Proponents of the concept of Medicare for all never discuss the economics in any depth.
First, a historical note. Post-World War II, the unions in the U.S. did a great favor for all workers that is forgotten. They obtained first-dollar health insurance coverage on a pre-tax basis. Over time, cost pressures required employees to begin picking up portions of the costs, but most of that was still done on a pre-tax basis via cafeteria plans, health savings accounts, etc.
Let’s assume, using slightly inflated 2018 data, that health insurance costs $1,200 for a family on a monthly basis. Utilizing a 15% tax rate, plus payroll taxes, this results in a benefit worth about $1,550 per month, pre-tax.
I am recently retired and am now covered by Medicare. It requires buying a Part B supplement (unless an Advantage Plan is utilized) and a Part D policy for prescription drugs. My Part B supplement costs $237 per month. Medicare’s premium for part B is at least $145 per month (with higher-income participants paying more). My Part D premium is $13 per month (which is very low, as I am on no prescription medications). This totals $395 per month, or $4,740 per year of after-tax dollars. Using the 15% rate, it is $5,576 before tax. That is seldom tax-deductible, unless a catastrophic health year occurs or unless a participant carefully times tests, procedures, etc., and bunches them into one year to exceed Form 1040 limitations.
Let us extrapolate to a family situation. If we use my costs multiplied by three family members, it comes to $1,185 per month (close to the above family’s $1,200 in 2018 dollars).
Here is the never-discussed question: Are you willing to give up a pre-tax policy of $1,200 per month and pay for it after tax?
Multiply the pretax $1,550 family amount by 12 months ($18,600) and then by 158 million, which is the Kaiser Foundation estimate of people covered by employer health plans, to get the big-picture impact. IRS coffers will be improved significantly!
Remember also that under this scenario, the government would be totally in charge of health care’s 19% of the economy. Recent history — including the novel coronavirus, the Veterans Administration woes, and the Affordable Care Act — does not prompt a lot of confidence for giving the government such power.
Evaluate the facts and vote wisely.
Thomas Buresh of Duluth is a retired certified public accountant, certified financial planner, and health care consultant.