The numbers: Private Health Care VS Single-Payer
I’ve been arguing with a certain individual about health care and as a result I’ve looked up lots of numbers. Since this information is likely to be useful for anyone talking about health care I’ve decided to share it—some might call it being a good Samaritan.
How much do we pay for health insurance?
Employers:
9.95% of salaries: In the U.S. employers currently pay on average 8.5% of their payroll on private health insurance (goes up every year). They also pay 1.45% on Medicare taxes for a total of 9.95% of their payroll.
Employees:
Varies: Family health care premiums for employees are currently averaging about $3000 annually (taken from here) regardless of how much a person makes (no idea how good that coverage is). Therefore; the more money you make the less of a percentage it is of your income. Also, the less money you make the more of your money you’re devoting to health insurance premiums. This does not include co-pays for doctor’s visits, hospital care, drugs, etc.
Totals:
$2.16 Trillion: That’s how much the U.S. spent on private health care in 2006. Or, about 16% of the U.S. GDP.
~25%: That is how much of every dollar spent on health care in the U.S. goes to corporate profits, executive salaries, advertising, marketing, and the cost of paperwork (related to billing). In other words, that’s the overhead of private health care. Otherwise known as “inefficiencies”.
How much would we pay in a single-payer system?
The following assumes that HR 676 is what we go with for a single-payer system
Employers:
4.75%: 3.3% on top of the 1.45% they’re already paying for Medicare via payroll taxes (i.e. not taxed on income).
Employees:
1.45%: What you already pay for Medicare. HR 676 does not call for increased income taxes on individuals unless you’re in the top 5% of income earners (more below).
The Rich:
6.45%: The top 5% of income earners will have to pay a “health tax” on top of their existing 1.45% to Medicare. How much money do you have to earn to break into the top 5%? According to the IRS, about $137,000 (AGI)/year (AGI stands for Adjusted Gross Income which is IRS BS for about $330,000/year in reality—this is an injustice in itself, I’ll put more info in the comments).
Totals:
1.85 Trillion: That is a conservative estimate of how much it would cost yearly to give all Americans health coverage with zero co-pays and no premiums (i.e. free health care). It will probably cost considerably less (the reduced drug prices and paperwork costs alone could cut this figure in half).
3%: The overhead associated with a single-payer system. You can’t get away from all the paperwork, just most of it. This is actually the overhead associated with Medicare right now (believe it or not).
Other scary statistics:
- On average, if you’re under 65 and already spending more than $2000 on health care, you’re spending 41.3% of your income on it (2003 figure from the nchc.org link above).
- Half of all bankruptcy filings in 2006 were the partly result of medical expenses. 68% of them had health insurance.
- 30% of Americans say someone in their family delayed getting treatment (in 2006) due to the high cost of health care.
- Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
- 46 million Americans have no health insurance whatsoever.
3 Responses to 'The numbers: Private Health Care VS Single-Payer'
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on July 9th, 2007 at 1:25 pm
Regarding the IRS’s Adjusted Gross Income (AGI) figure: Everyone knows that there are tax loopholes, tax deductions, and tax credits. What everyone doesn’t know is that the richer you are, the more of them you get. So even beyond Bush’s tax cuts for the wealthy (which saved the top 1% $200 billion) the rich have a wider array of investments and income sources which gives them the power to take advantage of more loopholes, deductions, and credits than the middle class or the poor.
Example: You can deduct mortgage interest from your taxes. So if you own two very expensive homes you can write off more interest than the average person while at the same time funneling your money into an asset (the home). Therefore; the rich can seriously reduce their taxes by simply buying up property (which is what lead to our current housing market problems).
Another example: If you’re rich you can funnel money (in many effective ways) into an S-corp and pay yourself a lower salary (that is still loads of money) than what would be your typical income to significantly reduce your taxes. Anyone can do this, of course, but to do so at a mid-range income level is not very fruitful (the costs of setting up the S-corp outweigh the tax savings). Also, most working-class stiffs would be hard-pressed to give up their employer’s benefits in favor of tax savings (re-hiring them through the S-corp). For more info on how this works, see this:
http://www.mymoneyblog.com/archives/2006/07/forming_an_scor.html
Note: John Edwards earned $5-11 million a year from 1995-1998 via this method while reporting his salary as $360,000 (which is what the IRS saw). More here:
http://www.nytimes.com/2004/07/10/politics/campaign/10edwards.html?ex=1247198400&en=1cfa7c7d7d980f2e&ei=5090&partner=rssuserland
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“The road to injustice is paved with gold.”
on December 16th, 2007 at 7:59 am
Steve Jobs has an income of $1.00 a year. By your analysis, he would pay nothing. Other wealthy individuals would do the same as your previous commenter noted
Are you experienced with the Veterans Administration? If this is government run health care, count me out
46 million Americans have no healthcare for a number of reasons, including millions of 20-somethings not wanting it. And everyone of those 46 million (who came up with that number, and why should we believe them?) can go to the ER - and do so - on a regular basis. Not optimal, but healthcare is always available.
Now, changing the model to preventative healthcare instead of reactive healthcare might change the whole issue.
on December 16th, 2007 at 10:19 am
Horatio, there’s several fatal flaws with your arguments…
Firstly: Steve Jobs makes a hell of a lot more than $1.00 a year. You’re confusing his salary at Apple with his actual income. Apple pays him in stock which he then cashes out whenever he needs money (that, plus his salary/stock from Pixar and the millions he makes in interest from his savings accounts). If you want to complain about the rich not paying enough in taxes that is an entirely different matter…
Every time Steve Jobs sells stock he pays the 18% capital gains tax on it. If he were paid an equivalent amount of money in salary he’d be paying 35% income tax (the highest income tax bracket). So next time you want to complain about the rich having unfair advantages pick a better battle.
Second, the VA’s heath care program consistently ranks higher than the best private health insurance in the U.S.–in every category! You need to get the facts before you start making such arguments. Read more here, here, and here. Their quality of care is better *and* their customer satisfaction is higher.
Not only is the VA health care system better than our private one it is also cheaper. The overhead associated with private health insurance companies is about 31%. That means that for every 100 dollars we spend on health insurance $31 goes to pay for things like advertising, paper pushing, and other administrative costs (I know it is a cliche, but I’m going to say, “CEO yachts”). What does the VA pay in overhead costs? 1%! That’s right: ONE PERCENT.
There’s other benefits to the VA system which are due to the fact that it is a single-payer system such as better medical records.
Finally I’d like to add that you’re a victim here. That’s right: I don’t think it is your fault that you’re ignorant to these facts. The health care industry pays loads of money (thanks to our high premiums) in marketing and advertising to make sure that they appear to be better than they are. This “we’re great!” advertising goes on the same television networks that sensationalize the VA’s health care problems (it does have them).
Then again, you might just an astroturfer that was paid by the health care industry to post your comments. In which case you should be ashamed of yourself.
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