By NextBestFitReplace premiums with progressive taxes
Premiums (a flat amount per worker) are replaced with taxes based on income, so lower earners pay less and higher earners pay more.
Progressive replacement for flat premiums; required by single payer.
To review: Check the household calculator: households above about $240k pay more.
Review ledgerHow this path connects
Concrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- End employer and employee premiums for covered services
- Enact replacement taxes (payroll, income, or both) at published rates
- Publish household calculators showing net change
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
- Premiums are a large, flat, hidden tax on wages
Replacing flat premiums with income-based taxes lowers payments for most households below the stated high-income threshold. Tax financing also makes the funding visible and accountable.
- Faces political, industry, or legal opposition
Tax financing is politically harder to increase than premiums.
- Replacing premiums with taxes
Income-based taxes make higher earners pay more.
Who's affected
- Low- and middle-income households
- Premiums are a large, flat, hidden tax on wages: A flat premium takes a large share of a modest paycheck.
- Replacing premiums with taxes: Income-based taxes replace flat premiums that took a large share of their pay.
- Employers
- Premiums are a large, flat, hidden tax on wages: Small employers pay the same premiums on lower payrolls.
- High earners
- Premiums are a large, flat, hidden tax on wages: A flat premium is a small share of high pay.
- Replacing premiums with taxes: They pay more under income-based taxes than they did in flat premiums.
- Health insurers, brokers, and their shareholders
- Premiums are a large, flat, hidden tax on wages: Premiums are insurers' revenue.
- Employers
- Replacing premiums with taxes: Businesses that never offered coverage start paying toward it.
- Phase in rates and publish household calculators
Where it has been tried
- Canada, UK, Taiwan: Funded through general and payroll taxes.
- Canada: In 2022, government spending financed 71% of Canada's total health expenditure in a system funded mainly through taxes.Sources: Commonwealth Fund (2026)