2007 Mean Household income is $67,609
total of 116,783,000 households
aggregate US income in 2007 – $7,895,581,847,000 –
Let’s call it $7.9T – Total 2007 US income.

The Median Household income is $50,233 which means that 58 million households are making less than $50K and 58 Million households are making more than $50K. And the Mean, or Average, household income is $67K. Something doesn’t seem quite right here… But I didn’t start this to talk about income inequality.

A few days ago I mentioned that the 2007 health care expenditures in the US were $2.2 Trillion and the per capita cost of that comes to ~$7K per person. And I thought that was a doable cost to support. How can it be done?*

If we go to some sort of National HMO plan that covers the full range of health care that $2.2T covered, then we can drop about 20% of the costs right off the top to get rid of the administrative overhead and all those redundant file clerks at every office, leaving us with about $1.8T to manage. I think about $0.5T of the expenses is for Medicare but I want to roll the Medicare expenses into my plan so I will leave them there.

I like the way SSA does it, and Medicare, with the Employee paying 50% and the Employer paying 50%, so the Employees need to cover $0.9T to cover their part of the HMO insurance.  $0.9T/$7.9T = 11.4%.

The Employers get out of the health care management business altogether, saving themselves a lot of aggravation and expense,  and will end up with a presumably healthier, more productive workforce.

So along with the 6.2% FICA, and an additional 11.4% payroll tax to cover the medical  everyone will be paying a 17.6% payroll tax. But unlike FICA/SSA, the medical/HMO can be used immediately. Should be used immediately. If people started getting routine medical maintenance when they are young, and using neighborhood clinics instead of emergency rooms for minor ailments, the long-term medical costs would drop a bit right there.

A 17.6% payroll tax is a bit steep if you have to worry about other taxes on top of that, but that medical coverage could pay for itself overnight if you don’t have the coverage today. I would further propose to get rid of all the deductions and other bits that make tax season so much fun and give a straight single deductible of $50,233. You only pay income taxes on your income greater than the median family income. 

*Must remember to start with First Principles:

We the people of the United States, in order to form a more perfect union, establish

justice, insure domestic tranquility, provide for the common defense, promote

the general welfare, and secure the blessings of liberty to ourselves and our

posterity, do ordain and establish this Constitution for the United States

of America.

I think this comes under the promote general welfare principle, so we can proceed.