Stitching Up a Hole in the Safety Net

I’ve been going to lots of political meetings lately. I’ve introduced myself from the front of the room, and I’ve listened to a number of party and organization leaders, candidates, and engaged citizens. We can’t get through one of those meetings – or even most dinner parties or bridge games – without talking about healthcare. I mostly, though not exclusively, hang out with other Democrats, so we aren’t a “repeal & replace” crowd. We do usually agree that the Affordable Care Act could use some improvements, though.

One perennial hot topic on healthcare is Bernie Sander’s Medicare-for-All proposal. This is what the Washington Post said about the proposal (September 14, 2017). “In year one of the plan, Medicare is expanded to cover children 18 and under and adults 55 and up. Over a four-year period, the plan transitions all Americans into a comprehensive package covering most health-care needs, including hospital and primary care, maternity care, and prescription drugs, vision and dental benefits, and reproductive services. The government would be the sole insurer.” [1]

Here’s a sample from the Sanders’ report called Options to Finance Medicare For All. At $10,000 per person, the United States spends far more on health care per capita and as a percentage of GDP than any other country on earth in both the public and private sectors while still leaving 28 million Americans uninsured and millions more under-insured. Today, health care spending in the U.S. accounts for nearly 18 percent of our Gross Domestic Product (GDP) and is on track to total over 20 percent of GDP over the next decade. It is projected that if we do nothing and maintain our current dysfunctional system that we will spend $49 trillion over the next decade on health care. That would be an incredible burden on businesses, working families, and the entire economy.[2]

Those sound to me like compelling economic reasons to stop what we’re doing and move to universal health care. But how do we, the taxpayers, afford it? If it was just “we the taxpayers,” we probably couldn’t. Let’s think for a minute how our medical insurance (for those of us fortunate enough to have it) is paid for.

First, look at the Affordable Care Act. One aspect of the ACA is extended coverage for young adults who need to stay on their parents’ insurance. Another part of the plan opened up insurance marketplaces for people not covered by an employer’s health plan to buy pooled insurance at subsidized rates. The ACA also offered States the chance to expand their Medicaid coverage with significant contributions from the Federal government. Some individuals balked at the requirement that (almost) everyone had to have medical insurance. Insurance companies and their lobbyists haunted the Capitol hallways, waylaying Members of Congress to protest their lost revenue. The Senate Majority Leader and the Speaker of the House led their troops on a quest to up-end the Affordable Care Act to punish President Obama. It’s tough to calculate the unsubsidized premiums, co-pays, and deductibles for ACA plans, but with some research and some windage, we can roughly figure them at around $10,000 for an “average” American family.

Second, consider that the majority of Americans under age 65 who have medical insurance receive it through their employer or their spouse’s or parent’s employer. Most companies share the cost of the policies with their workers and most workers who have this type of group insurance also have co-pays, deductibles, and coverage restrictions. Details in Sanders’ plan show that the annual cost to the employee just for healthcare premiums in 2016 was $5,277 for a family of four. The 2016 cost to employers for health insurance averaged around $12,865 per employee with a family of four. The report doesn’t discuss the related costs to the employees for co-pays, deductibles, and co-insurance. Neither does it mention the additional costs to the employers for managing the employee health plans. Even with just these basic expenses, we can see lots and lots of money coming from employers and employees … and going to insurance companies and medical providers and pharmaceutical manufacturers.

Third, another type of insurance coverage that employers and employees share is FICA – the Federal Insurance Contribution Act. That’s the deduction from our pay that insures us in our old age; that’s Social Security and Medicare. In 2017, the employer and employee each contribute 1.45 percent to the worker’s Medicare account. Self-employed people have to pay the full 2.9 percent themselves. According to the U.S. Bureau of Labor Statistics, the median annual wage for an American worker is $44,148,[3] so we can calculate the average cost of Medicare coverage as $1,280 per employee, per year. When we turn 65 or so, we can begin to use our Medicare insurance, but we still pay for it then through an automatic deduction from our Social Security earnings.

Now we have an idea of the cost of health insurance for employees and employers both for policies for active employees and contributions to Medicare, and the cost of Affordable Care Act coverage. Private, company-subsidized health insurance costs around $18,142 per employee per year; Medicare (also shared by the employer and employee) costs around $1,280; and ACA government-subsidized insurance costs around $10,000 per year, plus 1.45 percent of income for Medicare (or 2.9 percent for self-employment).

The short-take on the Medicare-for-All bill is that employers will pay a 7.5 percent income-based premium to the government and the employee will pay a 4 percent income-based premium to the government. Senator Sanders has a comprehensive explanation of how this plan will provide universal healthcare for all Americans and will save money for employers, employees, and the government. The figures I find most compelling are: employer annual saving = $9,000 per employee; employee (family of four) annual savings = $4,400; government annual administrative savings = $500 billion. Sanders and his Senate colleagues also propose a set of measures that would bring in $2.8 trillion over ten years by imposing fair-share taxes on corporations and wealthy individuals and closing loopholes. [4]

If we judge Medicare-For-All not merely on the economic benefits to individuals, businesses, and the government, we have even more excellent reasons to replace our antiquated, corporatist, seemingly punitive, and occasionally capricious health insurance system. The current Medicare-(just)For-Seniors program does not cover dentistry, optometry, or audiology. (Why it ever seemed like a good idea for people over age 65 to not have coverage for root canals, eyeglasses, or hearing aids is beyond me.) The proposed Medicare-For-All plan does cover those services … even for seniors. Also, Medicare-For-All will have tremendous clout with pharmaceutical companies and, Bernie’s team predicts, could save the U.S. over $113 billion per year. Most importantly, I believe, is that this will truly be universal coverage. All Americans will be able to go to the doctor, receive diagnostic, preventive, and wellness screenings, get their medications, and have necessary procedures. And no American would ever again go bankrupt because of medical bills.

A final word about Social Security. It isn’t an entitlement. It isn’t the government’s money. Baby Boomers, who paid into it their entire working lives, are collecting now. We need to keep the trust fund out of the hands of Wall Street and its Republican minions so that it will be providing security for Gen X, Gen Y, Gen Z , and I suppose, Gen AA.

[1] https://www.washingtonpost.com/news/posteverything/wp/2017/09/14/bernie-sanders-startsthats-startsan-important-conversation-about-health-care/?utm_term=.37b85e4cb423

[2] https://www.sanders.senate.gov/download/options-to-finance-medicare-for-all?inline=file

[3] https://www.thebalance.com/average-salary-information-for-us-workers-2060808

[4] https://www.sanders.senate.gov/download/options-to-finance-medicare-for-all?inline=file

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