How Much Would Single Payer Health Insurance Cost?


Obamacare is dying. Insurance premiums are continuing to haul-ass to the moon and major insurance companies are getting out of the individual market as fast as they can. Half of the country will have 1 choice of insurers when the exchanges open in November. But having only 1 choice will seem abundant to folks in eastern Tennessee and most of Iowa. As things stand now they will have NO individual health insurance available to them for 2018. Absolutely zero. But of course they’ll still have to pay the penaltax for not having insurance.

The Trumpcare bill passed by the House of Representatives won’t change any of this (except for eliminating the penaltax). In fact it will probably make it worse because ending the individual mandate will prompt even more healthy people to drop health insurance. Premiums will shoot past the moon and head for Mars. The remaining insurers will leave the market in droves so that by 2019 most of the country will be an insurance-free wasteland. No health insurance for you!

Voters will be apoplectic and will scream for the government to do something. And you know what Congress is going to do …

… single-payer here we come.

In fact Democratic Congressman John Conyers has already introduced a bill into the House of Representatives to make the progressives’ dream come true – H.R. 676, The Expanded and Improved Medicare for All Act. The bill would do just what its name implies, put everyone in the country on Medicare. It will also outlaw private health insurance. You will be at the mercy of the fuck-ups who managed to drive the health insurance market into the dirt. What could possibly go wrong?

Obviously this bill won’t pass the current Congress but with Paul Ryan and Donald Trump leading the charge into oblivion it is almost certain that the Democrats will regain control by 2021. And when they do Medicare for all will be a top priority.

So how much is this going to cost us taxpayers?

Let’s start off by looking at a few states that have toyed with the idea. In 2011 Vermont passed a law to establish the first state run single payer insurance scheme. It died 3 years later before it was ever implemented. Why? Because it was going to cost $4.3 billion, which would have nearly doubled the state’s $4.9 billion budget. Even the socialists in the Green Mountain State realized that the resulting taxes would drive business elsewhere.

Last week New York’s assembly passed its own single payer bill. If the bill becomes law then private insurance will be outlawed as of 2019 and New Yorkers’ only options will be Medicare, Medicaid, or the state’s insurance. The low-end estimate is that it will cost $91 billion, or $9 billion more than the state expects to spend for everything else in 2019. However, a group not associated with the state government estimates that the scheme will cost $226 billion, or nearly 3 times the state budget. How the hell do they plan to pay for this? New taxes of course, ranging from 9% to 16% on earned income and investment income. That would double or triple the state taxes that New Yorkers already pay. Who stands to benefit the most from this? Moving companies. Will the last taxpayer to leave New York please turn out the lights?

Now California is getting into the act. The state, which currently spends $180 billion per year, has a bill floating around its legislature to cover everyone who resides in California, including illegal immigrants. How much will it cost? $400 billion per year! That would more than triple the current budget. So far they have no clue how they will pay for it but the idea of a 15% payroll tax has been mentioned. This would double the current payroll tax and speed the introduction of robots to replace low skilled workers.

As you can see, government run single payer health insurance is not cheap. So what is it going to cost us when the government rams it down our throats?

As it turns out, the feds already run a couple of single payer insurance plans – Medicaid and Medicare. Medicaid is aimed at the poorest segment of the population and is paid for using general tax revenues. Users of Medicaid do have to pay very small deductibles and co-pays but as long as you stay out of the hospital the fee rarely exceeds $100. In 2016 Medicaid spent $553 billion to cover 72 million people, most of who are young and healthy. That comes to $7,680 per person per year. That is equal to an insurance premium of $640/month for 1 person.

Medicare is what the single payer crowd claims they want us all to have, and it is very complicated.

Medicare Part A covers most basic services including hospital stays. You don’t have to pay anything to get it but you will have to pay a deductible of $1,316 each time you end up in the hospital, and might have to pay a co-pay in addition. Part B covers services not covered by Part A but you will have to pay a monthly premium of $109 or more. If you actually use part B then you have a $183 deductible and a 20% co-pay.

Part D is overseen by the government but you have to go to a private insurance company to get it. It covers drugs, so you definitely want it, and the premiums run about $30-$40/month with small deductibles and co-pays.

Part C is an amalgamation of Parts A, B, and D that is sold through private companies. In other words, single payer isn’t always single payer. Conyers’s bill would outlaw this.

So how much does this clusterfuck cost? In 2014 the feds spent $597 billion to cover 55 million blue-haired citizens. That works out to $10,855 per person per year or $905/month.

Between these two programs there are currently 127 million people using the government single payer system. These people cost US taxpayers $1.15 trillion or $9,055 apiece. What would it cost if we insured everybody, all 326 million Americans?

Somewhere between $2.5 trillion and $3.5 trillion. An additional $1.35 trillion to $2.35 trillion more than the feds spend on Medicaid/Medicare now.

In 2016 the feds only brought in $3.27 trillion and spent $3.85 trillion. Where are the extra trillions supposed to come from? Taxes? To cover everyone and pay for it via taxes means the average person would owe an additional $4,100 to $7,200 every year. At a minimum, a family of four would have to pay $16,400 extra. You can buy a damn good private insurance policy for that kind of money … and have enough left over for a down-payment on a nice car.

Of course Congress won’t tax you directly because that would be insane. They will tax the evil rich. And by the evil rich I mean businesses. They’ll hike the “employer’s share” of the payroll tax and raise corporate taxes. Thus, you won’t get a raise, new workers won’t get hired (and many will get laid off), and everything you buy will be more expensive. Whether you realize it or not, you will be paying for this.

And it’s gonna make you sick.

Wayne Middlesteadt is the author of Five Ways to Beat the Market and The Golden Age of Distance Running.

About Author

Wayne Middlesteadt is a 1986 graduate of Georgia Tech and has an MBA from Georgia State University. Currently working as a financial writer and track and field historian, his latest book is Five Ways To Beat The Market.