2018), shows that the answer isn’t so simple:

We find that private health spending has on average a higher health‐promoting effect than public health spending. This result is robust with respect to the choice of outcome measure and covariates in the regression and driven primarily by the countries with ineffective governments. Once we restrict our sample to countries with effective governments, private health spending is found to be no better than public health spending in improving the health outcome.

In short, on average, government spending is less efficient than private spending.  This should give single payer opponents ammunition that a single payer system is likely to be wasteful.  Single payer advocates will cite that this difference is not found in countries with efficient governments.  Thus, your interpretation of these findings for the U.S. context likely has to do whether your prior belief of whether you think U.S. government is efficient or not.

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