By Richard Master
Earlier this week, former vice president and current presidential hopeful Joe Biden made one of the more unusual arguments against Medicare for All.
“Right now you have this … overwhelming number of employers who are paying into the health care plan. Why let them off the hook? All the sudden they don’t have to pay anything?”
I’m one of those employers, and I’m supportive of Medicare for All, but it’s not about being let off the hook. As the founder and CEO of a business that has always provided health care for our employees, MCS Industries, I’d rather pay a predictable, manageable payroll tax to finance health care than pay impossibly high and unpredictable premiums.
Last year, MCS, a company with 200 employees, paid over $2 million in insurance premiums. That cost is astronomical, and only expected to grow. In 2018, the average premium cost in America was $6,896 for single coverage and $19,616 for family coverage. Over 10 years, those costs have increased by 55% nationally. No business owner knows what their cost is going to be one year to the next, which makes it almost impossible to plan for long-term growth.
With rising costs, businesses have to get creative about how we manage our overhead. There’s a lot to consider: What are our employees health care needs? Are there enough in-network providers in the area? Do we offer family plans, vision, or dental? Most of us aren’t insurance or health care experts, and don’t have the expertise to easily navigate the complicated system.
Sometimes, to get costs under control, business owners need to switch plans or providers to lower premiums, which might mean higher deductibles or out-of-pocket costs for employees. That’s borne out in evidence: Employee deductibles have risen 212% over the last decade, raising out-of-pocket costs enough to negate wage increases.
Even if those corners do get cut, rising premiums always mean there’s less money for the things businesses actually want to do: raise wages; enter new markets, create new product lines, and hire new employees.
Medicare for All is about freeing up businesses and the middle class while reducing our national health care bill.
We can lower overall health care spending by cutting out a massive intermediary (insurers), streamlining the financing of care by converting from a multi-payer to single-payer system, and strengthening negotiating power for rates. Medicare operates at a significantly lower administrative cost than does commercial insurance, and doesn’t use money for things like inflated executive salaries, advertising, or sales.
Medicare for All would save money on the provider side as well. Currently, the average primary care provider in the U.S. spends about $100,000 a year on dealing with commercial insurance companies, which all have different systems and standards for filing claims, and are financially incentivized to deny them—which usually means appeals. Finally, Medicare for All would have leverage to control pharmaceutical costs, bringing us much closer to international standards, and would be able to standardize rates at hospitals and other providers, which frequently overcharge or are inconsistent on costs.
We can finance Medicare for All by replacing the current system’s premiums, deductibles, copays, and other out-of-pocket costs with a progressive system that fairly taxes capital gains, dividends, and payroll. Economists have estimated the potential savings to be more than $5 trillion between 2017 and 2026.
The vice president, who is fond of referring to himself as “Middle-Class Joe,” has good reason to embrace Medicare for All. A large part of any new health care system will be payroll taxes, which are largely covered by employers. The remainder are paid by employees, and since the taxes are based on income, the wealthiest would be asked to pay a bit more—further evening the playing field.
Medicare for All doesn’t let employers off the hook, but it does keep commercial insurance companies from fishing us into extinction.
Richard Master is the CEO of MCS Industries and founder of the Business Initiative for Health Policy.