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The Single-Payer Option: A Reconsideration

London School of Economics and Political Science

This article discusses some of the merits and demerits of the single-payer model of health care financing, with particular reference to the English National Health Service (NHS). Specifically, it is argued that the main merits are that the model can directly provide universal health care coverage, thus eradicating or at least alleviating market failure and equity concerns, and that it can achieve this with relatively low total health care expenditure in general and—as compared to the commercial multiple insurance model—low administrative costs in particular. A perceived demerit of the single-payer model is that it can lead to excessive health care rationing, particularly in terms of waiting times, although it is argued here that long waits are probably caused by insufficient funding rather than by the single-payer model per se. Moreover, rationing of one form or another occurs in all health care systems, and single-payer models may be the best option if the aim is to incorporate structured rationing such that an entire population is subject to the same rules and is thus treated equitably. A further perceived disadvantage of the single-payer model is that it offers limited choice, which is necessarily true with respect to choice of insurer, but choice of provider can be, and increasingly is, a feature of centrally tax-financed health care systems. No model of health care funding is perfect; trade-offs are inevitable. Whether the merits of the single-payer model are judged to outweigh the demerits will typically vary both across countries at any point in time and within a country over time.

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