Running some rough numbers on medicare for all

[ksen]

I did some quick math to try and figure out about how much it should cost, all else being equal, to put in place medicare for all.

Currently the medicare population is about 17.25% of the US population (55 million out of 318.9 million). Current total medicare taxes are 2.9% split evenly between employee and employer so 1.45% each.

Given that the total US population is 5.88 times the size of the medicare population then it should follow that medicare taxes should have to rise 4.7 times to cover the 80% or so of the remaining non-medicare population (5.88*80%). Multiplying the current medicare tax rate of 2.9% by 4.7 times results in a new medicare tax rate of 13.63%. This new rate would, theoretically, also by split 50/50 between the employee and the employer which would be 6.825% each.

Assume an employee that earns $14/hr. Over a two-week, 80 hour, payroll period that employee grosses $1,120. Medicare currently takes $16.24 each pay period for a combined employee/employer medicare cost of $32.48 per pay period.* Under the new rate that same employee would have medicare taxes of $76.44 take out of her paycheck. An increase of $60.20 a pay period. The new total combined employee/employer medicare taxes would be $152.88, which is $120.40 more than the old medicare cost.

Using my company as an example our lowest cost health insurance plan covering just the employee costs $290.70 per pay period. Currently that $290.70 cost is split between the employee and the employer. Under the medicare for all costs explained above that would result in a combined net savings of $170.30 per pay period or $4,427.80 annually per employee.

And that only takes into account employees that take the employee only insurance option. Employees that take employee+ insurance options would save even more under the above medicare for all tax scheme.* Using my company again the cheapest family plan is $828.48 a pay period. Replacing that with medicare for all would result in a combined net savings of $675.60 per pay period or $17,565.60 annually.

I know the math and assumptions above are extremely simplistic but I think it should be within the reasonable ball park. In fact I think I may be overestimating how much medicare taxes would have to go up since the current rate is designed to cover the part of the population that is the most expensive to cover and utilizes the greatest share of our healthcare resources.

Anyone see any problem with my maths or assumptions?

So in my mind anyone that says medicare for all would be too expensive or it would kill business or just plain too hard is full of shit and either hasn't actually tried running some numbers or don't really care that the numbers would lead to a cheaper system because their objections are pure ideology.

I'm hoping someone like aa can come along and check my assumptions and some math nerds to check my math.

 

[dismal]

Just agree to a reasonable cost cap at the US Constitutional level and I'm in.

Maybe not Cuba level of spending but it seems like we ought to be able to do it at France level. This appears to be about $3400 per capita, BTW.

https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita

 

[Jimmy Higgins]

I did some quick math to try and figure out about how much it should cost, all else being equal, to put in place medicare for all.

Currently the medicare population is about 17.25% of the US population (55 million out of 318.9 million). Current total medicare taxes are 2.9% split evenly between employee and employer so 1.45% each.

Given that the total US population is 5.88 times the size of the medicare population then it should follow that medicare taxes should have to rise 4.7 times to cover the 80% or so of the remaining non-medicare population (5.88*80%). Multiplying the current medicare tax rate of 2.9% by 4.7 times results in a new medicare tax rate of 13.63%. This new rate would, theoretically, also by split 50/50 between the employee and the employer which would be 6.825% each.

One big issue is you are simply looking at age, not the representative cost of health for those on Medicare. Those currently on Medicare are generally more expensive to insure for health care. If younger people are added in, their cost of the system is much lower. Of course, they are making less money too, so the math is a bit (much) more complicated.

Regardless, it is definitely doable. At least on paper.

 

[Elixir]

If younger people are added in, their cost of the system is much lower. Of course, they are making less money too, so the math is a bit (much) more complicated.

Regardless, it is definitely doable. At least on paper.

Certainly so. And ksen's model fails to account for the vast purchasing power that a single-payer entity would wield.
And THAT is the main factor that is religiously disregarded by every other proposal. The actual COST of health care in the US is hugely inflated for no other reason than to provide massive profits to large corporations (mainly Pharma). Single payer would also allow for consolidation of administrative functions, currently spread out in a tangled morass of insurance Companies, billing Companies etc., and there very significant efficiencies to be gained if we were to commit to a single payer system.

If ksen's model were accurate, there would be no countries offering their citizens better, cheaper health care under the single payer model, and we all know that's not the case.

 

[ksen]

Just agree to a reasonable cost cap at the US Constitutional level and I'm in.

Maybe not Cuba level of spending but it seems like we ought to be able to do it at France level. This appears to be about $3400 per capita, BTW.

https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita

In your link France is $4,400 not $3,400 per capita.

 

[ksen]

I did some quick math to try and figure out about how much it should cost, all else being equal, to put in place medicare for all.

Currently the medicare population is about 17.25% of the US population (55 million out of 318.9 million). Current total medicare taxes are 2.9% split evenly between employee and employer so 1.45% each.

Given that the total US population is 5.88 times the size of the medicare population then it should follow that medicare taxes should have to rise 4.7 times to cover the 80% or so of the remaining non-medicare population (5.88*80%). Multiplying the current medicare tax rate of 2.9% by 4.7 times results in a new medicare tax rate of 13.63%. This new rate would, theoretically, also by split 50/50 between the employee and the employer which would be 6.825% each.

One big issue is you are simply looking at age, not the representative cost of health for those on Medicare. Those currently on Medicare are generally more expensive to insure for health care. If younger people are added in, their cost of the system is much lower. Of course, they are making less money too, so the math is a bit (much) more complicated.

Regardless, it is definitely doable. At least on paper.

I did acknowledge in the op that I'm probably overestimating the tax rate for that very reason.

 

[dismal]

Just agree to a reasonable cost cap at the US Constitutional level and I'm in.

Maybe not Cuba level of spending but it seems like we ought to be able to do it at France level. This appears to be about $3400 per capita, BTW.

https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita

In your link France is $4,400 not $3,400 per capita.

Go down to the chart that splits public and private spending. The government spends about $3400 per capita.

 

[ksen]

In your link France is $4,400 not $3,400 per capita.

Go down to the chart that splits public and private spending. The government spends about $3400 per capita.

Ok, thanks.

 

[ksen]

Just agree to a reasonable cost cap at the US Constitutional level and I'm in.

Medicare is already a constitutionally valid program. That shouldn't change if it was expanded to cover everyone.

I don't know why extra constitutional hurdles need to be added. Well, other than to maintain ideologically driven opposition to single payer healthcare.

 

[dismal]

Just agree to a reasonable cost cap at the US Constitutional level and I'm in.

Medicare is already a constitutionally valid program. That shouldn't change if it was expanded to cover everyone.

I don't know why extra constitutional hurdles need to be added. Well, other than to maintain ideologically driven opposition to single payer healthcare.

Hmm, not sure what this has to do with the words I wrote.

I obviously can't be described as being "against single payer healthcare" when I just said I'd be for it if a certain constraint were in place.

 

[Toni]

A huge flaw is based on the assumption that Medicare rebuts enemy's actually cover the costs of services provided. They do not and the gap is widening greatly.

The other assumptions are that Medicare expansion will cover usual and customary costs for care for all. That is an assumption I would not make.

 

[Loren Pechtel]

1) You need to add the medicaid spending to this. (Admittedly, the government is already spending it, it would just be relabeled.)

2) Medicare is not very good coverage.

 

[ksen]

1) You need to add the medicaid spending to this. (Admittedly, the government is already spending it, it would just be relabeled.)

2) Medicare is not very good coverage.

1) Why?

2) Which explains why seniors are clamoring for it to go away I guess.

 

[dismal]

1) You need to add the medicaid spending to this. (Admittedly, the government is already spending it, it would just be relabeled.)

2) Medicare is not very good coverage.

1) Why?

2) Which explains why seniors are clamoring for it to go away I guess.

If I pay into the Government Pizza Fund my whole life and then finally become eligible for free pizza at 65, I don't root for the free pizza to go away because it isn't as good as most pizza.

 

[Alcoholic Actuary]

I did some quick math to try and figure out about how much it should cost, all else being equal, to put in place medicare for all.

Currently the medicare population is about 17.25% of the US population (55 million out of 318.9 million). Current total medicare taxes are 2.9% split evenly between employee and employer so 1.45% each.

Given that the total US population is 5.88 times the size of the medicare population then it should follow that medicare taxes should have to rise 4.7 times to cover the 80% or so of the remaining non-medicare population (5.88*80%). Multiplying the current medicare tax rate of 2.9% by 4.7 times results in a new medicare tax rate of 13.63%. This new rate would, theoretically, also by split 50/50 between the employee and the employer which would be 6.825% each.

Assume an employee that earns $14/hr. Over a two-week, 80 hour, payroll period that employee grosses $1,120. Medicare currently takes $16.24 each pay period for a combined employee/employer medicare cost of $32.48 per pay period.* Under the new rate that same employee would have medicare taxes of $76.44 take out of her paycheck. An increase of $60.20 a pay period. The new total combined employee/employer medicare taxes would be $152.88, which is $120.40 more than the old medicare cost.

Using my company as an example our lowest cost health insurance plan covering just the employee costs $290.70 per pay period. Currently that $290.70 cost is split between the employee and the employer. Under the medicare for all costs explained above that would result in a combined net savings of $170.30 per pay period or $4,427.80 annually per employee.

And that only takes into account employees that take the employee only insurance option. Employees that take employee+ insurance options would save even more under the above medicare for all tax scheme.* Using my company again the cheapest family plan is $828.48 a pay period. Replacing that with medicare for all would result in a combined net savings of $675.60 per pay period or $17,565.60 annually.

I know the math and assumptions above are extremely simplistic but I think it should be within the reasonable ball park. In fact I think I may be overestimating how much medicare taxes would have to go up since the current rate is designed to cover the part of the population that is the most expensive to cover and utilizes the greatest share of our healthcare resources.

Anyone see any problem with my maths or assumptions?

So in my mind anyone that says medicare for all would be too expensive or it would kill business or just plain too hard is full of shit and either hasn't actually tried running some numbers or don't really care that the numbers would lead to a cheaper system because their objections are pure ideology.

I'm hoping someone like aa can come along and check my assumptions and some math nerds to check my math.

Few things here (and I'm assuming your research and numbers are accurate):

1) The cost to cover current medicare people is 2.9% for 55m people. We want to cover Everyone, right? So we still need the current 2.9% tax to cover current medicare folks. The 13.63% is 'in addition' to the 2.9%? It looked like your calculation only calculated a rate for the 80% not on medicare. I think the new total tax rate should just be the 5.88 factor * 2.9% = 17.052%

2) There is a mismatch between the people being covered and the people paying the premium. That is intentional in medicare but not in your standard health insurance premiums (you correctly identified this when you mentioned the difference in price for a family of 4 vs an individual and higgens also correctly identified that medicare covers aging populations - which are generally more expensive, but then I don't think medicare covers pediatric care or births).

It's a great first effort and I am confident we could expand medicare for all in an affordable way.

However I would stop short at calling your estimate conservative. It could very well be at or below your estimate depending on how closely we want to mimic the medicare coverages. Once we depart from those it could be higher.

aa

 

[Nice Squirrel]

This analysis is fine and all, but think of the rich executives who will need to invest in areas outside of healthcare.

 

[Alcoholic Actuary]

I did some quick math to try and figure out about how much it should cost, all else being equal, to put in place medicare for all.

Currently the medicare population is about 17.25% of the US population (55 million out of 318.9 million). Current total medicare taxes are 2.9% split evenly between employee and employer so 1.45% each.

Given that the total US population is 5.88 times the size of the medicare population then it should follow that medicare taxes should have to rise 4.7 times to cover the 80% or so of the remaining non-medicare population (5.88*80%). Multiplying the current medicare tax rate of 2.9% by 4.7 times results in a new medicare tax rate of 13.63%. This new rate would, theoretically, also by split 50/50 between the employee and the employer which would be 6.825% each.

One big issue is you are simply looking at age, not the representative cost of health for those on Medicare. Those currently on Medicare are generally more expensive to insure for health care. If younger people are added in, their cost of the system is much lower. Of course, they are making less money too, so the math is a bit (much) more complicated.

The age issue is definitely true for men. I don't think the same is necessarily true for women. Generally women are cheaper to insure after they hit menopause. End of life care is always the most expensive, and people are living longer now.

aa

 

[RavenSky]

One of my favorite resources on this topic: http://www.pnhp.org/publications/pnhp-proposals

 

[Elixir]

One of my favorite resources on this topic: http://www.pnhp.org/publications/pnhp-proposals

From the last link at that page:

"After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States
and 16.7 percent of health care expenditures in Canada."

That's YUUUGE. Again, add in the bargaining power of a single-payer entity to deal with Pharma Companies, and the savings would more than offset any increase in per-capita spending, assuming that coverage is not extended well past what Medicare offers.

Personal anecdote: for thirty+ years I've been paying for catastrophic policies for my wife and myself, to the tune of an average of about $9500/year, with $10k deductibles for each of us. In all those years I don't think we have collected a thousand dollars of the $300,000 or so we've paid in. Now I'm on Medicare - about $1400/yr with an annual deductible of $188. (Still paying almost $700/mo for my wife's 10k deductible policy). Today I went to a doc who did some x-rays, then referred me for an MRI for a suspected torn rotator cuff. Probably looking at some laparoscopic surgery... I don't know what the cost to the system will be, but I'm not laying awake at night trying to figure out how to pay for it, or feeling guilty for consuming those resources.

 

[untermensche]

1) Why?

2) Which explains why seniors are clamoring for it to go away I guess.

If I pay into the Government Pizza Fund my whole life and then finally become eligible for free pizza at 65, I don't root for the free pizza to go away because it isn't as good as most pizza.

You are lucky there is anything.

If it were up to people like you there would be nothing.

Millions of the elderly with no insurance at all.

A healthcare system the fraction of what it is.

Millions more out of work.

A healthy third world misery.