What it is:
A single-payer system is a health care system in which the government pays for all health care costs.
How it works (Example):
Though there is considerable debate about how a single-payer system fundamentally works, by many accounts a single-payer system operates much like the Veterans Administration works today in the United States: Hospitals receive a general budget from the government, doctors receive a salary from the hospitals, and the government pays for the cost of care.
However, single-payer systems can also work like Medicare, which allows patients and doctors to operate in the private markets while receiving negotiated payments from the federal and state governments.