The American Health System

A Bright Meadow Group analysis of Medicare for All from the employer’s side of the ledger

A company that paid a supplier nearly $27,000 a year for each family it covered would put that supplier under review. It would compare prices with competing suppliers, inspect the product, check the service record, and look for fees that serve the vendor more than the customer. American employers sponsor coverage for about 153 million people, which makes them the largest private buyer in the health system. They have rarely run that review.

This piece runs it, using Bright Meadow’s Observe-Design-Intervene method: watch how the system behaves, design a better arrangement, then lay out the steps for getting there.

OBSERVE

The price

KFF’s 2025 employer survey puts the average annual premium at $9,325 for single coverage and $26,993 for family coverage. The family premium rose 6% in one year and 26% over five. Unlike a commodity price that rises and falls with the market, this one has only climbed.

The price also depends on who is buying. Center for American Progress research found that administrative costs take about 10% of a large employer’s premiums and 20 to 25% of a small employer’s. Treasury analysts found small-firm premiums can carry up to three times the administrative load. The Commonwealth Fund reports that in 2023, workers at small businesses paid $733 more a year toward family premiums than workers at larger firms. A forty-person company and a fifty-thousand-person conglomerate buy the same product at different prices, and the difference has nothing to do with how either one runs its business.

The product

The World Health Organization tracks two figures that let us compare national health systems the way a buyer compares vendors: what each country spends per person, and how many years of healthy life its people can expect. WHO’s healthy life expectancy (HALE) counts only the years lived without significant illness or disability. For an employer, those are the working years that matter.

In 2022 the United States spent $12,434 per person on health care, adjusted for purchasing power. American HALE in WHO’s 2021 data was 63.9 years.

Country	Spending per person (WHO, PPP $)	Share of U.S. spending	Healthy life expectancy (WHO, 2021)	Healthy years beyond U.S.
United States	$12,434	100%	63.9	—
Singapore	$6,658	54%	73.6	+9.7
Japan	$5,387	43%	73.4	+9.5
South Korea	$5,350	43%	72.5	+8.6
Norway	$9,927	80%	71.2	+7.3
Sweden	$7,659	62%	71.1	+7.2
Spain	$4,776	38%	71.1	+7.2
Switzerland	$10,668	86%	71.1	+7.2
Australia	$7,072	57%	70.6	+6.7
France	$6,853	55%	70.1	+6.2
Canada	$6,813	55%	69.8	+5.9

Spending figures are from WHO’s Global Health Expenditure Database for 2022, or 2023 where that is the latest year. HALE figures are WHO’s 2021 estimates.

Read it the way a purchasing manager reads competing bids. Japan delivers nine and a half more healthy years per person at 43 cents on the American dollar. Spain delivers seven more at 38 cents. Switzerland, the closest to the U.S. on price, still delivers seven more healthy years for 14% less money. No comparable country spends as much as the United States, and none gets as little for it.

Ordinary life expectancy shows the same pattern. WHO puts it at 76.4 years in the U.S. and 84.5 in Japan.

The service record

The Commonwealth Fund’s Mirror, Mirror 2024 scored ten wealthy countries on 70 measures across five areas: access, care process, administrative efficiency, equity, and outcomes. The U.S. finished last overall. It ranked last on access and equity, next to last on administrative efficiency, and last on five of six health outcome measures.

The U.S. did rank second on care process, which covers the quality of what happens in the exam room once a patient gets there. The clinical side of American medicine holds up well. The problems are in paying for care and getting people in the door.

Where the money goes

A 2020 study in the Annals of Internal Medicine compared administrative spending in the U.S. and Canada for 2017. American insurers and providers spent $812 billion on administration, about $2,497 per person, or 34.2% of national health spending. Canada spent $551 per person, or 17%.

The line items show where the gap comes from. Insurer overhead ran $844 per person in the U.S. against $146 in Canada. Physicians’ insurance-related costs, meaning the billing staff, coding, claim fights, and prior authorizations, ran $465 against $87. The study’s lead authors co-founded a physicians’ group that advocates for single payer, so readers should weigh that. Their methods drew on government reports, accounting data, and census employment figures, and the size of the gap holds up under scrutiny.

A third of the dollars flowing through the system pays for the system to process itself. Picture a river where a third of the water evaporates from holding ponds along the way, before it reaches the fields.

The hidden line

The premium is the visible cost. The Integrated Benefits Institute estimated that in 2019, illness-related lost productivity cost U.S. employers $575 billion, or 61 cents for every dollar they spent on health benefits, across nearly 1.5 billion days of absence. That covers sick days, disability, and the slower work of people who show up with conditions nobody treated in time.

The current system makes this worse in a predictable way. High deductibles push lower-wage workers to skip early care, and the problem comes back later as an emergency room visit and two weeks off the schedule.

What the observation shows

American employers are the largest private customer of a vendor that charges about double the going rate, delivers six to ten fewer years of healthy life per person than its competitors, spends twice as much on its own paperwork, and charges small customers more than large ones. A business would rebid a contract on half that record.

DESIGN

Suppose employers could write the specifications for a replacement system. Five requirements follow from what we observed.

1. One payer, one rulebook. The administrative savings come from simplification. With one set of rules, prices, and forms, a doctor’s office stops paying staff to work around dozens of insurers’ rules, and an employer stops running a benefits operation it never wanted to be in. The international data shows several ways to reach universal coverage. The Netherlands and Australia, two of the top three in Mirror, Mirror, use regulated private insurers alongside public programs. Single payer’s particular advantage is administrative: it is the arrangement that removes the most billing machinery. For a business deciding which version to back, that is the reason to back Medicare for All.

2. Financing that scales with payroll and is the same for every firm. Health costs should become a known percentage of wages that does not change with company size or a workforce’s medical history. Senator Sanders’ financing options included one example: a 7.5% employer payroll tax with the first $2 million of payroll exempt, which his office estimated at about $3,750 for a worker earning $50,000. The exact rate is a political question. The structure is what matters to a buyer: one rate for the independent shop and the conglomerate alike, no renewal season, no underwriting.

3. Keep the clinical side. The U.S. ranked second in care process. The reform should change who pays and how, and leave alone the clinical skill that already ranks near the top.

4. Build capacity before the switch. Canada, the closest single-payer comparison, has a serious weakness. The Fraser Institute’s 2025 survey found a median wait of 28.6 weeks from a family doctor’s referral to treatment, with orthopedic surgery waits near 49 weeks. Fraser estimated those waits cost Canadians more than $4.2 billion in lost wages and productivity in 2025. For an employer, a worker waiting most of a year for knee surgery is either absent or working at half speed. Waiting lists would cancel out much of the absenteeism savings. Any American design has to fund clinical capacity (staff, operating rooms, imaging) ahead of the demand that comes with universal coverage. The U.S. starts with an advantage here, since it already spends heavily on the supply side. The design job is to keep that spending in clinical capacity while the billing apparatus shrinks.

5. Leave room for supplemental coverage. Companies that want to compete for talent with extra benefits, such as private rooms, faster elective scheduling, or added dental and vision, should be able to buy them. Health benefits then become a perk employers choose to offer instead of a burden they have to carry.

INTERVENE

Run your own numbers. Each firm’s case is different, so start with its own books. Add up the employer share of premiums, broker fees, the staff hours or contractor costs of benefits administration, compliance costs, and a fair estimate of illness-related absence. Compare that total with a payroll-tax rate in the range being discussed. For many small and mid-sized firms, the comparison will settle the question.

Speak as a buyer. Chambers of commerce, trade associations, and industry groups shape health policy, and their positions often reflect their largest members and the insurers who sit at the same tables. Small and mid-sized firms can push their associations to represent the businesses that pay the size penalty.

Know who is on the other side. Health insurers lose their product under single payer. Parts of the financial sector tied to insurers and to private medical investment lose revenue. Hospitals and physician groups would face pressure on payment rates. These are serious interests with serious lobbying budgets, and any coalition for reform has to plan for them.

Plan the transition as a phase-in. A sudden switch would strain clinical capacity and disrupt workers mid-treatment. A business-backed proposal should ask for a phased rollout, for example by age group or by region, with capacity funding front-loaded.

RISKS AND OPEN QUESTIONS

A sound analysis lists what could go wrong.

The total price is uncertain. Published estimates of Medicare for All’s effect on national health spending range from about a 16% increase to a 27% decrease. A 2020 Lancet study estimated 13% savings, about $450 billion a year. The Mercatus Center, the Urban Institute, and RAND produced higher annual totals. The main variable is provider payment: estimates that assume hospitals and doctors are paid near Medicare rates show savings, and estimates that assume higher rates show cost increases.

The employer tax rate could be higher than the headline figure. The Tax Policy Center found that Sanders’ two income-based premium options, the employer payroll tax and a household surcharge, would cover about a quarter of a full program’s cost under Urban Institute estimates. The rest would come from other taxes, and some of them could reach businesses. A firm modeling its own numbers should test a range of rates, not just one.

Some of the outcome gap is outside the health system. American obesity rates, overdose deaths, firearm deaths, and traffic fatalities all lower healthy life expectancy, and coverage reform alone will not fix them. Universal coverage should narrow the gap with peer countries, but it should not be expected to close all of it.

Some of the savings may go to workers. Many economists hold that employer premiums come out of wages over time. If so, part of what employers save would eventually show up as higher pay. That would still leave small and large firms on equal footing, which is the competitive gain this analysis is after.

FINDINGS

On price, product, service, and overhead, the current American health system would fail a vendor review. Comparable countries buy more healthy years for less money, and they do it without asking employers to run health plans on the side. The case for Medicare for All from the business side rests on three outcomes: a predictable cost that does not penalize smaller firms, the end of the benefits-administration burden, and a healthier workforce. The risks are real and manageable: an uncertain final tax rate, the need to build capacity before the switch, and resistance from the industries that profit from the current arrangement. A business that runs its own numbers will likely find its interests on the side of reform.

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