How Much Will You Pay if Medicare For All Becomes Law?
Less than you think.
Bernie Sander’s Medicare For All bill has brought the discussion of single-payer healthcare into mainstream conversation in the U.S. The proposal is surprisingly popular; even though most Americans are happy with the insurance they have, most of them support the bill, even if it means losing their current plan.
Even so, there is skepticism around Medicare For All, revolving around cost and quality of care. Let’s take a look at costs, with an eye toward making things as simple as possible. Really, the core of this is much simpler than people are making it out to be.
In 2017, American spent $3.5 trillion on health care. $1.5 trillion was paid by the federal government. $880 billion was paid by employers. The rest of the money was spent by private citizens, either out of pocket, private insurance or company insurance.
I wasn’t able to find specific numbers for how much is paid annually by employees (if you know that number, please chime in!), so I’m making an estimate of $620 billion. This number is based on the fact that most company insurance plans call for employees to pay for half of their insurance plan. I used a lower number, to err on the side of caution. For the purposes of this article, we don’t need an exact number, we only need something close to the actual number.
If you combine the numbers above, you get a total of $3 trillion for what is already being spent on healthcare by employers, employees and the federal government. That’s $500 billion short of all healthcare expenditures. It’s estimated that a single-payer system would reduce administration and prescription drug costs by 500 billion per year.
What does this all mean? It means we could provide healthcare to all U.S. citizens without spending more money as a country, and without sacrificing the quality of healthcare. It’s a matter of shifting the money we’re spending into a more efficient system.
What does that mean to you? If you’re already insured through your employer, you would be shifted over to a government run plan. You’d likely see taxes added to your paycheck that would equal out to what you’re already paying for healthcare. If you’re paying out of pocket for your insurance, you’d pay far less than you’re paying now (if you pay at all). If you’re an employer, you’d see a new payroll tax that would roughly equal what you’re already paying to insure your workers. If you’re self-employed, you’d probably be paying a higher self-employment tax, which would be equal or less than your insurance premiums. In most cases you’d pay nothing more for this system than you’re already paying; you’d just be paying it in a different way.
Funding this bill can be done as simply as what I’ve just described, but it also offers an opportunity to help workers and businesses by shifting some of those healthcare costs to other payers. Taxes could be assessed on companies that are profiting by making people unhealthy. Bernie’s plan offers other alternatives like a wealth tax or a tax on income over $10 million. Ideas like this shift the burden of paying for the system away from you (unless you’re making $10 million per year), lowering your taxes. Any choices we make in shifting that tax burden can be done in a way that encourages better health or economic growth.
It should be pointed out that Bernie’s plan, as written, would give more benefits than any single-payer plan on Earth. This would obviously cost more money than I’ve accounted for in this article. Keep in mind that the Medicare For All bill won’t pass as written. Political compromise will whittle it down to something more realistic, both in costs and in benefits.
It should also be pointed out that Medicare pays lower rates to doctors than private insurance, something that doctors won’t be excited about. While true, the numbers I refer to in this article are based on existing rates, many of which are from private insurance. This means rates could be set in a middle ground without changing overall financing of the system. With rates set in the middle ground, most doctors would make roughly the same amount as they do now.
Higher doctor rates are a disadvantage of the American education system, related to healthcare. Doctors here graduate with six figures of debt, forcing them to charge more than doctors in other countries. As consumers, we pay for their education (and student loan interest) via fees and premiums. As time progresses, it’s worth examining whether this is a good system, or if paying for their education (without student loan interest) would be a better use of money.
How much will you personally pay for Medicare For All? That depends on which options we choose for funding it and how much coverage we will build into the plan. The most progressive version would include top-notch coverage, funded by taxes on the wealthy. Unless you’re making millions, you shouldn’t be paying any more than you already are. Done correctly, you should pay less and get better coverage. The middle of the road version would give coverage similar to what most of us already have, funded by what we’re already paying. The conservative version? There is no conservative version of improved healthcare, unless you count Trump’s call for cuts to Medicare and Medicaid.
