Under current system, many employers provide medical insurance as an employment benefit. This helps employers to stay competitive with other employers when trying to attract or retain employees. However, this benefit is expensive and is a significant portion of an employee’s compensation package.

If the government were to provide universal coverage and employer sponsored coverage was banned, employers could then shift the savings from health insurance to attract or retain employees by increasing wages.

How likely is such scenario under medicare-for-all type proposals?

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    Additional question: How much will this be offset by a change in government spending? (assuming they cover the plan with taxes) Jan 31, 2020 at 15:30
  • In zero order approximation, the disposable income should not change if the efficiency of the health system and the supplied amount of care doesn't change. Disposable income is much more relevant than nominal wages. Jan 31, 2020 at 20:55
  • @Trilarion Yup. The people who run the Post Office and the VA are easily expected to achieve "the supplied amount of care doesn't change." Want to buy a bridge made of watches?
    – puppetsock
    Jan 31, 2020 at 20:58
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    I think this question is interesting because most of the focus of Medicare-for-all debates has been on the after-tax wages going into people's pockets, not on the before-tax wages being reported. So it's possible we would benefit twice-- employers paying less to opt their employees into plans, and employees paying less out-of-pocket for expenses. Jan 31, 2020 at 21:10

2 Answers 2


The medicare-for-all still needs to be paid for and if you look at European countries with universal healthcare for reference, this will take a significant proportion of wages (for example around 16% of pre tax wage in Germany, paid half and half by employee and employer). So instead of the employer putting money into a health care plan he would have to put money into the medicare-for-all.

It is quite possible that overall healthcare costs in the US would be lower with a medicare-for-all scheme (the US has significantly higher healthcare cost than Western European countries for a comparable quality of healthcare) but whether that would actually happen and if so to what extend is really hard to predict.

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    Good answer. I would note that differences in healthcare costs are somewhat related to doctor salaries, which is not controlled by the state in the US, where doctor salaries are very high. So regardless of what plan they put in place, unless they plan on putting regulation on doctor salaries, the differences in cost may persist.
    – blud
    Jan 31, 2020 at 23:48
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    @blud There is an indirect way of lowering the salaries: free education. When you don't have to pay hundreds of thousands for medical school, much lower salaries become attractive. Feb 2, 2020 at 6:01
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    @Jouni Sirén: But SOMEONE still has to pay those hundreds of thousands of dollars, even if it's not the person getting the medical degree.
    – jamesqf
    Feb 2, 2020 at 18:49
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    @jamesqf Education also tends to be cheaper in single-payer systems. Feb 2, 2020 at 19:42
  • @Jouni Sirén: Does it? That's not my perception from having worked at a fairly major European university. Most of the materials, like books, computers, lab equipment &c are the same as in the US, produced & sold by multi-national companies. There did not seem to be less bureacratic overhead, and cost of living was quite a bit higher. So how does education become cheaper?
    – jamesqf
    Feb 3, 2020 at 17:24

This is an interesting question.

Other single-payer-healthcare plans are usually funded by premiums paid by both the employer and the employee in different amounts.

Employers would no longer have to pay private healthcare insurance costs (or at least much reduced private healthcare costs) and this would probably mean a reduction in the per-employee costs they had to pay. One would like to think that they would pass some of these savings on to their employees in the form of increased wages, but that might be optimistic.

There is also the question of employees who do not currently have healthcare insurance of any kind, and whose employer would have no cost savings. This would imply that their employers would not have any cost savings (and might see a cost increase) and so unlikely to see a wage increase. However those are the employees who are most likely to benefit from having free health insurance.

  • I should correct you on the 50/50 statement for Canada. In Ontario where I live, an employer above a certain size pays a payroll tax of maximum 1.95% of payroll fin.gov.on.ca/en/tax/eht. There is an employee "health premium", basically a surtax, on employees above a certain income, maxing out at $900 a year ontario.ca/page/health-premium. These are both just supplements to the gov't. The vast bulk of OHIP, the provincial SP insurance scheme, is covered by general tax revenue. Ontario income tax is roughly 50% of the federal.
    – user30014
    Feb 1, 2020 at 22:39
  • I'm sorry, you are right. I realized I had confused it with EI. Feb 2, 2020 at 4:00

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