10 Questions in the U.S. Health Care Cost Debate

Would a Single-payer System Be Better?
Canadian and American flags fly as Canadian pharmacists handle prescription drugs for a group of Minnesota senior citizens in 2003. Even though it is now technically illegal, many still Americans drive to Canada to buy cheaper drugs. Jeff Haynes/AFP/Getty Images

A single-payer system is when one entity — typically the federal government — is in charge of paying all medical bills out of a pool of money. Canada has a single-payer health care system; America's government-run Medicare is another example. In this model, everyone receives the same benefits, and all medical care providers receive the same pay. This is not the same as socialized medicine, where the government both owns and operates the health care system.

A single-payer system might lower costs. Proponents note that if everyone is insured, money should be saved since there will be fewer indigent people using expensive emergency-room treatment. Further, the government, as the sole medical-care purchaser, would be in a strong position to negotiate lower rates for pharmaceuticals, medical devices and the like. And rather than spending inordinate amounts of time and money working with innumerable insurance companies, medical providers would only have to deal with one, slashing their administrative costs [source: Sanghavi and Bleiberg].

One of the main negatives cited of the single-payer health care system is that the setup doesn't recognize or reward quality or value. There are often long waits for service. (Fifty-nine percent of Canadians wait four weeks or more to see a specialist. Just 20 percent of Americans wait that long [source: Kilff]). And, since providers are still paid on a fee-for-service basis, this setup could result in patient overuse, which could negate any potential savings. Finally, governments often clamp down on payments to providers to save money, which can result in less innovation and older technology [sources: Sanghavi and Bleiberg, Reinhardt].