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VOL. 41 | NO. 35 | Friday, September 1, 2017

How would single-payer health care affect U.S. employers?

By Jeannie Naujeck

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Under single-payer system, businesses could contribute toward their employees’ premiums through payroll taxes directly to the federal government or to insurance companies reimbursed by the government. That’s close to the German hybrid model, which some analysts believe would be most palatable to the U.S.

Others, such as Richard Master, a Pennsylvania business owner who produced a documentary called “Fix It” to lay out the business case for health reform, advocate a pure single-payer model that would eliminate the insurance industry and empower a single public agency to pay medical costs for all Americans, including care at the nation’s existing network of private hospitals and pharmaceuticals, which would be negotiated with the enormous purchasing power of the U.S. government.

The savings to employers could be reinvested in expansion and new jobs, he argues.

The cost of health care is now one of the biggest concerns of American businesses, most of which are required to provide their workers with health insurance, according to an annual survey of large employers by the National Business Group on Health. The cost of providing health and other benefits to employees is one of business’ biggest expenses.

Smaller companies tend to offer their workers traditional, fully-insured health plans in which the employer pays the premiums for health care and workers contribute a portion.

But many large national employers self-insure, meaning they pay medical claims themselves, often negotiating directly with local hospitals and physician groups to care for their employees at a discounted price.

Even so, costs keep rising, and large U.S. employers expect their medical and pharmacy costs to rise five percent next year, or $14,156 per worker, including premiums and out-of-pocket costs for employees and dependents. Employers cover nearly 70 percent of those costs.

Health economists point to World War II as the point at which employers began providing health care as a benefit to attract workers. In the 1950s, unions began to negotiate for more generous benefit packages, and the modern era of employer-provided health care began.

With inflation came rising health care costs, however, forming the backdrop for the passage of Social Security and Medicare, a single-payer system for those 65 and up, by Lyndon B. Johnson in 1965.

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