Single-payer insurance might efficiently allocate US healthcare spending

California flag and American flag

A single-payer system in the U.S. is more feasible than previous believed, says the author of a new analysis showing that publicly-funded healthcare is already a reality for majority of Californians.

If public funds continue to cover the majority of healthcare expenditures, it will be increasingly significant to monitor whether alternatives, such as a state single-payer system, would be a more efficient allocation of public and private dollars, the analysis, from the UCLA Center for Health Policy Research, notes. Public funds accounted for 71 percent of healthcare spending in California in 2016, according to the analysis.

The calculated public expenditures are much greater than spending by Medicaid and Medicare alone. Other avenues of public funding include tax subsidies for employer-sponsored insurance (ESI), government spending on public employee health benefits and tax credits offered via the Affordable Care Act insurance exchange. County spending factors into the authors’ estimations, as well.  

Premiums paid by employers and workers for ESI are exempt from taxation. Such “forgone” taxes could be used to bolster the coffers of state programs such as Medi-Cal, says Gerald Kominski, analysis co-author and director of the UCLA Center for Health Policy Reseach.

“Nationally, ESI tax subsidies are the third-largest healthcare program after Medicare and Medicaid” Kominski says, citing National Bureau of Economic Research data.

Of the U.S.’ $3 trillion in healthcare spending, close to 65 percent is funded by taxpayers, Kominski also tells Kaiser Health News.

Medi-Cal, Medicare and ESI tax subsidies covered 59 percent of the state’s $367 billion healthcare expenditures, according to the policy brief.

Noting the success of the Affordable Care Act nationally and in California, the findings “focus attention once again on the crazy patchwork of healthcare financing we have in the U.S.,” Kominski says.