As the American healthcare debate rages on, one conversation is what would happen to workers’ employer-sponsored plans under a single-payer system, like Medicare for All.
But if the data on the cost of employer-sponsored plans is any indicator, not many Americans will miss their employer-sponsored health insurance.
For many workers, one benefit offered is health insurance for the worker, paid by the company, with the option to extend coverage to a worker’s family for a monthly premium. This is the most common form of health insurance in the U.S., according to a study from the University of Pennsylvania’s Leonard Davis Institute of Health Economics and United States of Care. That study also shows the premium for family insurance is sometimes one of the biggest sucks on a family’s household income.
In all 50 states, the premium on employer-sponsored health insurance is never less than 24.4% of a family’s household income (Minnesota), and goes as high as 37.1% (Louisiana). On average, the family premium comes out to around 30% of an employee’s check. This is likely due to the fact that the increase in employer-sponsored health premiums outpaced income growth in 46 states.
Family premiums for employer health insurance chews up over 20% of income in every state, around 30% on average pic.twitter.com/0OYQOYd3mi
— People's Policy Project (@PplPolicyProj) April 2, 2019
“In 2016, the national health care cost burden was 30%, representing average premiums of $17,710 and median income of $59,039,” the study read. “Between 2010 and 2016, the average health care cost burden increased from 28% to 30% nationally, with premiums growing faster than incomes (27.7% vs 19.8%). The burden increased in all but four states, including the District of Columbia.”
With family premiums taking up an average of 30% of monthly household income, that would make health insurance premiums just about as expensive as rent. The U.S. Department of Housing and Urban Development states that for a renter to be considered “rent-burdened,” he or she would have to pay more than 30% of their income in rent. This means most Americans are, on average, paying as much for employer-sponsored healthcare as rent-burdened tenants.
To compare, Senator Bernie Sanders (I-Vermont) has said he would fund his Medicare for All proposal partially by increasing the payroll tax to approximately 8%, implementing a 3.7% tax on nonessential goods, taxing net worth over $1 million at 0.36% every year, and raising the tax rate on capital gains to be the same as tax rates on regular income. All told, this would raise an estimated $1.08 trillion — $30 billion more in revenue than the Political Economy Research Institute estimates Medicare for All would cost.
Socialist magazine Jacobin broke down how that cost would impact working-class Americans:
Uninsured families who make $35,000 would pay about $600 in taxes and would no longer face any financial barriers to medical care. Middle-income families who make $60,000 currently spend up to $10,000 per year on health care, while under Medicare for All they would spend only $900 in taxes. High-income families, on the other hand, would see their subsidy disappear and instead begin paying a meager 3.9 percent of their income in taxes.
Again, co-pays and deductibles would completely disappear. High-quality health care would be guaranteed to all as a right. Everyone would have total choice in their preferred provider.
Under Sanders’ plan, private health insurance companies would be eliminated, making the Medicare for All system the only healthcare Americans would use. Americans on employer-sponsored health plans currently paying an average of $17,000/year in family premiums would stand to save thousands of dollars each year on healthcare costs under this hypothetical Medicare for All funding structure.
While Sanders’ plan may initially prove contentious with Americans who like their employer-sponsored insurance — in addition to Americans averse to tax increases — the cost savings of a Medicare for All system would benefit all working-class families.
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.