Medicare for All is a universal healthcare system where the government is the sole insurer. Various public figures have pushed for some form of Medicare for All over the years. Former presidential hopeful Bernie Sanders was the most famous advocate for Medicare for All.
Support for Medicare for All has grown considerably since it was first introduced. However, it has tapered off a bit in more recent months. Last month, a Kaiser Foundation Survey found that 54% of Americans support some form of Medicare for All. Although this figure declines after people are told that they we need to pay higher taxes for such a universal healthcare system, it is still clear that support for Medicare for All is increasing.
As the possibility that lawmakers will pass a Medicare for All bill increases, stakeholders across the country will need to recognize the impact. This includes small business owners.
Small business owners need to understand the significance of Medicare for All. They should be aware of the positives and negative aspects, so they can prepare accordingly. Policy research firms have helped shed some light on these questions.
How would Medicare for All affect small businesses?
A number of Medicare for All advocates argue that the policy would be a net benefit for small businesses all over the country. Some of the benefits that they support are clearly accurate. However, the truth is more complicated.
There are also downsides to Medicare for All that need to be taken into consideration. The reality is that all businesses would be affected differently. It is too simplistic to say that all companies would be net beneficiaries, since there are some that might be left worse off.
This does not mean that Medicare for All is a bad concept in general. However, companies would need to adapt strategically if they would be left worse off.
In order to understand the net impact of Medicare for All, it is necessary to be aware of the details. One of the most important things to understand is the financing structure through taxes. It is also important to understand the scope of the benefits and the impact on choice of insurers. These issues are explained below.
Financing of Medicare for All
Under the current United States healthcare system, most people get healthcare through private insurers. The only exceptions are impoverished people in states that expanded Medicaid through the Affordable Care Act, people over the age of 65 qualify for Medicare and people that are disabled that qualify for Medicare. Medicare is mostly funded through small payroll taxes at the federal level.
If we transition from our private healthcare system to Medicare for All, then we would need to implement a lot of new taxes, since Medicare for All would cost over $30 trillion every decade. Estimates of the cost of Medicare for All vary, but generally expected to be in the range of 15% to 30% if the policy was funded through payroll taxes.
Most politicians and advocates believe that these costs would be shouldered by the employers. This would be a new cost for some businesses.
However, businesses might also save money by not having to pay for health insurance anymore. Many businesses might find that the new universal healthcare system would be a net savings if the taxes would be lower than the amount of money they are currently spending on healthcare premiums.
On the other hand, some businesses would end up paying more. Around 40% of businesses don’t currently pay for healthcare for their employees. These companies would not save anything from eliminating private health insurance premiums and would still have to pay more taxes instead.
The impact on employers that currently pay premiums for health insurance would be mixed. Employers with older workers tend to have higher premiums, so they might save money under the new system. However, as the affordable care act showed, employers with younger workers tend to be a bit worse off. Those employers had to pay higher premiums as a result of the last healthcare reform act, because younger employees had to pay higher premiums as a result of the reforms. The same observation would likely hold true under Medicare for All.
Small businesses we need to figure out whether they are going to be better or worse off under Medicare for All. They would need to find new ways to generate money to finance higher payroll taxes if it would be a net loss for them. Their other alternative might be to lower salaries to reduce the cost of taxes. They might also shift towards using independent contractors to avoid the responsibility of payroll taxes.
Health insurance would no longer be a benefit to attract new employees
Employees take a number of things into consideration before taking a job. One factor that they currently look at is the quality of health insurance. Some employees have actually turn down companies paying higher salaries in exchange for an employer offering a better healthcare plan.
Medicare for All would level the playing field. Employees would no longer be able to offer better health insurance to attract employees. They would need to find other incentives instead.
Interesting related article: “What is Health Insurance?“