Medicare for All

 

 

One of the planks in the Democratic Socialist platform is Medicare for All. Senator Bernie Sanders of Vermont and other leading Democratic Socialists never fail to include it in their demands.The influence of the DSA is growing within the Progressive wing of the Democratic party, and it looks like Medicare for All will be a big issue in the upcoming mid-term elections.

 

However, we already have Medicare for all. Most of us are enrolled in Medicare in the same way we are enrolled in Social Security. Anyone with taxable income must contribute to Medicare in the same way they contribute to Social Security. All employees must contribute 1.45% of each paycheck to their Medicare account. Employers are required to match that contribution so that the total amount comes to 2.9% of pay. For most workers the Medicare tax goes largely unnoticed since it is a payroll deduction.

 

The tax is more visible to self-employed individuals since they must pay the whole 2.9% themselves and actually cut a check for the amount on a quarterly basis.

 

Unlike the Social Security tax which only applies to the first $185,000 of income, there is no limit on the amount of income subject to the Medicare tax. Let’s take a look at some examples.

 

Someone working at the minimum wage of $15.00 per hour for 2000 hours a year would have an annual income of $30,000. To make it easy let’s round off the Medicare tax rate of 2.9% to 3%. The worker’s Medicare tax would be $900 a year. We can call it the annual premium for Medicare insurance which will begin to pay off at age 65.

 

In our next example, the worker’s annual income is $200,000. That number is significant because over that amount, the employer is no longer required to match, and the employee must pay the whole 2.9%. In fact, on income over $200,000, there is a surcharge of 1% bringing the total to 3.9%. To keep it simple for now, this worker’s Medicare tax would be 3% of $200,000 or about $6,000 per year. In other words, his Medicare insurance premium is $6000 per year for the same plan that costs the minimum wage employee $900 per year. 

 

Finally, let’s look at really high earners like movie and rock stars, professional athletes, and even CEOs who have incomes of $20 Million per year. Since there is no limit on the amount of income subject to the Medicare tax, and since there is a 1% surcharge, their effective tax rate of 4% means that their Medicare tax would be 4% of $20,000,000 or $800,000 per year. That's right, $800,000! Remember, even though their Medicare insurance premium is huge, they still get the same coverage as anyone else. Actually, these wealthy people don't even need Medicare. It’s really amazing that Democratic Socialists want to eliminate the billionaires who fund Medicare.

 

Of course, people with little or no taxable income would currently be eligible for Medicaid but Progressives and Democratic Socialists really want free Medicare for all at any age. But do they?

 

Does Medicare for All mean that Senator Sanders and other politicians would give up their current gold-plated government plans for Medicare or Medicaid? I don’t think so. When Obamacare was passed, members of Congress were supposed to join that plan and give up their Federal medical insurance but that never happened. I doubt that any federal, state, or municipal employee would want to give up their current medical insurance for Medicare.

 

###

Quote of the day: All animals are equal, but some are more equal than others. George Orwell, Animal Farm.

 

###