Bernie Sanders' Single-Payer Health Plan Could Reduce Employment by 11.6 Million Jobs

The [Congressional Budget Office], for instance, has come to the conclusion that the Affordable Care Act’s [aka, "ObamaCare's"] combination of taxes, tax credits, and mandates will reduce full-time equivalent employment (one full-time equivalent employee works 40 hours per week; two part-time workers equal one full-time equivalent) by about 2 million in 2025 [nine years from now].

As it turns out, the ACA’s many taxes are relatively insignificant compared with those in the Sanders plan. Applying the CBO’s approach and assumptions, along with tax data from the National Bureau of Economic Research, to the Sanders plan indicates that the campaign’s assumed taxes would reduce employment by 4.9 million full-time equivalent workers in 2025. Not an insignificant number.

When we take [veteran Emory University health economist Kenneth] Thorpe’s more realistic assumptions and apply the same approach, the fully-implemented [Sanders single-payer health] plan reduces employment by a whopping 11.6 million full-time equivalent workers. Under these assumptions, the average marginal tax rate would grow from around 22 percent to 42 percent, while the average total tax rate would increase from 11 percent to 31 percent. At the upper end of income, total tax rates would be far beyond 50 percent. And none of this factors in state and local taxes [which in Connecticut, adds 3 percent on the first $10,000 of taxable income, and 5 percent on taxable income between $10,001 and $50,000, and if you're lucky, another 5.5 percent on taxable income between $50,001 and $100,000].

Of course, some of drop in employment might be considered “voluntary.” Some would stop working because they no longer needed to be employed to receive health insurance — escaping "job lock," as House Minority Leader Nancy Pelosi once put it. But others would simply find it meaningless to put in extra hours or look for more lucrative positions when so much of their earnings get sucked away as taxes.

For employers, this would all mean a large increase in hiring costs, too. Sure, as Sanders’ campaign likes to remind us, employers would no longer pay for private health insurance. But economists also recognize that health insurance is a form of compensation. And if you cut health insurance (with or without raising taxes), wages must in turn go up.

- from the article, The Single-Payer Sacrifice: 11.6 Million Jobs, By Yevgeniy Feyman, a fellow and deputy director of health policy with the Manhattan Institute.