Prominent Democrats have been endorsing a single payer healthcare plan called "Medicare For All". Basically, it is just what the name implies, an expansion of Medicare so that it covers all Americans (and most likely even non-Americans who happen to be here.) Sounds good, right? But there's a problem with this system that none of the Democrats even mention: it would be incredibly expensive. The Democrats don't even guess at the cost of a Medicare for all system, so we will have to try to figure it out ourselves.
Let's start with a few facts:
1. In 2015, national expenditures on healthcare were 3.2 trillion dollars. I'm using 2015 since the Democrats all claim that Medicare for all would reduce costs and expenditures. If I were to use 2017 estimated expenditures, the number would be higher by a percentage in double digits.
2. Medicare spending in 2016 was $646 billion and Medicaid spending was $545 billion. All of the preceding figures come directly from the Centers for Medicare and Medicaid Services of the federal government. The total of these two is 1.2 trillion dollars.
3. If we had Medicare for all, the cost would be roughly the same as the remaining expenditures above what was already spent on Medicare and Medicaid in 2015. That comes to roughly two trillion dollars per year. The change in the system might bring some savings but there also would be increases. For example, the services paid for by Medicaid would cost more under a Medicare system.
So where would that $2 trillion come from? Total federal tax collection in 2016 was 3.6 trillion dollars, so a 2 trillion dollar increase would require all taxes to go up by about 55% across the board. That's more than ten percent of the GDP.
Some people say that by eliminating the health insurance companies, America would save so much money that it would more than make up for the additional cost. That's wrong. Total spending by health insurance companies was just over 1 trillion dollars in 2015 according to the same government figures discussed above. At most 20% of that was for administration, other overhead and profit. That would mean that between 800 and 900 billion went to actual healthcare payments. In gross terms, that means that even if all that money were somehow directed to Medicare For All, there would still be about 1.1 trillion in additional expenditures that would have to be paid. And remember, if you credit the health insurance costs to the new system, that requires that all Americans now paying health insurance premiums continue to do so under the new system.
So putting this in the clearest terms, the Democrats' Medicare For All proposal would result in one of two things: a) Americans continue to pay current health insurance premiums as well as another trillion of new taxes to the government, or b) health insurance premiums end but there are another two trillion in taxes.
In order to get the additional tax money there is only one source from which to get it, namely, the average American worker. Corporate taxes in the USA are already the highest in the world. Were Congress to increase corporate taxes further, our companies would just move their production outside the USA with the result of soaring unemployment and declining incomes. Personal income taxes could be increased, but not enough would be raised from just taxing the wealthy. There is just not enough income there to cover the needed taxes. The only way to raise this much would be through additional payroll taxes. That would mean at a minimum an additional 10%.
Consider what this would mean for the average American family which gets its healthcare now through insurance provided by the employer. A ten percent additional payroll tax for the average family would mean an increase in withholding/taxes of just over five thousand dollars. The same family, however, would no longer pay any portion of employer provided health insurance, so they would save, on average, about $2400 per year. That means each American family would pay about $2600 extra in taxes each year.
Would it mean better healthcare? No. Would it mean better coverage? On average the answer is No. Would it stop constant cost increases? Again, the answer is NO. In fact, as the costs went up the taxes would have to go up too. It would mean, however, that everyone who has a job in health insurance would lose their employment. It would also mean that the limited flexibility in the healthcare system that comes from the insurance companies (and that's really not much at all) would disappear as a government one-size-fits-all system replaced it. And remember, we never even figured in the cost required to oversee and administer the bigger Medicare system. We also didn't figure in the much higher fraud rates that hit Medicare as compared to the private health insurers; the new system would be a bonanza for criminals.
In short, Medicare For All is a system to get nearly everyone the same healthcare they have now but at a much higher cost.
Let's start with a few facts:
1. In 2015, national expenditures on healthcare were 3.2 trillion dollars. I'm using 2015 since the Democrats all claim that Medicare for all would reduce costs and expenditures. If I were to use 2017 estimated expenditures, the number would be higher by a percentage in double digits.
2. Medicare spending in 2016 was $646 billion and Medicaid spending was $545 billion. All of the preceding figures come directly from the Centers for Medicare and Medicaid Services of the federal government. The total of these two is 1.2 trillion dollars.
3. If we had Medicare for all, the cost would be roughly the same as the remaining expenditures above what was already spent on Medicare and Medicaid in 2015. That comes to roughly two trillion dollars per year. The change in the system might bring some savings but there also would be increases. For example, the services paid for by Medicaid would cost more under a Medicare system.
So where would that $2 trillion come from? Total federal tax collection in 2016 was 3.6 trillion dollars, so a 2 trillion dollar increase would require all taxes to go up by about 55% across the board. That's more than ten percent of the GDP.
Some people say that by eliminating the health insurance companies, America would save so much money that it would more than make up for the additional cost. That's wrong. Total spending by health insurance companies was just over 1 trillion dollars in 2015 according to the same government figures discussed above. At most 20% of that was for administration, other overhead and profit. That would mean that between 800 and 900 billion went to actual healthcare payments. In gross terms, that means that even if all that money were somehow directed to Medicare For All, there would still be about 1.1 trillion in additional expenditures that would have to be paid. And remember, if you credit the health insurance costs to the new system, that requires that all Americans now paying health insurance premiums continue to do so under the new system.
So putting this in the clearest terms, the Democrats' Medicare For All proposal would result in one of two things: a) Americans continue to pay current health insurance premiums as well as another trillion of new taxes to the government, or b) health insurance premiums end but there are another two trillion in taxes.
In order to get the additional tax money there is only one source from which to get it, namely, the average American worker. Corporate taxes in the USA are already the highest in the world. Were Congress to increase corporate taxes further, our companies would just move their production outside the USA with the result of soaring unemployment and declining incomes. Personal income taxes could be increased, but not enough would be raised from just taxing the wealthy. There is just not enough income there to cover the needed taxes. The only way to raise this much would be through additional payroll taxes. That would mean at a minimum an additional 10%.
Consider what this would mean for the average American family which gets its healthcare now through insurance provided by the employer. A ten percent additional payroll tax for the average family would mean an increase in withholding/taxes of just over five thousand dollars. The same family, however, would no longer pay any portion of employer provided health insurance, so they would save, on average, about $2400 per year. That means each American family would pay about $2600 extra in taxes each year.
Would it mean better healthcare? No. Would it mean better coverage? On average the answer is No. Would it stop constant cost increases? Again, the answer is NO. In fact, as the costs went up the taxes would have to go up too. It would mean, however, that everyone who has a job in health insurance would lose their employment. It would also mean that the limited flexibility in the healthcare system that comes from the insurance companies (and that's really not much at all) would disappear as a government one-size-fits-all system replaced it. And remember, we never even figured in the cost required to oversee and administer the bigger Medicare system. We also didn't figure in the much higher fraud rates that hit Medicare as compared to the private health insurers; the new system would be a bonanza for criminals.
In short, Medicare For All is a system to get nearly everyone the same healthcare they have now but at a much higher cost.
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