Single-Payer Healthcare Would Cost a Third of Current Healthcare Costs

The current healthcare debate is about a bad law and an even worse replacement bill. But given the potential savings, we should be discussing single-payer.

While it’s true that the Affordable Care Act (Obamacare) made it possible for millions more Americans to have health insurance who didn’t have it previously and that the current system is marginally better than what came before Obamacare passed, it’s also true that health insurance under the Affordable Care Act is still far too expensive for many Americans, and more could be done. Robert Cruickshank, the former Public Policy Director for the California-based Courage Campaign, crunched the numbers and found that single-payer healthcare would actually cost far less than what individuals and households currently pay for private health insurance.

First, it’s important to note that the United States currently spends roughly 17.8 percent of its Gross Domestic Product (GDP) on healthcare expenditures, according to 2015 figures from the Center for Medicare and Medicaid Services, with that number expected to climb in the coming years.

California, which has a population of approximately 40 million people and an annual GDP of $2.45 trillion, is the world’s sixth largest economy, ranking it just ahead of France and just behind the United Kingdom. So the fact that California is seriously considering the implementation of a statewide single-payer healthcare system is particularly significant, as it would prove to be a worthwhile model for how such a system could work in the United States as a whole.

According to the California state senate appropriations committee, the raw annual cost of such a plan would amount to $400 billion per year, though existing healthcare payments would cover half of that cost, and additional savings would mean that Californians would only have to pay between $50 billion and $100 billion per year to provide every man, woman, and child with comprehensive healthcare. As Cruickshank pointed out, $400 billion is roughly 16 percent of California’s annual $2.5 trillion GDP, meaning the cost is right in line with what Americans currently pay for our current inefficient, inadequate, for-profit healthcare system.

However, even assuming the most costly scenario for Californians, in which $100 billion in new taxes would be used to pay for single-payer healthcare across the state, when spread evenly across 40 million Californians, that means each Californian would only need to pay $2,500 each year, or just $208 a month. When comparing this number to the $597 average monthly health insurance premium individual Californians currently pay, according to numbers from the California Health Care Foundation, the savings are easy to see. Also, it’s worth keeping in mind that the $208 figure would cover all healthcare costs, from prescription drugs, to emergency visits, to surgeries, pediatric care, and other procedures, all without a co-pay or a deductible.

Chart courtesy of the California Health Care Foundation

Even though the number itself sounds high, $300 billion per year — which is the highest estimated cost Californians would pay according to the previously mentioned senate appropriations committee report¬†when factoring in what Californians already pay for healthcare¬†— would be just around 12 percent of California’s annual GDP. According to 2013 figures from the Organization for Economic Co-operation and Development (OECD), that would mean California would still spend 4 percent less of its GDP on healthcare than what the United States currently spends.

Percentage of GDP spent on healthcare expenditures in 2013. Chart courtesy of OECD

Given the overwhelming evidence, it makes perfect economic sense to try single-payer healthcare before going backwards and taking healthcare away from millions of people.

 

Tom Cahill is a senior editor for the Resistance Report based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact him via email at [email protected], or follow him on Facebook by clicking here.¬†