Single Payer Healthcare and Workers’ Compensation

At the 2019 California Self-Insurer Association Annual Conference, Joe Paduda with Health Strategy Associates kicked off the conference with a session talking about the workers’ compensation implications of single payer healthcare.

Characterizations of a Centralized Single Payer System

• Concentrated Financing
• Government is dominant payer.
• Funded primarily through taxes.
• Providers and hospitals can be a mix of public and private.
• Universal access. Everyone has insurance.
• Very little out of pocket spending.
• Private insurance is limited.
• Government is the revenue collector and central authority/gatekeeper.

Models

There are many different models for single payer health systems. As examples, look at four different countries single payer systems:

England – Revenue comes from taxes. About 11% of people buy supplemental coverage. No cap for services. The government owns the healthcare providers.

Canada – Canada has different payers for each Provence. Funding comes from taxes and lottery proceeds. About 2/3 of people buy supplemental coverage.

Norway – Revenue comes from taxes. There are regional health authorities that control the care and this funnels down to municipalities that control primary care services. 10% buy supplemental coverage.

Germany – Revenue comes from taxes. There are private non for profit Sickness Funds that operate like insurance companies. People choose which Fund they join. 11% of population opt out and purchase private insurance. .

Each country tends to have a unique financing and delivery model and these models continue to evolve. Countries are moving toward more localized and less centralized decision making authority.

Generally workers’ compensation funding and benefits are separate from health insurance. Workers’ compensation insurers are not for profit public entities. Funding comes mostly from employers with some using taxes as well. In most countries medical care is paid by the workers’ comp insurer.

Examples of workers’ compensation systems from other countries:

Canada – Very similar to US monopolistic states. Medical fees consistent regardless of payer type.

Norway – Mandatory for employers and administered by a Public Pension Fund. Medical expenses paid by governmental entity. Insurers can pay for additional medical services to try and expedite return to work (such as physical therapy)

Germany – Handled outside of health insurance program and funded with a payroll tax. Workers’ comp non-profit institutes pay all medical costs and wage replacement.

England – Multiple private insurers provide coverage. There is no exclusive remedy for workers’ compensation so injured workers’ can sue in civil court.

Challenges with Single Payer in the United States

Vermont attempted this back in early 2000 and it failed. The taxes were very high and there were too many employers exempted to make it workable.

California also tried a single payer system in the early 1990s. It did not move forward for a variety of reasons. California tried again in 2017 with a bill that did not make it out of Committee. As with Vermont, the key issues were financing, delivery of care, and cost controls. Single payer is a lot easier to talk about than to actually enact.

Single payer cannot move forward in the United States without Medicare/Medicaid being part of it. They fund close to 50% of healthcare costs in the United States so without them you lack the critical mass necessary. The Federal government thus far been unwilling to consider turning over Medicare/Medicaid to the states in a single payer format.

Another challenge is that the healthcare industry is the single biggest lobbying group in the Federal and State legislatures. They oppose any form of universal healthcare.

How Single Payer Could Change Workers’ Compensation

Advocates claim provider access would be improved under a single payer system. However, is this true? The group health world has restricted access and requires preauthorization. In a single payer system, the administrator controls access to care in order to control costs. These other models are no easier to navigate than workers’ compensation.

Also, in a universal care setting there may be a lack of focus on return to work increasing indemnity costs. Clinical guidelines used in the group health setting typically does not address functionality and return to work. They are much more passive in treatment than in worker’s compensation because of the lack of a functionality/return to work goal.

Workers’ compensation is usually the highest rate payer in the healthcare system, so providers are not turning away workers’ compensation patients because of reimbursement rates.

Workers’ compensation addresses many different things ranging from loss prevention, funding, medical treatment, return to work, vocational retraining, etc. It holds the employers responsible for their actions by variable premiums based on loss experiences. In a universal healthcare system funded by taxes, you take away the focus on employer safety and return to work since an employers experience is not adversely impacted by their actions in these areas.