Health and financial security Medicare What's Buzzing

Medicare for All would lead to a better performing labor market

Written by Diane Archer

A new paper by Josh Bivens at the Economic Policy Institute makes the case that there is no reason that Medicare for All would reduce the number of jobs in the US. To the contrary, he finds that Medicare for All could increase people’s wages and create better jobs, helping families. An important by-product of enacting Medicare for All would be a far better performing labor market.

How could Medicare for All increase wages? If employers gave the money they currently spend on their workers’ health insurance premiums back to their employees. Today health insurance premiums account for 8.4 percent of a typical worker’s total compensation. Economists like Emanuel Saez and Gabriel Zucman are proposing that Medicare for All require employers to return  all (or most) of the money they currently spend on their workers’ health insurance premiums to their workers in increased wages. Even if they gave all that money to their employees, employers would save money as they would not have the administrative expenses associated with providing health insurance, although they would have higher payroll contributions for Medicare and Social Security.

Why would jobs be better? Everyone would have good affordable health care and would not have to worry about taking a job that they didn’t want because Medicare for All allows them to get the care they need when they need it. People would also experience less anxiety when they lost their jobs or were between jobs because they would still have health care coverage. Also, they would not feel locked into their jobs, if they wanted to leave, because they would always have health insurance.

With Medicare for All, people would be more inclined to create their own jobs. Small businesses could grow and flourish, as people at these businesses would not have to worry about health care costs. Right now, the US ranks at the bottom of OECD countries in terms of people who are self-employed, at 6.3 percent. Small businesses are extremely risky because of the cost of health insurance and health care. Countries with universal health care, such as France, Spain and Germany, have between 9.9 percent and 16.0 percent self-employment.

Why would there be more jobs? No question, Medicare for All would cause a shakeup in the job market as 1.8 million people working for insurers and in medical billing are projected to lose their jobs. But, the federal government would be paying for more health care, including dental, vision, hearing and long-term supports and services, creating more demand for health care and more jobs in the health care delivery space. 

In addition, Medicare for All legislation should include support to help people who had been working for insurers and in medical billing to find new jobs. It’s not as big a lift as some believe. The number of people who would lose their jobs if Medicare for All were to be enacted is relatively small. It is about one-twelfth the number of people who lost jobs in 2018, 21.5 million.

Today, about 87 million Americans are uninsured (23 million) or underinsured (64 million).  And, the cost of ensuring that people get the health care they need continues to grow. Health insurance premiums rose 20 percent in 2019. Prescription drug costs grew 9 percent. Prices keep going up far faster than in any other developed nation. For that to end, the federal government must step in to set prices for health care, as it would with Medicare for All.

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