Costs and Savings

Report #1: monthly cost of health care with Medicare for All
Report #2: monthly cost when stricter regulations were put on health insurance companies in the state of New York
Report #3: costs and savings per year for employers and employees
Report #4: less government: reduction in government spending, requiring less of our tax dollars

Report #1: monthly cost of health care with Medicare for All

Medicare for All — With single-payer, Medicare for All, most people will see mainly or only a different amount for the Medicare tax from their payroll::

Health care costs with single-payer:
Example 1: $49 per month for $12,500 total earned income for the household
Example 2: $198 per month for $50,000 total earned income for the household
— no health insurance premiums (eliminated)
— little or no co-pays
— no deductible(s)
— no major medical bills
— lower taxes via less government: see Report #4

By percentages of total earned income:
    Current: 1.45%
    Medicare for All: 4.75%

The increase is small compared to the huge savings that many Americans (and their employers) will experience with Medicare for All. See that detail in Report #3 of this web page.

Comment by Bob: politicians will tell you about what they misleadingly call a “huge” increase in taxes, such as in the increase above. They don’t tell you about is the truly huge savings that is described in Report #3.
— Bob

Report #2: monthly cost when stricter regulations were put on health insurance companies in the state of New York

The U.S. Congress plans (as of resolutions in 2009) to apply stiff regulations on health insurance companies.

Use of Health Insurance Companies with Increased Regulations — As reported here about stiff regulations on health insurance companies, the state of New York established stiffer regulations and has the following range of premiums for health insurance policies for November 2009 for a family:

Health care costs with increased regulations:
$2,882 per month to $4,786 per month for premiums for a family via the NY state website posting (pdf) of rates
plus out-of-pocket costs, such as:
— co-pays … (Note: little or none with single-payer)
— deductible(s) … (Note: none with single-payer)
— coinsurance on major medical bills … (Note: none with single-payer)

The U.S. Congress plans add these:
— mandated (dictated, forced) health insurance
— automatic (forced) enrollment of families into Medicaid

Report #3: costs and savings per year for employers and employees

based on the median household income reported by the Census Bureau

Summary of the details on the rest of this web page, as they apply to most Americans:

A – There will be a decrease of costs (to zero!) to health insurance companies

B – There will be an increase of costs for the new non-profit national health insurance, such as from payroll deductions

Result: the decrease (A) is far greater than the increase (B), resulting in the significant savings documented above

Nonfamily is a relatively new term. The U.S. Census Bureau reports data by family and nonfamily. A nonfamily household consists of a householder living alone, or a householder who shares the home exclusively with people to whom he or she is not related. Some reports on income by various organizations equate “single” and “nonfamily.”

Business Savings. As seen below, the business’ savings are $7,505 for an employee who has a family and $2,795 for a employee who is a single person. However, note that the “business cost” overlaps with the employee compensation; these are two different viewpoints of looking at the same numbers. For notes about other positive impacts on businesses, see Other Business Impacts.

Basis

The information on this web page is based on health insurance costs for a family household earning $62,359/year and for what the U.S. Census Bureau calls a nonfamily household earning $30,176/year, based on having employer-sponsored coverage. These figures are median household incomes as reported by the Census Bureau in August 2008.

• The comparison in the table below is for:
  • the current health care financing:
    • single-payer for 65 and older
    • plus added government programs
    • plus government handouts
    • plus the operation of over 1300 for-profit companies)
  • compared to Health Care for All with non-profit single-payer national health insurance
    • single-payer for all … and that’s all!

Description of the Impact on Dollars and Coverage

With respect to the cost per family or nonfamily, the following results occur with the replacement of current U.S. health care financing (complex and inefficient mess with millions not covered) with one national health insurance program that covers everyone (Expanded and Improved Medicare for All):

• The large cost of for-profit health insurance goes to zero for the employee and the employer.
• The savings overwhelms the increase in payroll taxes .
• The medical coverage goes to a maximum: all medically-necessary services from pre-natal to end-of-life.

Savings Which Are Not Included. This report does not take into account any of the additional savings that can be realized by other national cost-saving projects. In some, perhaps all, cases these additional cost-saving projects will be best conducted by having a single national health program in place first. Then the long-term savings might be greater, but the cost of the projects themselves will also certainly be lower by having the best national focus with a minimal number of organizations and programs! One organization and one program!

Explanations

Exceptions. Especially if you are one of the top 5% richest persons in the U.S., refer to the exceptions.

For-profit insurance

• The average employee and employer payments that are made to for-profit health insurance companies are from the Employer Health Benefits (pdf) Annual Survey 2007, which is based on a survey of 1,997 employers.

Taxes for non-profit, single-payer insurance – now and in the future

• Current: Medicare tax 1.45%
  • Purpose: cover people 65 years and older with some benefits
  • Family
    • Basis: $62,359 median family income in 2007
      • Reported by U.S. Census Bureau in August 2008
    • Resulting tax: $904/yr
  • Nonfamily
    • Basis: $30,176 median nonfamily income in 2007
      • Reported by U.S. Census Bureau in August 2008
    • Resulting tax: $437/yr
• Future: Expanded and Improved Medicare for All tax 4.75%, as per U.S. House Resolution 676
  • Purpose: cover everyone with all medically-necessary services
  • Health Care for All with single-payer national health insurance
  • Family
    • Basis: $62,359 income
    • Resulting tax: $5,924/yr incl. employer contrib.
    • Resulting net savings: $7,990/yr
  • Nonfamily
    • Basis: $30,176 income
    • Resulting tax: $2,866/yr incl. employer contrib.
    • Resulting net savings: $2,487/yr

Unpredictable Costs associated with current health care financing.

These result from getting health care or trying to get health care in the current system.

These include:

• what happens regarding the health condition of individual family members
• any accidents that occur which require medical treatment
• the current, sometimes-changing, rules of the health insurance companies on whether they cover a particular cost and how much.
• If and when health care is obtained, one or more of the following items will be involved:
  • Co-pays
    
  • Deductibles
    
  • Coinsurance: percentage not covered by insurance, such as for surgery
    
  • Health care bills after the lifetime limit is exceeded
    
  • High prescription drug costs due to U.S. not negotiating prices
    
  • High medical equipment costs due to U.S. not negotiating prices
  • Added potential costs for those burdened by medical expenses
    • credit card interest
      
    • interest on loans to pay medical debts
      
    • bankruptcy
      
    • loss of home
      
    • divorce, which sometimes results from financial problems
  • These are just to name a few examples of the risk of the current unfortunate reality.

Exceptions As per H.R. 676, most of us will have just one tax expense for health care associated with (the new) single-payer national health insurance: the Expanded and Improved Medicare for All payroll tax.

• Possible exceptions:
  • Depending on the negotiations in establishing the actual law, there could be some additional costs per family and per single person, but the net savings will still be large, based government and private economic evaluations going back to at least 1991. The following list is based on H.R. 676:
    • For some: there is a small stock transfer tax of 0.25% on seller and buyer.
    • For a few: a small percentage of persons will pay an additional amount, according to the tax surcharge of 5% on the very richest 5% and 10% on the richest 1%.
    • For all: there might be a small charge for prescription drugs or other item, depending on the negotiated details of the legislation.
  • Note: I will try to keep in mind my question, and perhaps yours, of what might be a “contingency factor” to apply in case the negotiations of the final law might cause a small additional tax or expense for most of us. As noted just above, the net savings will still be large, but I’m picky about the details!

Other Business Impacts

A growing number of businesses no longer offer health insurance benefits. Some of those businesses very much wanted to provide health insurance for their employees for these reasons: 1) they care 2) they want to keep employees and 3) they want to be attractive to prospective new employees.

• Benefits to those businesses
  • They will no longer have to worry about the 3 factors listed above.
  • Lower costs and higher productivity will help to offset the increased payroll costs via the following factors:
    • less employee turnover and training of new employees, because employees won’t be constantly worrying about finding a job with health insurance benefits
      • employees who like a job can stay on that job
    • much better chance of high productivity due to good employee health, as both the employer and the physician can promote good health habits and encourage the employee to see their physician early when there is a problem
    • fewer illnesses and deaths which lead to lower costs
    • a related point: employees going to the doctor/hospital to get care promptly will mean that they return more promptly and more healthy when they return to the job

Report #4: less government: reduction in government spending, requiring less of our tax dollars

Single-payer will eliminate current health care entitlement programs, such as Medicaid, SCHIP and COBRA, replacing those with a better system, Medicare for All … a single public agency, reportable to the public … using the Medicare regions and facilities that are already in place.

Eliminate Bureaucracy It’s time to move from complexity to simplicity by eliminating bureaucracy

Bureaucracy regarding health care comes in 3 forms prior to the implementation of single-payer:

• insurance companies’ bureaucracy
• government bureaucracy
• supporting bureaucracy

Sources and Additional Information

Sources

• Employer Health Benefits (pdf) Annual Survey 2007, which is based on a survey of 1,997 employers.
• H.R. 676 — United States House Resolution 676, the U.S. National Health Insurance Act (“Expanded and Improved Medicare for All”)
• Census report (pdf) — See table 1 in this August 2008 report of 2007 statistics: “Income, Poverty, and Health Insurance Coverage in the United States: 2007”

Government and private economic evaluations that start in 1991

• Economic evaluations of single-payer, both nationally and by state are reported here. As far as I know, the most detailed study of the U.S. administrative costs was conducted by Woolhandler, Campbell, and Himmelstein in their report (pdf) that resulted in the 31% administrative cost associated with the current U.S. health care financing.)

Proposed Financing of Single-Payer

• Defined in U.S. House Resolution 676:
  • Tax on earned income (Expanded and Improved Medicare for All tax of 4.75%)
  • Stock transfer tax of 0.25% on seller and buyer
  • Tax surcharge: 5% on richest 5%; 10% on richest 1%

As author Joel Harrison knows, I haven’t made a final review of the following article to offer you anything more than my providing a link to it here for your consideration:
Paying More, Getting Less from the Dollars and Sense magazine

Also see Single-Payer Education and tax.

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