What You Should Know About Universal Health Care Coverage

Female doctor giving a health insurance card to a patient
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"Universal health care" or "universal coverage" refers to a system of allocating health care resources where everyone is covered for basic health care services and no one is denied care as long as he or she remains legal residents in the territory covered—such as all the residents of the Commonwealth of Massachusetts, or all the citizens of the country of Canada.

The concept of universal health care is often incorrectly equated to a single-payer, government health care system, where all medical expenses are paid by one entity, usually the government. However, "single-payer" and "universal" are not the same.

Universal Coverage

A system of "universal coverage" can mean two slightly different things. First, it can refer to a system where every citizen can access either public or private health insurance. Second, it can refer to a system where every citizen automatically obtains free or low-cost basic services (prevention, emergency medicine) for a government-mandated set of standard benefits.

In the United States, the goal of universal coverage animated the adoption of the Affordable Care Act—sometimes called Obamacare—and arguments about how to maximize coverage while containing costs have consumed the early Trump administration. Under the ACA, health insurance companies could offer specific health policies with a mix of benefits required by law. For people who fall at certain percentages of the federal poverty line, a sliding scale of public subsidies pay some or all of their premiums. The intended net effect was that anyone, regardless of income, could afford at least a reasonable basic health-insurance plan.

Single-Payer Systems

In a single-payer system, however, there are no private insurance companies, to begin with. The government alone authorizes and pays for health benefits. The classic example of a single-payer system is Great Britain's National Health Service; the NHS controls access to health care resources and even employs the health care providers. Canada offers a similar scheme.

Some members of the U.S. progressive movement have suggested that the United States could arrive at a form of single-payer healthcare by offering "Medicare for all"—that is, by taking the government-payer program for the elderly and universalizing it to all citizens. It's not clear, however, that such an approach has any significant political support beyond some experiments proposed in individual states.

Public-Private Partnerships

Throughout the world, many countries offer health care universally, to all their citizens, in public-private combinations, and not through single-payer systems. Examples of these countries include Germany, the Netherlands, and Singapore. Singapore enjoys one of the most successful health systems in the world, with long life expectancies and low infant mortality rates.

Managing Risk

In any system where private insurers play a role in health care financing, individual health insurance companies must balance the ratio of sick-to-healthy in their consumer base in part through the value-added products and services they offer atop government minimums, and how those extras are priced in the open market.

In some places, the government protects the insurers against significant loss in part by "penalizing" insurers whose risk profiles performed better than average and then equalizing the costs. This approach is called risk adjustment.

However, in countries where buying into the system is either voluntary or effectively voluntary (e.g., through low penalties for non-compliance), the so-called Young Invincibles—young, healthy people who pay into the system but consume very little resources—offer financial stability to the system. When the Young Invincibles decline to participate, the system skews toward the older and sicker population, which effectively drives up costs for everyone.

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