Democratic presidential candidate Bernie Sanders, claiming that "health care is a right," wants the U.S. government to take over the entire U.S. health-care industry.
Sanders promises "Medicare-for-all," a national, single-payer Medicare system with "vastly expanded benefits." The senator admits his plan would exterminate all private insurance companies, so as to eliminate competition with his expanded Medicare program.
Deductibles and co-pays would be eliminated. The Sanders plan also calls for universal long-term care in home and community settings. Medicaid would continue to cover institutional care, and states would determine the standard of eligibility.
The conservative Mercatus Group estimates that the Sanders' plan would cost Americans $33 trillion over the next decade -- $3.3 trillion per year.
Health insurance is traditionally paid for by paying "premiums." But to pay for his Medicare-for-all insurance, Sander instead proposes tax increases.
Sanders states that to pay for Medicare-for-all, new taxes would be imposed on both employers and employees. Employers would pay a new 7.5% payroll tax (with the first $2 million in payroll exempted "to protect small businesses"). Employees would pay an additional 4% tax (but the first $29,000 of income would be exempted for a family of four).
Because these taxes will not be enough, Sanders also proposes raising a marginal tax rate of up to 70% on those making above $10 million, taxing earned and unearned income at the same rates, limiting tax deductions for filers in the top tax bracket, and establishing a tax on extreme wealth and making the estate tax more progressive, including a 77% top rate on an inheritance above $1 billion.
At present, workers in America pay a Social Security/Medicare tax at the rate of 15.3%. Our government tells us that 7.65% of that tax is paid by the employer, and 7.65% is paid by the employee. That is a fiction. The entire 15.3% is really paid by the employee.
It's a tax-accounting gimmick designed to convince the gullible that the employer is paying 7.65% in addition to the worker salary, when in reality the entire 15.3% is taken from the worker's salary with half labeled as a tax on the employer, and the other half as a tax on the employee.
Sanders is engaging in exactly the same legerdemain. He disingenuously claims the employer will be taxed an additional 7.5% and the employee only an additional 4%. In reality, the new 11.5% will be deducted from the employee's pay so that instead of paying 15.3% for Social Security and Medicare, the employee will have the high honor of paying 26.8%.
And, of course, the employee will also have the high honor of paying his federal income taxes with no deduction for what he pays for his new Medicare-for-all.
If the 2018 federal income tax rates remain the same, and if the Sanders' Medicare-for-all plan becomes law, a single man with a taxable income of $50,000 will pay federal income tax of $6,834 plus a real Social Security/Medicare-for-all tax of $13,400 -- 40.5% of his taxable income.
Rock Island County runs Hope Creek Care Center. County Administrator Jim Snider states that running a nursing home is "a tough business." Hope Creek, in three months, has increased its short-term debt from $4.6 million to $5.3 million. Net operating costs are running a loss of about $460,000 per month. The county, which can't print money, has to make up the shortfall.
And how is Medicare presently doing? In 2018, Medicare trustees, reported that the fund would become insolvent in 2026. (In 2017, they estimated insolvency would occur in 2029).
Rock Island County can't run a small nursing home. The present government-run Medicare system is seven years from insolvency. Congress can't get anything done. So why would any rational person risk putting nearly 20% of the U.S. economy in the hands of government bureaucrats who screw up everything they touch?
We have the lesson of U.S.S.R socialism: bankruptcy. We have the lesson of Venezuelan socialism: bankruptcy. We have the lesson of Cuba: a 1950s economy. Sanders goes blithely on, intentionally closing his eyes to the historical realities of Russia, Cuba and Venezuela.
It is argued that our present insurance system is expensive. But you get what you pay for. Before you believe people who claim "our system is the worst among developed countries," check the details, e.g., what is counted as a "live birth" in America? In France? How you count makes a big difference. If you count a child delivered before 22 weeks which quickly dies as a live birth, and France doesn't, we look worse.
Posted: QCOline.com May 2, 2019
Copyright 2019, John Donald O'Shea
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