I wanted to get this idea published in the Newspaper of Record for Missouri before I heard someone else say it. I’m sure it has been said before and perhaps even several times, but it is new to me and here it is:
There has been a lot of talk, especially if you paid attention to the Democrat Party primary debates, about the concept of governmental financing of health care using, of course, our taxes. My own position is easy to figure out, and I’d guess you have a pretty strong opinion as well.
Our government has always provided some things for us from the very beginning of our country like a military to protect us from nation states not friendly to us, roads so we could travel about, courts to offer us justice, police to protect us locally, and then fire departments, public schools, and so on. In the mid 1930’s the government began to administer a retirement system for older Americans (Social Security) and in the mid 1960’s a medical insurance program as well (Medicare). Those worrying about “creeping socialism” are just a little late, wouldn’t you say?
Now, we have heard about a medical insurance program or programs administered by Uncle Sam that would cover everyone. It goes by various names and in various garbs but is essentially using taxes to pay for everyone’s medical care. Each of the programs is a little different and those supporting them and those opposed seem to make an art form out of the confusion each generates to buttress their positions. I am certainly not going to try to clear up the miasma of misinformation, distrust, greed, altruism. That’s for you to do on your own or led by others; But there is one aspect of, I’ll call it Medicare For All (MFA), that I’ve been thinking about.
I’ve been told that when an employer hires someone for full-time work, the salary paid to the employee is only a fraction of the cost the employer pays.
I have never owned a business with employees so the information I’m relating is all second-hand, you should check it out by speaking to such an employer, but I have heard it a lot so it just might be fairly accurate.
I’ve heard that one’s full-time salary is often only 50% of the cost paid by the employer. There are the benefits and the taxes paid for by the boss. There are unemployment taxes, social security taxes, and so on that the employer must pay. In addition, and perhaps even more expensive, are the benefits.
The benefits are almost always voluntary and the employer could choose to omit them, but some have become so expected that full-time employment is sometimes defined by whether those benefits are paid or not. Some of the benefits an employer pays such as a company car, rent assistance, gym memberships, extended vacations can get pretty fluffy and the costs add up but the employer can modify or cease them as business profitability directs. Some not-for-profit organizations (like government itself) offer enhanced benefits in place of higher salaries to attract workers. But one benefit that is almost always offered by all employers, public and private, is health insurance. And it is expensive. Sometimes the most expensive benefit of all.
This is what I haven’t heard anyone else say: If government takes on the task of providing health insurance to all, and employers no longer have to provide health insurance to their employees to keep them, why can’t employees ask for raises in their salaries and share in some of the windfall “extra cash” their employers will experience when no long providing health insurance?
Of course, I understand that taxes must increase to pay for the new governmental program of Medicare for All; taxes paid by both employers and employees. But won’t there be some money left laying around? After all, all medical bills are not paid by someone, and the majority of those are paid by insurance companies which, after paying them all, make a profit. And, since those insurance companies are run pretty much “cost plus” (perhaps the subject of another column someday) their profits are pretty much guaranteed. I mentioned cost plus as a response to those who might say that government is so wasteful and inefficient that it could never run an insurance program as well as a private company. I might also add that our present Medicare system runs on a margin of, I’ve been told, about 2 – 3%, while insurance companies rack up profits in the neighborhood of 10-15%.
But, there is still the specter of increased taxes on everyone. And that’s a big deal. So, how much of a tax increase, and who is going to shoulder it? If we knew that those making yearly incomes of millions of dollars would have to pay more of the bill while those making barely a living wage would pay much less, and those in between a proportional amount, would I care? Wouldn’t it still boil down to “how much will I have to pay?”
I haven’t seen any figures I would depend on to make that decision, and I am sure that whatever program mandates we heard in the beginning, those mandates would be subject to change later on. And let’s not forget the undeniable fact that when there is that much money circulating through a program as monstrously large as MFA, there is going to be some shenanigans deluxe!
Still, there is at least the possibility that even after some tax increases on employers are manifested, the cost to the employer will be less than providing health insurance for all employees. And if that happens, will employees get some of the “extra?”