National Health Insurance
February 4, 2003
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.
addition, by adopting measures that will control health care
costs in the future (such as negotiating fair fees with
doctors and budgets with hospitals), national health insurance
will save billions of dollars ever year subsequent to its
adoption, thus ensuring an affordable health care system for
These are the
conclusions of several state-level studies by the conservative
D.C. consulting firm The Lewin Group, as well as
national-level studies by government agencies such as the U.S.
General Accounting Office and the Congressional Budget Office.
National Health Insurance Act,
developed and endorsed by the Physicians Working Group for
Single Payer National Health Insurance (an ad hoc coalition of
over a dozen of the nations most prominent physicians, see
www.physiciansproposal.org), Rep. John Conyers (Chair of the
Congressional Black Caucus) and distinguished colleagues in
the Progressive and Hispanic Caucus, would provide
comprehensive coverage (including medications, coverage of all
42 million uninsured persons, and long-term care) to all
Americans as of January 1, 2005.
from the Lewin Groups recent study of single-payer in
California, along with a package of progressive financing
developed under the direction of the late Tony Mazzochi, a
life-long advocate for economic justice, it is estimated that
the NHI would reduce health spending in 2005 from $1,918
billion to $1,861.3 billion (a savings of over $56 billion)
while covering all the uninsured. Ninety-five percent of
families would pay less for health care than they do today.
way to raise a budget of $1.861 trillion ($56.7 billion less
than without reform) is the following:
1. Keep most
existing government revenues in place (approx. half the U.S.
health care budget).
2. Implement a variety of mechanisms to make health financing
more equitable and progressive, so that low and middle-income
families pay a smaller share of their incomes for health care
than the wealthiest 5% of Americans. Close loopholes so that
corporations pay their fair share.
3. Impose a modest payroll tax on all employers (3.3%).
Keep existing federal, state and local revenues that currently
pay for Medicare (employer and employee payroll taxes of 1.45%
each or $194 billion) and other federal and state programs
(with the exception of revenues that now pay government
workers health premiums).
Implement a modest payroll tax of 3.3% on all public and
private employers, while eliminating employer premiums for
private health plans. Employers that currently pay all or part
of their employees health premiums will face much lower health
costs than they do today (employers who provide coverage
currently pay an average of 8.5% of payroll for much less
comprehensive coverage). A 3.3% payroll tax is low enough so
that all employers (including those that do not provide
coverage today) should be able to contribute without undue
without reform, the average employer that offers coverage will
contribute $2,600 to health care per employee (for much
skimpier benefits). Under this proposal, the average cost to
employers for an employee earning $35,000 a year will be
reduced to $1,155, less than $100 per month.
on the richest 5% of Americans: $221.8 billion
The wealthiest Americans, who accumulated nearly all the gains
from economic growth in the past two decades, should pay their
fair share for health care. Today, poor and middle-income
Americans pay a higher percentage of their incomes for health
care than the very wealthiest Americans. This budget includes
an additional 5% income tax on the top 5 to 1% of the
population, the group that in 2002 had declared incomes of
$140,000 to $250,000. This tax exempts the first $140,000 in
income, and does not include unrealized capital gains in
stocks, bonds, home sales, etc. The budget also includes a 10%
income tax on the richest 1% of Americans, those with average
incomes of $1,100,000 (exempting the first $250,000 in income,
and not counting capital gains on stocks, bonds, property).
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 transactions: $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. The wealthiest 10% of households own
over 80% of all stocks, including those in mutual funds or
pension plans. Over 40% of all stock is owned by the richest 1
percent of households. About half of all households own no
stocks, not even in mutual funds or pension plans such as
IRAs, 401(k), 403(b) or Keogh plans.
Close corporate tax shelter loophole: $105.2 billion
According to the Treasury Department, corporations are very
skilled at avoiding paying their taxes, costing the government
billions annually. An increase in abusive tax shelters -
various accounting methods that have no legitimate business
purpose and are invented solely to lower a companys taxes Đ
means that corporations are paying less in taxes (as a
percentage of profits) than they did in the 1960s. Closing
these loopholes and making corporations pay their fair share
of taxes will raise over $100 billion annually for health care
(David Cay Johnston, 'Corporations Taxes are Falling Even as
Individuals Burden Rises' New York Times, Feb 20, 2000 and 'US
Takes Aim at Tax Shelters for Companies' New York Times, Feb
Repeal the Bush tax cut of 2001 and invest the Bush 'economic
stimulus plan' of 2003 into health care: $206 billion
The 2001 Bush tax cut ($120 billion) benefited the wealthiest
Americans the most. Everyone should pay their fair share for
health care. Bush has also proposed $865 billion in additional
cuts over the next nine years (an average of $86 billion a
year over the next decade), tax cuts that would mostly benefit
those with very high incomes. Redirecting this funding into
health care spending would provide a genuine economic stimulus
while providing an important public service. Health care is a
social good that benefits everyone (e.g. wealthy Americans not
only need secure health coverage for their own families, they
also depend on a healthy labor force for their incomes and
National health insurance eliminates all household
contributions to private premiums (including Medi-gap plans),
co-payments, deductibles and all out-of-pocket costs for
services not currently covered like dental, vision, and
prescription drugs. 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% reduction in current out-of-pocket expenses.
Existing non-patient revenues: $44.5 billion
Existing funds raised from donations from individuals and
foundations and from hospital gift shops will continue to
contribute a small percentage of the total budget.
Total budget: $1.861 trillion
progressive funding package was developed in 2001 by Tony
Mazzochi (Labor Party) and Drs. David Himmelstein and Steffie
Woolhandler (Harvard), with assistance from Dean Baker (Center
for Economic Research and Policy). We thank Dean Baker for
updating the financing and charts for this press conference.
Appendix on Financing National Health Insurance
Dean Baker, Center for Economic Research and Policy
estimates of spending with and without reform, 2005: Includes
savings from administrative simplification ($178.2 billion)
and bulk purchasing ($50.5 billion) minus an increase in
utilization ($172 billion) as a result of universal coverage.
The estimate of savings on administration (9.3 percent) and
bulk purchases (2.6 percent) are taken from the Lewin Groups
analysis of the Cal Care single payer proposal for California,
figure 17 [www.healthcareoptions.ca.gov]. The estimates have
been multiplied by the ratio of projected health care spending
in 2005 to 2002 spending. The data on national health care
expenditures and public expenditures for 2005 is taken from
the Centers for Medicare and Medicaid Services, Table 3:
National Health Expenditures Aggregate and per Capita Amounts,
Percent Distribution and Average Annual Percent Change by
Source of Funds: Selected Calendar Years 1980-2010.
The estimated cost of a single payer system is taken from the
Lewin Groups analysis of the Cal Care single payer proposal
for California, figure 17.
The estimate assumes that the ratio of the cost of a national
single payer system to the cost of the current system will be
the same in 2005 as the ratio Lewin estimated of the Cal Care
plans to base line spending for California in the year 2002.
This estimate includes the cost of home health care. It also
uses the Lewin Groups estimate of a 10.7 percent increase in
utilization resulting from universal coverage and the
elimination of most forms of co-payments.
Future projections are based on data from the Centers for
Medicare and Medicaid Services that show that health spending
will grow 7.3% annually without reform (Table 3: National Care
Health Expenditures Projections: 2002-2011). The growth rate
of expenditures is assumed to be 1.3 percentage points lower
each year in the universal system than with the current
system, following the analysis of the California Cal Care plan
by the Lewin Group (Lewin Appendix page H-18, Figure 9). The
estimate of per capita expenditures divides the 2005
expenditures by population (levels and growth are taken from
the Social Security trustees report, table V.A.2).
2) A 3.3
percent payroll tax will raise $220.8 billion, based on the
Social Security trustees projection of the revenue yielded in
2005 by the 2.9 percent Medicare tax (Social Security trustees
report, 2002 (table VI.E.10). 9) The savings per worker for
firms that already provide workers with coverage are derived
from Lewin Groups estimate that the average premium per worker
in California in 2002 was $2256. This figure is increased by
15.1 percent to account for cost increases between 2002 and
3) The tax
yields from a 10 percent income tax on the richest 1% of
families and a 5% percent income tax on the top 5 to 1% of
families were calculated by taking the share of these groups
income as indicated in Mishel, Bernstein, and Boushey, 2003,
estimates of revenue for the stock/bond transfer tax are taken
from Pollin, Baker, and Schaberg, 2002. The 1997 estimate was
multiplied by 1.49 to take account of GDP growth between 1997
and 2005. Other minimal rates of taxation used for this
estimate are: Government bonds (0.1%), corporate bonds (0.1%),
futures contracts (.02%), currency (0.1%), swaps (0.02%).
Reversing the Bush tax cut would raise an estimated 1 percent
of GDP, which would be $120 billion in 2005. Re-directing the
'economic stimulus' plan to health care would contribute $86
billion a year (Families USA, 'Tax Cuts for the Rich or
Solving Major National Health Problems' 2/3/03).
estimate of $105.2 billion from closing corporate loopholes
and having corporations pay their fair share of taxes is
estimated by comparing corporate tax rates on profits from
1960 to 2002.
7) It is
estimated that 3.7 percent of medical expenses will be born
directly by households (e.g. purchases of over the counter
drugs) and that 2.5 percent would come from charitable
donations or other non-patient forms of income.