In the April 2004 issue of Access Press I summarized a plan for a universal, single-payer health care system as developed by the Physicians Working Group (PWG) on Single-Payer National Health Insurance, an ad hoc collaboration of 18 of the nation’s top physicians (“Could Universal Healthcare Work?”). Last month I explained how our current United States health care system is being financed, and sketched out one proposal for financing a universal, single-payer health care system. This month I present a somewhat different proposal for financing such a system, this one drawn from testimony by the PWG in Congress in support of the United States National Health Insurance Act (H.R. 676), which was introduced by Representative John Conyers on February 11, 2003.
“Less Than What We Are Currently Spending”
The PWG introduced their endorsement with these words: “By eliminating unnecessary, duplicative paperwork (with single-source financing) and adopting rational, proven mechanisms to stretch our health care dollars (such as bulk purchasing of medications), the United States can provide comprehensive health care coverage—including long-term care—to every resident of the United States for less than what we are currently spending.”
The 2005 cost of universal coverage, they say, would come to $1.861 trillion (that’s $56.7 billion less than health care spending is projected to be without reform.) Where would this money come from? In the year 2005, according to the PWG, the money would come from:
GOVERNMENT ($852.5 billion): H.R. 676 would keep existing federal, state and local revenues that currently pay for Medicare (employer and employee payroll taxes of 1.45 percent each or $194 billion) and other federal and state programs.
EMPLOYERS ($220.8 billion): H.R. 676 would implement a modest payroll tax of 3.3 percent on all public and private employers (for comparison, the Social Security payroll tax on employers is 7.65 percent), while eliminating employer premiums for private health plans. Companies that already provide health insurance for their workers will save money. “A 3.3% payroll tax is low enough,” according to testimony by the PWG, “so that all employers (including those that do not provide coverage today) should be able to contribute without undue hardship.”
THE RICHEST FIVE PERCENT ($221.8 billion): The wealthiest Americans with declared incomes of $140,000 to $250,000 would pay an additional 5 percent income tax. This tax exempts the first $140,000 in income and does not include unrealized capital gains in stocks, bonds, or home sales, etc. The richest 1 percent (average incomes of $1,100,000) would pay an additional income tax of 10 percent. As the PWG notes, “The most well-off Americans also are the most dependent on a healthy labor force for employees and services. Thus, they will benefit greatly from their modest additional investment in universal health care.”
STOCK AND BOND TRADERS ($144.6 billion): Anyone who buys or sells a stock will pay a transaction tax equal to one quarter of one percent of the purchase price. For example, a $100 stock purchase will be taxed a total of 50 cents. For those who invest and hold on to stocks, the tax is minimal. Other financial transactions will also be taxed minimally. This will provide another progressive revenue stream for health care. (A revenue source is “progressive” when the rate of taxation goes up as income goes up.) This tax will primarily affect the wealthiest 10 percent of American households, who own over 80 percent of all stocks. About half of all households own no stocks at all, not even in mutual funds or pension plans.
CORPORATE TAX EVADERS ($105.2 billion): According to the Treasury Department, corporations are very skilled at avoiding paying their taxes, costing the government billions of dollars annually. Closing loopholes and making corporations pay their fair share of taxes will raise over $100 billion annually for health care
THE 2001 TAX WINNERS ($206 billion): H.R. 676 would repeal the Bush tax cut of 2001 and invest the Bush administration’s “economic stimulus plan” of 2003 into health care. “Redirecting this funding into health care spending would provide a genuine economic stimulus while providing an important public service,” says the PWG.
HOUSEHOLDS ($65.9 billion): Total household expenditures will drop from $326.7 billion to $65.9 billion annually. The only expenses left for individuals will be over-the-counter drugs (such as aspirin), elective cosmetic surgery, etc. This represents an 80 percent reduction in current out-of-pocket expenses.
OTHER ($44.5 billion): Existing funds raised from donations from individuals, foundations and from hospital gift shops will continue to contribute a small percentage of the total budget.
Total budget: $1.861 trillion
You can read the entire proposal of the Physicians Working Group on Single-Payer National Health Insurance (“Financing National Health Insurance February 4, 2003”) on the web at http://www.pnhp.org/nhibill/nhi_financing.html.
Next month, in Part 4, we’ll take a look at some specific implications of a National Health Insurance system for people with disabilities.
