“But How Are You Going to Pay For It?”

How much would Medicare for All cost if we made employers pay most of the bill, as they do now? Let’s take a horseback guess.

  • CMS estimates total health care spending in 2018 of $3.6 trillion.
  • About 55 percent, or $2 trillion, is covered by private sources, mainly corporations. The rest is already paid for by state and federal governments.
  • Of this, perhaps 20 percent would be paid by individuals in the form of copays. This is about the average for health care plans in other countries.
  • The total outlay for employers is therefore $1.6 trillion.
  • Approximately 112 million people are currently employed in large corporations.
  • That comes to $14,000 per employed person. Currently, large corporations pay about $10,000 per employee in health care costs.

There are several options left to us here:

  • We could make large corporations pay $14,000 per employee. They’d just have to suck it up.
  • We could keep them at their current rate of $10,000 and raise the remaining $400 billion elsewhere, perhaps from some combination of higher taxes on the wealthy and a small VAT.
  • We could make all but the very smallest employers pay a head tax. With a larger tax base, the cost per employee drops to $11,500 and there’s very little to make up.

This is rough, but it’s the basic lay of the land if we’re willing to make corporations continue to pay for health care at the same rate they pay now. They’d have no real beef since it would cost them nothing more and would free them from the overhead cost and hassle of dealing with health care. There’s also a strong chance that the head tax would rise more slowly than it does now, since government-run health programs almost invariably cap cost growth better than the private sector.

This is a slightly more detailed version of my post the other day asking, yet again, why Democrats don’t propose this as the funding mechanism for M4A. Other countries do this without a problem, and there’s no special reason we can’t do it too. It certainly makes it far easier to provide a cogent and popular answer when reporters ask, “But how are you going to pay for it?”

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