To pay for Medicare For All (MFA) the average worker would pay $23,000 in annual Medicare taxes

[Linden_Arden]

MFA proponents never get specific on how to pay for such a program so I did a little cost analysis myself. First some basics:

How much Medicare tax does the average American worker pay?
So, let’s see how much the average American pays in Medicare taxes. According to the Bureau of Labor Statistics, there were about 137.9 million American workers in mid-2015, if you include part-time employees. Also in 2015, the most recent year for which complete taxation data is available, $241.1 billion was paid in Medicare payroll taxes.

Of this amount, $211.9 billion came from wage income. The remaining $30 billion or so came from other sources that don’t impact the average American, such as the 0.9% additional Medicare tax I mentioned earlier.

By dividing the total Medicare tax that came from wage income by the number of workers, we find that the average American worker’s contribution to the Medicare Hospital Insurance (HI) program was about $1,537. However, keep in mind that half of this amount was paid by the employer, so the average Medicare tax that was paid in 2015 per worker was about $769. This corresponds to an average annual wage of $53,000, which is consistent with data from the Census Bureau and other sources.

How Much Medicare Tax Does the Average American Worker Pay? | The Motley Fool

So this worker now sees a $769 Medicare deduction on their paycheck (the employer matches that).

GDP was 19.39 trillion USD (2017). Healthcare costs 17% of GDP. Rounding down GDP and dividing by 17% we get $3.2 trillion of total healthcare costs in 2017. This is consistent with 10 year cost projections of $32 trillion provided by MFA supporters.

$3.2 trillion divided by 138 million workers is $23,000 annually. This pays for ALL medical services for all 300 million plus residents which I understand is the objective of MFA advocates. But this is where MFA proponents quickly leave the discussion. Who pays for that $3.2 trillion after some modest overhead is reduced?

Medicare payroll tax is regressive so this poses a problem of what the “average” worker would pay. It is capped for high income earners. I am also assuming that Medicare would be taxed separately as it is now.

The first criticism should be “you are putting all the cost on 138 million workers”. Well, yes. Workers and employers pay 85-90% of Medicare taxes today. And if you want to tax employers why change the system at all?

Since 2013, high-income taxpayers have been assessed an additional 0.9% Medicare tax on earned income above certain thresholds – currently $200,000 for single taxpayers and $250,000 for married taxpayers filing jointly.

(same link)

The ACA levied a new tax on high income earners but it is small in overall Medicare tax impact.

So, I gave it a try. The insurance companies profit is a tiny sliver of that $3.2 trillion (MFA proponents like to overstate savings there).

So, if you care at all, tell me where I am mistaken because I would not want to deliver the cost per worker to voters of MFA either - just as proponents are loathe to. I certainly could have made a math error. It would not be the first.

And if you disagree tell me what the tax per worker would be - don’t just correct my math. Adjust away.

[kanicbird]

If people need medical care, and that has to be paid for somehow. That money needs to come from somewhere. Now the only question is where the money comes from. Also it is what one’s priorities are, like if everyone gets some level of coverage.

[Riemann]

You are implying that this is an extra cost. Where do you think that 17% of GDP comes from? Americans are already paying this much for healthcare. Just because it’s not levied as a specific separately identifiable tax does not mean you’re not already paying it.

You also seem to be proposing an unnecessarily regressive tax, then criticizing it for being regressive. Most countries fund their basic universal healthcare system primarily out of general taxation, not a specific (and regressive) separate tax.

[Ravenman]

How much does the average worker - as you’ve used this term in your OP - currently pay in Federal income taxes?

[Horatio_Hellpop]

Does the average Canadian or British or French worker pay that much in healthcare taxes? I doubt it. I also doubt they pay $800 for saline drip or $2000/month for insulin.

Here in South Korea, medical care is not free, but it is heavily subsidized. My aneurysm operation cost about $10 K; in the US it would have cost about ten times that. Health care is very cheap in China, but the quality of it is terrible/ I think Korea may be a workable model.

[PoppaSan]

For the OP, currently what does the average worker pay towards existing health insurance, which under the proposals would no longer be needed? How much waste via paper shufflers in the medical side and also at the insurers would be squeezed out of the system?

[PastTense]

You state GNP is $19.39 Trillion dollars and there are 138 million workers. Divide this and that means $140,500 per worker. So your $23,000 is not that big a chunk (16%-17%) of that $140,500. Personally most of know only a limited number of people making that kind of money. But in any event we plan to tax people progressively to pay for Medicare for all (for example the federal share of Medicaid and Veterans Health benefits and federal government employment health insurance benefits are already paid this way).

[Linden_Arden]

@Riemann

Americans are already paying this much for healthcare.

Not with taxes.

Some candidate will be forced to state how much in higher taxes will be required. And taxes are paid by workers/investors. Since I generally favor Democrats I don’t want the poor sap to be forced into this position when it is too late.

I support the ACA and the status quo.

“Hey, we’ll send you the bill later” is not good enough.

[Grim_Render]

You seem to be assuming that Medicare for all will involve Medicare paying all the insurance companies salaries. And the salaries of all the people on the hospital side involved in negotiating with the insurance companies. And those people who liaise with all the different insurance companies.

In other words, rather than an extended Medicare system, you are assuming the current system with Medicare paying all the bills.

Remember, the US government spends more money per citizen on healthcare than what most governments spend to cover 100 % of their populations. And then the US population has to spend even more on insurance plus out of pocket.

[jasg]

IMHO, attributing the total cost of MFA to tax increases is incorrect. It ignores the fact that currently, healthcare costs are shared between the insured and either the government or employers. Even current Medicare beneficiaries pay 20% of all costs, with no out-of-pocket cap unless they buy additional private coverage. I see no reason why this could not continue.

So, for the ~50% of workers have employer health insurance - employer contributions would/should continue under MFA. According to this KFF report, the average employer share is almost $5000 for a single employee. For a family, the employer contribution is more than $13,000.

For a family, the total premium is $18,687.

All figures are for 2017.

[Northern_Piper]

@Horatio_Hellpop

Does the average Canadian or British or French worker pay that much in healthcare taxes? I doubt it. I also doubt they pay $800 for saline drip or $2000/month for insulin.

Correct on both points.

Here in Canada, health care is paid for out of general tax revenue, just like police, fire services and highways. It’s a public service and there are no specific payroll taxes for health care.

And no bills for individual health services, either doctors or hospitals.

And no paying for the admin cost of private insurers.

[Muffin]

@Horatio_Hellpop

Does the average Canadian or British or French worker pay that much in healthcare taxes? I doubt it. I also doubt they pay $800 for saline drip or $2000/month for insulin.

When compared to Americans, Canadians live longer, live healthier longer, pay less out of their pockets, and pay less through their tax dollars. https://boards.straightdope.com/sdmb/showpost.php?p=5456070&postcount=10

[Chronos]

And we’re not talking about “after some modest overhead is reduced”. The overhead is about half of the total, if we can judge from all of those non-exceptional countries with half our total cost.

[Linden_Arden]

@PastTense

You state GNP is $19.39 Trillion dollars and there are 138 million workers. Divide this and that means $140,500 per worker. So your $23,000 is not that big a chunk (16%-17%) of that $140,500. Personally most of know only a limited number of people making that kind of money. But in any event we plan to tax people progressively to pay for Medicare for all (for example the federal share of Medicaid and Veterans Health benefits and federal government employment health insurance benefits are already paid this way).

Americans earned nearly $7.3 trillion in wage income in the most recent tax year for which data has been finalized, according to the IRS, and they paid Medicare tax on every penny of it.

(same source as OP)

[Linden_Arden]

@Chronos

And we’re not talking about “after some modest overhead is reduced”. The overhead is about half of the total, if we can judge from all of those non-exceptional countries with half our total cost.

Need citation on that.

The most detailed study I have seen only shows MFA saves $2 trillion over a ten year period.

Keep in mind other countries tightly control provider salaries and fees. Gutting salaries for medical professionals is a sure loser.

According to the Mercatus model, total health spending would actually come in about $303 billion lower in 2031 than under current projections, with $7.35 trillion going to healthcare that year versus $7.65 trillion expected now. Total national health spending would be $2 trillion lower from 2022 to 2031 under the plan, the report found.

That study going around on Bernie Sanders' 'Medicare for All' plan comes with...

[Grim_Render]

@Linden_Arden

Not with taxes.

Some candidate will be forced to state how much in higher taxes will be required. And taxes are paid by workers/investors. Since I generally favor Democrats I don’t want the poor sap to be forced into this position when it is too late.

I support the ACA and the status quo.

“Hey, we’ll send you the bill later” is not good enough.

You can do a rough back of the envelope calculation pretty easily. Medicare enrolls 55.5 million people (2015) and has a budget of 700 billion dollars. But the overwhelming number of medicare enrollees are over 65, a group that is 4x as expensive in healthcare terms as the average under-65. So you’d need about 835 billion more to cover everyone.

However, you wouldn’t need Medicaid anymore, they’d be on Medicare. Thats 582 billion (2015). So you’d need to come up with 253 billion.

But wait! You would not need the VHA. They’d all be on medicare. Thats 199 Billion (2019)- So it’d cost 54 billion.

**Except! **You might not need the IHS, depending on how you set it up. So thats 6 billion. Now you need 48 billion.

**Hold on! **You could cut CHIP, thats an additional 12 billion. So now you need 36 billion. (I believe you should still keep the childrens healthcare free though, so maybe not cut that?)

So on the order of 36 - 48 billion. Using your numbers of 138 million workers, you’d be adding about 260 -350 $ in taxes per person per year. (Feel free to check my math, its really late here and I’ve been drinking.)

**Only we’re not done! **Currently out-of-pocket expenses are 365 billion. You wouldn’t need most of them any more. So your average taxpayers total expenses are lower by 1150 before he gets the 300 extra tax bill.

Furthermore! Private health insurance is 1184 billion per year. You won’t need anywhere near as much as that. Thats a further reduction of 3 700 per citizen. More per working person of course, about 8500 Employers can use that on more investment, increased profits, research or expanding and creating more jobs.

Now let us check the numbers… Today you spend 10 700 per person on healthcare. Under this setup you'd spend 4 800 per person, plus whatever extra already covered people decided to spend on insurance and out of pocket, since medicare does not pay every cent of the bill. So maybe 6000 - 6500 $ per person ?

And it turns out that 6 000 is pretty average for a nation with the US GDP per person. By the magic of Christmas, it turns out that the laws of economics work the same for everyone!

[Riemann]

@Linden_Arden

Not with taxes.

But the economics are exactly the same. You’re getting paid less because your employer has to pay for your healthcare. The money to pay for your current healthcare doesn’t come from magic. It comes out of your pocket for the work that you do, one way or another.

Again, the most sensible way to fund healthcare is from general taxation, since it’s then effectively a compulsory global insurance pool. Pretty much every nation on earth except the U.S. has figured this out.

[Linden_Arden]

@Riemann

But the economics are exactly the same. You’re getting paid less because your employer has to pay for your healthcare. The money to pay for your current healthcare doesn’t come from magic. It comes out of your pocket for the work that you do, one way or another.

Again, the most sensible way to fund healthcare is from general taxation, since it’s then effectively a compulsory global insurance pool. Pretty much every nation on earth except the U.S. has figured this out.

So how much will worker taxes rise? We know they will rise considerably.

That is the pertinent question here. Avoiding an answer is irresponsible. I have yet to find a MFA proponent that will provide an honest answer.

[Riemann]

@Linden_Arden

So how much will worker taxes rise? We know they will rise considerably.

That is the pertinent question here. Avoiding an answer is irresponsible. I have yet to find a MFA proponent that will provide an honest answer.

No, implying that universal healthcare will cost people extra money overall is irresponsible and dishonest.

[Ravenman]

@Linden_Arden

So how much will worker taxes rise? We know they will rise considerably.

That is the pertinent question here. Avoiding an answer is irresponsible. I have yet to find a MFA proponent that will provide an honest answer.

Once again, the answer to this depends on your definition of “average worker.”

So, please respond: how much did the average worker pay in Federal income taxes last year (or any recent year of your choosing)?