The Bernie Sanders Presidential Campaign tweeted today about an op-ed piece in the Philadelphia Inquirer that breaks down the numbers to conclude that we’re already paying basically the full freight on single-payer just in government spending and tax expeditures that fund the V.A., Medicare, Medicaid, etc., and health-plans for government employees. With the tax write-offs employers get, the Treasury is already paying the full costs of a single-payer plan. It's just we don't have the universal coverage to show for it.
So, it can be done without raising any additional tax revenues. Bernie's tax plan would just pay for it more responsibly than the debt we're accumulating now, and would save a lot of money for people and busineses that pay premiums and deductibles now.
Of course, GOP Mayors and Governors would have to give up scoring points by slashing benefits for public employees, and we wouldn’t want to do that, would we?
---— The argument -------
The starting point is the recognition that a lot of people are already getting health care in ways that most recognize as public insurance plans. Here, we’re talking about Medicare and Medicaid and the Veterans Administration, as well as other care that’s provided by the CDC. These expenditures account for fully 45% of the annual national health care expense.
This 45% is the figure that HHS uses — so, it’s the baseline for this discussion. But, it’s the wrong baseline. Because, the federal, state and local governments also pay a good chunk of change to coer insurance for public employees. That’s estimated at 28% of all employer-provided health care spending.
The governments also subsidizes the insurance provided by private employers (and other privately purchased care), because these costs are tax deductible. Those subsidies (called tax expenditures) amounted to $326 billion last year. And, those benefits accrue primarily to the more financially-able. High-paid employees tend to have very expensive plans.
So, including these other amounts, and we discover that taxpayers are already directly paying for or subsidizing nearly 2/3 (65%) of the national health care spending. And, none of this includes the tax money that covers spending for the care of the uninsured.
One-third of our tax dollars go through the hands of private insurers (this includes those who insure public employees) who snag 12% to cover their overhead, which compares to 2% for Medicare. So, it’s a highly inefficient way to spend our tax dollars. That’s $400 billion we could save. That’s actually enough to cover all the expenses for the uninsured and the co-payments and deductibles that most of the rest of us pay.
This means that we wouldn’t pay any more than we’re paying now if we switched to a national single payer plan.
“That means a national single-payer plan wouldn't cost Americans any more than we're currently spending. Moreover, the taxes to pay for it would be fully offset by the savings from eliminating private insurance premiums.”
As the authors note, we wouldn’t have to raise taxes much to cover the revenue needed to fund a single-payer plan.
“Moving from our current level of tax financing, 65 percent, to Canada's 70.7 percent would mean a tax increase of about $185 billion per year. But Americans would save at least that much on premiums. The vast majority of American households would come out ahead financially, and everyone would be covered.”
Based on my calculation, that’s about a 10% increase in current income tax revenue, but would be much less in the out years as tax receipts rise, hopefully at a faster rate than medical inflation. 10% is just a tick above what Sanders has proposed for most employees, as he wants a 2.2% income-based tax premium for individuals and families, and a 6.2% income-based health care premium to be paid by employers on top of current payroll taxes.
As noted though, this would be in lieu of premiums and deductible being paid by Americans and business. The Sanders campaign’s health care plan release states that a family of four making $50k would save $5800 a year over what they’re paying now for privately-purchased coverage. Businesses would save $9400 in health care costs for the average employee.
It is true that we’re comparing apples and oranges a bit, since Canada does not cover prescription drugs — though the cost of the drugs is cheaper there, mostly because of government price controls. We could choose to cover a greater percentage of the health care cost by covering prescription drugs and we could even include better dental care benefits than Canadians get. We could include co-pays, or very small deductibles, or put in a slightly higher tax premium than is being proposed, Even if we did any or all that, the system will be cheaper and cost us less than what we’re paying now out of our taxes, tax expenditures and private premiums, deductibles and co-pays. The only thing missing in this picture is the political will to do it. That part is actually going to require us to put in a little.
The authors of the piece are Steffie Woolhandler, M.D. ( hunter.cuny.edu), and David U. Himmelstein, M.D. ( hunter.cuny.edu), listed as professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.