Friday, September 25, 2009

How I Got My Numbers

In my last post, I suggested that health care reform as it stands now offers us a choice between paying 12.5% or 4.5% of our income for health insurance. The larger figure assumes that the Baucus bill or some close variant of it passes and every American whose employer does not offer medical insurance is required to pay it on the open market. The smaller figure assumes that somehow Congress finds the will to create a single-payer system similar to Medicare.

I have to admit that I haven't actually seen the case put this way before. Here's how I arrived at those two numbers:

The Baucus bill widely assumes that most Americans now buying health insurance on the open market are paying about 12.5% of their income and that it is reasonable to expect them to continue to do so. It offers some kind of Federal tax subsidy for people who can't afford that: I'm not very clear on the details.

According to Representative Anthony Weiner of New York, Medicare currently spends 4% of the money it collects on overhead and administrative costs. Private insurance companies, on the other hand, spend about 30%. So I figure that if we can collect 4.5% of everyone's salary or wage and if we require a matching contribution from employers then we'd have a pool equal to 9% of the nation's payroll and we should be able to insure everyone.

Actually, I don't know how much money that would generate or if it would be enough to actually insure everyone. But my figures seem reasonable.

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