France and Germany are good examples of large continental European countries that have extensive publicly funded health insurance programs. France pays for it with a series of taxes on everyone’s wages. Employers pay 13 percent of an employee’s total salary (or 7 percent for wages not exceeding 2.5 times the minimum wage) for health insurance. Employees pay 9.7 percent for “social security” surcharges (in France, this refers to all transfer programs, not just retirement pensions) and debt repayment on up to about 98 percent of their total salaries. So that’s a payroll tax rate of up to 22.7 percent for social services, as economists largely agree that the employer’s share of a payroll tax ultimately falls on the employee in the form of lower wages.
Germany has a similar system. Employees and employers each pay 7.5 percent on the first 53,000 euros of a person’s wages for health insurance, a total of 15 percent. Germans also pay an additional 2 to 3 percent of the same wage base for nursing insurance and can pay up to another 0.9 percent depending on what health insurance company they have (Germany publicly funds privately managed companies). That’s up to 19 percent of average people’s earnings, not the wealthy’s fat paychecks.
And that’s just the start of it. French and German taxpayers are also on the hook for a dizzying array of other items, including general income taxes, taxes to pay for pensions and unemployment insurance and value-added taxes. And let’s not even talk about the gas taxes, which are well above $4 a gallon.
Even Britain and her former colonies levy relatively high taxes on average people to pay for their health insurance plans. Britain pays for its National Health Services through general tax revenues. That includes a 40-percent rate of income taxation on incomes of 50,000 pounds or more (about $65,000) and a 20 percent VAT. Australia levies between a 32.5-percent and 37-percent rate on its middle- and working-class families, plus an extra 2 percent tax solely for health insurance and a 10-percent VAT. New Zealand has the lowest taxes of the bunch, with a rate of “only” 30 percent on all income more than NZ$48,000 — about US$31,000 — and a 15 percent VAT.
Each of these countries allows private-sector health insurance — complete with co-pays and premiums — taking a lot of the burden off of the public sector. The bottom line is that no one anywhere in the world pays for its universal, publicly funded health insurance coverage with taxes that fall only on the rich.
Proponents of single-payer systems in the United States often note that Americans already do pay a “tax” of sorts on health care in the form of premiums. Sen. Bernie Sanders (I-Vt.) has made clear that in his Medicare-for-all proposal such payments would be converted into a tax, but Warren refuses to acknowledge it. Instead, she dodges that problem by alleging that overall costs will fall.
That’s a red herring. It is true that other countries pay a smaller share of their GDP’s for health care, but that is in part because their citizens get less from their health care. Elective surgeries such as knee replacements, for example, can take months to occur unless the lucky injured person has a private policy. Some countries regulate who can get expensive drugs, which is one reason why many analyses show that United States fares better in long-term survival rates for some common cancers.
This also does not account for the dramatic hit to low-skilled, largely female employment that would likely occur under Warren’s plans. Think about who checks you in at a doctor’s office or hospital; they are nearly uniformly women. In fact, 75 percent of workers in entry-level health-care positions are women, with slightly higher shares in doctor’s offices and hospitals. But Warren’s plan would do away with much of the administrative work in health care, meaning those low-skilled workers — in addition to workers in the health-care insurance industry — will feel the squeeze considerably. Many will lose their jobs.
Contrary to what many conservatives say, publicly funded health-care systems in other countries work reasonably well. But contrary to what Warren says, they are paid for largely by the patients they treat. Regardless of what candidates believe on health care, they should at least be honest about what it means for voters’ bottom lines.