Public Provisioning of Services: Adjunct to Single Payer

June 19, 2025

Reviving public provisioning in US health care
Health Affairs Scholar
March 17, 2025
By Hayden Rooke-Ley, Dana Brown, & Colleen Grogan

Abstract

As new approaches of political economy gain ground in some sectors, American health care still reflects many aspects of neoliberalism. In this piece, we build on proposals to reorient health care policy around a new industrial policy for health. A core component of this strategy – and our focus here – is a revival of public provisioning of medical services and pharmaceuticals. Although less prevalent today, forms of public provisioning still exist in vital ways. These models demonstrate how public provisioning can not only address urgent capacity needs – it can promote local ownership, operate as a competitive public option that bolsters worker power, and assure societal return on public investments.

Introduction

Despite experimentation in certain sectors with new paradigms of political economy, American health care still exhibits many hallmarks of neoliberalism. The privatization of Medicare typifies an overreliance on market making and consumerism, even as it drives up costs and builds private power with public dollars. Widespread corporate consolidation, pursued in the name of efficiency, increases costs and often reduces access for low-income patients. The financialization of care delivery – instantiated by private equity, insurance conglomerates, and profit-oriented “nonprofit” hospital systems – prioritizes returns for investors and corporate management over the production of health. The broader picture is one of neoliberal “re-regulation”: it is not that the health care state has receded – indeed quite the opposite – but that it has been repurposed to empower large corporations and financial investors over popular democratic demands.

In response, calls are emerging for a new health care paradigm to join the existing ferment of industrial policy.

Core to this agenda should be a revival of public provisioning, which we define as medical care and pharmaceutical production that is owned and governed by public institutions. The decline of public provisioning accelerated with the neoliberal turn, as an ideological attraction to privatization and markets took hold. Nonetheless, as we explain here, public provisioning still exists in vital if less visible ways today. These models demonstrate how public provisioning can promote local ownership, serve as a competitive check on private industry, and assure that society benefits from public health care investments.

Public provisioning today

Public hospitals are defined as government-owned acute care hospitals and are owned by a state, county, city, or hospital district. They made up nearly a third of all US hospitals but have since declined by 39%; meanwhile, for-profit hospitals have increased by 32% since 2009. A key driver here is public-to-private conversions. The evidence suggests privatization does not increase efficiency but instead undermines access to care. Moreover, public hospitals that privatized had higher average mortality rates compared with public hospitals not experiencing privatization. Policymakers ought to consider maintaining and upgrading existing public hospitals and a more robust role for new public hospitals through which to direct public capital financing.

Health districts represent another element of locally governed and publicly accountable care that can adapt to a community’s needs. These services are often offered in under-resourced rural areas. Investing in these models will likely require cross-subsidization at the state or federal level.

Public health centers provide an avenue for local public investment to support health centers. Yet the expansion of public health centers is constrained by the 5% cap set by Congress. To build out this “public-public” delivery model, policymakers could lift the 5% cap and enhance grant funding of public institutions at the local level.

Pharmaceuticals … there are dire shortages in the generic drug market, and policymakers are beginning to look to the public sector in response. Federally, there are proposals both for large-scale generics production and public R&D coupled with public-interest provisions on all resulting intellectual property. These public-option proposals deserve serious consideration.

Future policy directions

Current policy limits the growth of public provisioning. Policymakers could begin to address this by lifting the cap on public entity Federally Qualified Health Centers. A “new Hill-Burton” could emphasize investment through public hospitals and health districts. Similarly, state and federal investment dollars could be channeled to build pharmaceutical capacities. Ultimately, a new health care industrial policy must prioritize a rational production and allocation of capacity – and public provisioning can ensure that these public investments deliver a return for patients, the health care workforce, and their local communities.

 

Comment by Don McCanne & Jim Kahn

The United States has the most expensive health care delivery system in the world, yet its performance falls far below that of other industrialized nations, leaving far too many individuals with poor access to health care, low quality care, high mortality, and crippling financial burdens.

Decades ago we realized that we could address these problems by implementing single payer financing: improving the Medicare program and expanding it to cover everyone. It would be funded through progressive taxes, affordable for everyone. But we failed to achieve that goal. Instead, costs have increased faster than in other nations, with coverage and quality lagging.

What happened? We shifted most health care payments into the private insurance system. Under public financing, the mission is to fund the health care needs of patients. In contrast, the primary mission of private insurance is to enrich investors and executives. Many of their business techniques – such as cherry-picking healthy individuals and lemon-dropping sick ones, burdensome prior authorization, upcoding of diagnoses, and excessive deductibles and copayments – are used to divert our health care dollars to their profits. Sadly, corporate insurers have been effective at privatizing public insurance, allowing massive diversion of health care funds to their purposes. Both Medicare and Medicaid operate mainly via private insurance.

Another critical factor is the transformation of care delivery by widespread corporate purchase of providers: hospitals, physician groups, and nursing homes. With private equity in particular, the goal often is to buy the health care entity, drain it of assets and funds, and then dispose of it, often via bankruptcy. With a shift in emphasis from patients to profits, costs are up while quality and access are down.

What can we do about it? Single payer is essential – to shift spending away from profit-making insurance intermediaries and toward providers. But we also need to shift to not-for-profit providers. To us – the community. That is, we need significant public provisioning of health care, building on an impressive history, as nicely reviewed Rooke-Ley and colleagues.

Public provisioning is feasible, with historical and current examples and the potential to represent best practices within a diverse delivery system. In contrast, a national health service (government owning the entire system) faces far greater resistance — it would be a monumental challenge to transfer private sector to public ownership in one step. Many voters are ideologically opposed to a system that would be entirely owned and administered by the government, dismissing it as “socialized medicine”. Instead, by establishing and expanding public provisioning options, we can imagine gradual transformation to substantial public ownership. Public providers, well-funded by single payer and without the need to extract profits, would be highly desirable to patients.

Do we have the necessary public support? Of course, politics is a challenge. One major political party has fostered “neoliberalism,” which supports a major private sector role (with profits) for public goals. A significant element within that party prefers “progressive” policies, in which the mission is public (eg patient care) while profit-oriented business interests are minimized. The other major party cuts health care spending as a source of funds to reduce taxes for the wealthy. Notably, voters of both parties want to retain Medicaid, Medicare, and other public insurance. So the path, although tricky, can build on a broad base of support.

Obviously, there is a pressing need to educate the public. But: affordable. comprehensive, high-quality care for absolutely everyone creates a much better image than billionaires using government tax policies to increase their personal wealth at the cost of reducing essential social services required by so many. The public is primed, more than ever, for a public approach.

Let’s finally end decades of delay and move forward with reform based on sound policy proposals. Public financing together with public provisioning is the potent combination!