As discussions around health care reform continue to expand, it’s crucial that everyone be informed on what a single payer system entails. A single payer system refers to universal health care in which one entity – generally government – collects all fees for services rendered and pays providers accordingly. Proponents of single payer claim it will eliminate private insurance and lower overall health care costs.

While a handful of countries possess true single-payer health care systems, most universal health care systems worldwide do not. Instead, the most typical model of universal coverage combines three components: centralized decision making and financing; some degree of devolution to regional or local governments; and private insurers operating alongside public coverage. Under such systems, most financial and policy decisions are made at national levels while some functions may be delegated down; these types of systems exist in 12 high-income nations like Australia, Denmark, England and Norway.

The second type of universal health care system maintains centralized decision making while still permitting regional/local governments some flexibility when choosing funding sources and implementing policies within broad national guidelines, similar to what Canada, Germany, and Switzerland use. A third model distributes decision making and funding authority among federal, regional/provincial, and local governments – this model is popular throughout most European nations and currently being proposed here in the U.S. as bills.

No matter which form of universal health care system is implemented, its goal should be to provide comprehensive and equitable health care to all its citizens. This is done by offering benefits, service standards and limitations, financing mechanisms, and modification over time; features that differ depending on country. Typically single payer proposals call for wide-ranging reform with numerous provisions intended to improve access, quality and cost containment.

Advocates of single-payer systems frequently reference Medicare as the model they seek to emulate. However, it should be remembered that Medicare does not function as a true single-payer system because beneficiaries pay premiums and co-pays.

According to estimates by the Congressional Budget Office, transitioning to Medicare-style health care spending would require quadrupling current government health spending; as a result, significant tradeoffs would arise regarding quality, access, and wait times.

An effective universal health care system should do more than reduce per-capita costs; it must also empower patients and ensure equal access to medical procedures. To this end, physician payments should be determined based on value rather than volume; while hospitals should be allowed the freedom to invest in cutting-edge technologies and treatments without being limited by rigid reimbursement structures that prevent them from providing patients with access to premium quality care.