[personal profile] dmaze
Let's say, hypothetically, that Bernie Sanders wins the election, and even more hypothetically, pushes through national single-payer health insurance and a corresponding IRC change that employer-provided health insurance is no longer a deduction.  This of course causes massive upheaval in the health insurance industry; but what effect does it have on a typical employer?

(You can ask a similar thought question about the proposal of just giving a handout to every person in the country that should be able to provide basic food and shelter, and simultaneously reducing minimum wage to zero.)

For full-time employees with benefits, health insurance is a major expense. This 2013 CNN article asserts that employers, on average, pay $10,000 per employee for health insurance to cover their families (less for single employees); the Kaiser Family Foundation has more current and detailed data. This is offset somewhat by it being a corporate tax deduction, but if mean wage (top-line W-2 number) is around $44,000, then health insurance is a giant fraction of your labor costs.

(Look at that last link! Wow! Median salary is under $29,000 for 2014. If you're paying an employee under $30,000, are you also buying insurance for them at $5,000-10,000 a pop? And that's half the country. See also "why the ACA is important".)

So the Sanders plan happens. Who pays for it? If you shift this entire cost to personal income taxes, then companies suddenly gain $5-10K per employee per year, and I'm guessing most companies won't give out raises just because, so it's a huge handout to corporations. And even assuming the US system loses 2x to inefficiencies in the private insurance system, you're giving employees back their $1-5K premiums at the cost of $3-9K (on average) in income tax. The flip side of this (remember, in this hypothetical, Sanders is president) is that tax rates can be progressive, so you could tune this so that the bottom fraction of workers get health insurance, the middle fraction of workers roughly break even (their taxes match their previous premiums), and the top fraction pays for the whole thing.

Another setup is to just outright try to match the current split: health insurance is like Social Security or Medicare and there's a direct payroll tax paid by both employers and employees. You could try to tune this so that the employer fraction of the tax is 80%, maybe a little less, and it would basically be identical to the current scheme in terms of who pays what. Of course, if the rollout and the economy are anything less than stellar, the giant new tax on corporations is going to give the opposition a huge talking point to try to shoot down a second Sanders term.

And as I hinted at the top, this would be a huge transition. What happens to the entire current health insurance industry? On the flip side, who administers the new giant national health insurance program? Do bad things happen when American patients stop paying for all first-world drug development? If they can start from a clean slate, can a mass of unelected bureaucrats in government actually do a better job than a mass of unelected bureaucrats in private industry?

Date: 2015-11-19 10:59 pm (UTC)
desireearmfeldt: (Default)
From: [personal profile] desireearmfeldt

Thanks for posting this -- not sure I have anything interesting to contribute to the conversation at the moment...



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