How Medicare for All could impact employers
Medicare for All could end up costing employers less than the current employer-sponsored health insurance system does, depending on how it's structured.
Yes, but: That certainly doesn't mean employers are on board, partially because other concerns — like access to health care and the competitive advantage that generous benefits can create — may outweigh cost and convenience.
The big picture: Employer-sponsored insurance is hugely expensive, a pain to administer, yet an embedded part of the American system.
- "Employers are in some ways a natural constituency for Medicare-for-all. But, the business community is generally not ideological inclined to support a government takeover of a whole sector of the economy like health insurance," said the Kaiser Family Foundation's Larry Levitt.
What they're saying: Employers provide health insurance "because it’s a benefit that attracts employees. It’s a benefit they like to provide, even if it’s expensive," said Neil Bradley of the U.S. Chamber of Commerce. "They’ve chosen to do it, because they think it makes good business sense.”
- He said that things like choice and access to medical care — which he said would be hindered under Medicare for All — are more important to employers: "Cheaper is not necessarily better."
The other side: "I’ve talked to a Fortune 500 CEO who says he would love [Medicare for All], and who told me he knows plenty of others who feel that way," said House Budget Committee Chairman John Yarmuth.
- "I think it’s that his experience in providing health care benefits, and watching his franchisees struggle with it, convinced him that standardized coverage is more efficient and cost effective," Yarmuth added.
By the numbers: Health benefits made up 8.3% of employee compensation in 2019, according to the Bureau of Labor Statistics. This translates into 12% of payroll, or of wages and salaries, Levitt said.
- Sen. Bernie Sanders' Medicare for All financing "options" that he released last week included a 7.5% "income-based premium" paid by employers, with the first $2 million in payroll exempted.
- But most economists assume that workers end up shouldering the cost of their employer insurance today through reduced wages, and that would continue if premiums were replaced with a tax to fund Medicare for All.
- Business owners would likely bear the brunt of some of the other taxes on the wealthy proposed in Sanders' financing options, and "business groups ultimately act in the interest of business owners," Brookings' Matthew Fiedler said.
The bottom line: How employers feel about Medicare for All — or more specifically, Medicare payment rates for everyone — could change over time, as the cost of private employer-sponsored insurance skyrockets, said former Trump administration health official John Bardis.
- The private sector is currently paying much higher rates than Medicare for the same services, "and that in and of itself may be a starting point in the discussion around the cost of health care in the United States," Bardis said.
Go deeper: Employers' health care crisis will only get worse