NCPA - National Center for Policy Analysis


April 24, 2008

While it may seem as though the Swedish tax rates are off the chart compared to American taxes, it would not take us long to get there if the United States made the mistake of adopting socialized medicine for all, says Sven R. Larson, founder and president of the Hill City Skunkworks, a public policy research firm.

For instance:

  • It has been estimated that a Swedish-style single health insurance system in America would cost the median-income household some $17,200 per year in health care taxes.
  • Even if this were to replace the cost of private insurance policies, it is far from certain that employers would pass savings along to worker's salaries.
  • Some suggest a business tax to pay for a single-payer system; that would effectively be the same as a tax on working families, either in the form of lower salaries or fewer jobs, or in the form of a mark-up on business sales.

As in Sweden, politicians would promise to freeze the tax to pay for a hypothetical American single-payer system at a fixed rate.  However, over the past half century, U.S. medical costs have risen just over twice as fast as the payroll on which the tax would be levied.  To avoid raising the tax, Congress would have to have curbed spending one way or the other.

This would have resulted in a combination of three things:

  • A significant lag in implementing new medical technology.
  • Massive reductions in staff, beds, and number of clinics and hospitals
  • Widespread transfers of responsibilities for medical evaluations and treatment downward in the skills pyramid.

If we implement a universal, single-payer model in America today, the negative effects will reliably occur about a generation from now, says Larson.

Source: Sven R. Larson, "Lessons From Sweden's Universal Health System: Tales From the Health Care Crypt," Journal of American Physicians and Surgeons, Spring 2008.

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