The Cost of
Free Health Care
We hear estimates of this cost (translation: tax increase) for medicare for all to be somewhere between the lower estimate of $30 trillion and the higher of 52 trillion dollars over the next ten years. Keep in mind that generally when government makes an estimation, they often come up very short of the actual cost.
We'll just start with the lower number. Lets assume that medicare for all will only cost $30 trillion over the next ten years.
How much is a trillion dollars anyway? Is it really a lot for a country like ours? Well, we have about 330 million citizens. A trillion dollars divided by 330 million people comes to about $3,000 per United States citizen.
$3,000 for each isn't really that bad is it? But wait, - we're talking 30 trillion, not one trillion - so multiply $3,000 by 30 and we have a cost of about $90,000 per United States citizen for the lowest estimation of the cost of socialized health care.
Not every citizen files a tax return or pays pays income tax. Only about 100 million actually file tax returns and pay federal income taxes. So that $90,000 over 10 years has to be increased to about $300,000 if we count only those who actually will be paying it.
This means that on the low end, the average taxpayer should expect a bill for $300,000 in additional income tax over the next ten years.
Lets move up to the $52 trillion estimate. Here that $300,000 tax bill increases to over $500,000. That's a half million dollars for the average taxpayer. You can buy a pretty nice house for half a million dollars in a lot of places in this country - instead you will get "Free Health Care".
What if you are an above average taxpayer? What if you earn more than average and your tax liability is higher than that of the average taxpayer as are many of my clients? You will have to do that math - or better yet, pray it never happens.
Lets not even get into the question of whether or not government will do a better job managing your health care than you will. They have a long record of mismanaging just about everything, but we can't assume they will botch this like they do pretty much everything else. For now lets not even address that looming catastrophe for many of our long-term sick and injured because we can't put a price on that. They have already told us what they will charge to implement it. We're only doing math here because analyzing the quality of the health care likely to be provided under such a plan would depress me even further.
What if, as usually happens, government estimates are on the low side? - and this socialization of our health care costs twice as much - or even more? Remember the BIG DIG in Boston? - Well, that cost roughly 20 times over the government estimate.
Christopher M. Barra, MS, EA
Barra Tax Service