Since I work in the Army Reserves, Mid-sized city EMS, come from a multi-generation military family on one side and a dairy farm family of 8 generations (1792 they were farming) on the other, I have a few friends and family who lean to the conservative side (and a few libertarians). They all seem to be freaking out about Sanders and Trump. Recently Sanders told someone in a meeting that “yes, you will pay more in taxes under single payer”...”but will spend less on insurance and health care”. that last part got left out in all the links they forwarded to me.
So, I sat down between calls and started doing numbers on the iPhone spreadsheet.
What Sanders said was “What we are going to fight for, is a Medicare-for-all, single-payer program, which would provide comprehensive healthcare to your family, and every family in America. So, let me tell you what we do, we raise your taxes if you’re somewhere in the middle of the economy, about 500 bucks, but you know what we’re going to do? For healthcare, we’re going to reduce your healthcare costs by $5,000. So, you’re going to pay a little bit more in taxes, but you’re no longer going to have to pay private health insurance premiums.” while addressing a person who said he makes $41,000 a year. I used this as the base of what Sanders seems to think the Medicaid for all plan would cost.
Base Assumptions
I am going to use numbers I have access to for the plans that my employers offer me then work around my pay for starts then go from there.
To see a $500 increase in taxes on $41,000 that is a 1.3%(ish) increase in taxes.
My income (gross) was $47,900.
My full time employer offers three plans: Choice, Balanced Choice, and Managed Choice.
The total cost is: Monthly premium + total out of pocket cost for “in-network” providers.
Total out of pocket cost is deductible + co-pays and cost shares to the total cap.
The Numbers Game
Mr. Sanders talking point said $500 for mid income family which for the $41k person would work out to be 1.3% I have a hard time with this, mostly because of two things. First, what government program has EVER come in at predicted budget? Second, in other nations that have Single Payer they are taxing at 6 to 9% more to cover the medical costs, with 8% seeming to be the most common rate.
As I was doing my number digging, I found a page explaining in more detail Sanders plan (or rather what they claim is the plan Sanders is basing his off of) that is calling for an 8.9% increase in taxes to pay for Medicaid for all. (6.7% to be covered by the employer — like FICA, and 2.2% by the employee. higher employment taxes result in less pay being offered because the cost of an employe is a set amount for businesses)
So I don’t trust that the rosy 1.3% or even 2.2% as it is way to optimistic for what i’ve experienced working in government and military. So I’m going to use 4% (assuming just employe direct cost) and 8% for a realistic total cost.
Round one: $48k a year
The three plans (family) cost $630 a month, $475 a month and $285. The deductibles for a family plan are $1,200, $1,800, and $3,600. Total out of pocket is $4,500, $5,000, and $7,200. [I should note here, the single rate is $332/$119 and free. Deductibles $400, $600, and $1,800. Since the single cheep plan is free, the choice of higher plans and family plans are exempt from any tax credits under ACA]
This gives you a range of total possible costs of $12,060, $10,700, and $10,620 that could be spent on health care. Out of $48k before taxes. (retirement, union dues, deductions, etc) or about 22 to 25% of your income if you used all the out of pocket limit.
Certainly if you were very lucky and did not need much health care then you’re just looking at premium costs — about 7 to 16% of your income.
Round two: Sanders plan applied
Under the Sanders plan (and my assumptions) a family with a $48k income will pay $624 at 1.3%, $1,920 at 4%, and $3,840 at 8%. So, assuming a family only pays the premium, does not use any health care or a minimum amount (free well visits, etc) then the 8% rate cost them more than they currently pay for coverage at the low end. The Single person with the free premium gets hit hard with higher taxes, while the 4% rate is cheeper than the expensive plan but still cost more than the mid level plan for a single person who does not use health care much or at all. (most young single people).
But i’ve never met any family that did not use health care. (I’m sure someone will commit they don’t, but that is a very very rare thing i’m sure.)
Round Three: Someone loses no matter what
The problem with politics is that someone always ends up being able to point to something that ends up costing them more than they get back in the short term. The single person who buys a home complaining about the school taxes they pay for “other” kids, Medicaid for other people, fire protection they never use, etc. In this case, unless the 1.3% can happen, single healthy people “lose” — spending more on taxes than they currently use.
That will be where the GOP types will point to or like my family and friends to just the “higher taxes” that will destroy the US economy...some how.
But since reality says 4 to 8% is more likely, the best way to frame the cost is to point out that at 8% this would be the same as a family having a $210 a month premium and a $1,000 total out of pocket cost limit. (about $3,530). Wouldn't that be a decent plan to have? If you’re making more than $48k a year that is not bad.
The Winner is: An 8% plan
Using the “worst case” numbers, Medicaid for all makes sense for most families earning more than $35,000 a year, and if you’re earning less than that (and in a medicaid expansion state) you already get medicaid at no cost or very low cost.
I think that pitching the total cost to the tax payer as the same as having a $210 a month $1,000 out of pocket plan would sell it better than saying “you will save $2,000 or more” — we were told that with ACA and i’ve not seen anything that shows that happened. All our plans had to increase to cover the new ACA standards. Because really how many people would be paying more for a $290 a month no co-pay no deductible no partial payment plan than what they pay now?