Health Care Plans Work Best if We Have Black Ink, Not Red Ink
PUBLISHED May 9, 2026
Rolling out a universal health care plan costs money. Any plan must begin with fiscal soundness.
Here is where our country stands. In 2024, the United States spent almost $5.3 trillion in health care expenditures.1 Below is a breakdown of who paid what.
| Federal Government | $1,652bn |
| Households | $1,459bn |
| Companies | $967bn |
| State and Local Governments | $860bn |
| Private Sponsors | $391bn |
If we model our All-American Care program after the national health insurance plan in the Netherlands, we need to balance the books. Individual premiums paid by households, out-of-pocket expenses, and corporate payroll taxes must add up to $2,426 billion, the sum total that households and companies paid toward health care in 2024. Otherwise, the country could go further into debt in order to pay for necessary medical expenses.
But first, why would we want to copy the Netherlands?
For one, they use ideas and practices that we as Americans are familiar with, i.e., we contact an insurance carrier to take out a health insurance policy. In addition, the Dutch have private supplementary plans to cover services like routine dental work and eyewear, ancillary benefits that are not covered under their basic health insurance scheme.
Most importantly, their plan works. The Netherlands devotes about 10 percent of its GDP to health care compared to 18 percent in the United States. Plus, the Dutch people live, on average, 3 years, 4 months longer than Americans do.
Finally, why reinvent the wheel?
Household Debt
Assume then, for argument’s sake, that we finance All-American Care in the same manner the Dutch fund their universal health care plan, using a blended financing approach. The table below summarizes the projected funding sources for households using Dutch assumptions. You can follow along with the math at the bottom of the page.
| Premium income | $578bn2 |
| Out-of-pocket expenses | $138bn3 |
| Supplementary insurance | $73bn4 |
| Government coverage for children under 18 | $302bn5 |
| Tax on premium income | $95bn6 |
| Total Household Related Financing | $1,186bn |
Two things here. Under Dutch rules, the government covers all children up to age 18. That means in an All-American Care Plan, the government would finance an estimated $302 billion in children’s health care costs.5
Additionally, the federal government forgoes another $316 billion annually by excluding employer-sponsored insurance as taxable income. If we follow the Dutch model, premium income comes from after-tax income, allowing the government to recapture some of the money it had previously forgone.6
Even so, household contributions are still short $273 billion in funds needed to properly finance an All-American Care plan.
Business Debt
Likewise, business contributions also fall short of the funds required to finance our health care plan. Following the Dutch way, businesses would pay a 6.51 percent payroll tax on the wages of each employee they have working for them up to a salary cap of $92,320 a year.
Using a 6.51 percent tax rate, businesses would only pay $347 billion into the system compared to the $967 billion they now contribute to our health care financing, a funding gap of $620 billion.7
If we want employers to shoulder more financial responsibility, we need to modify our funding formula. What we need instead is a Dutch financing model with American characteristics. Our first rule in making any such modification should be: keep it simple; stick with the familiar.
Here, we can follow Social Security guidelines: replace a 6.51 percent tax rate with Social Security tax rates. Tax employers 7.65 percent up to $184,500 on employee wages with a 1.45 percent tax on all wages thereafter.7 This concept is simple and familiar to Americans.
Under this method, employers would contribute $667 billion, short $300 billion from what they are paying now.
Combined, there is a funding gap of $573 billion between what household and employer contributions need to pay.8 Add on some startup costs, and the $573 billion gets bigger. How we should handle that funding deficit is the topic of a later blog.
Note: This is an ongoing series of blogs to develop an affordable, universal health care plan before the 2028 presidential election.
Author’s Calculations
1Centers for Medicare & Medicaid Services (CMS), National Health Expenditure Accounts, Table 5 (2024).
2Premium Income: $179/month x 12 = $2,148/year x 269mn = $578bn; Adult Population: 340,110,980 (.79) ~ 269m; Census Reporter, “United States – Profile Data,” accessed May 6, 2026, https://censusreporter.org/profiles/01000US-united-states/.
3Estimate based on out-of-pocket spending equal to 12% of health expenditures in the Netherlands. See European Observatory on Health Systems and Policies, The Netherlands: Country Health Profile 2025 (2025), 3. Calculation: 0.12 × $1,459 billion (CMS National Health Expenditure Accounts, Table 5, 2024) ≈ $175 billion. Further, children make up 21 percent of our population, so I assumed that the government would be responsible for their health care costs. $175 billion x .79 = $138 billion.
4Estimate based on supplementary insurance equal to approximately 5% of health expenditures in the Netherlands. See European Observatory on Health Systems and Policies, The Netherlands: Country Health Profile 2025 (2025), 3. Calculation: 0.05 × $1,459 billion (CMS National Health Expenditure Accounts, Table 5, 2024) ≈ $73 billion. This assumption models the Dutch, who pay 5 percent of the health expenditures on supplemental insurance.
5HIPAA Journal says average spending per child was $4,212 in 2024. Census data show that children under 18 were 21 percent of the population (.21 x 341mn = 71.6mn). Calculation: 71.6 million × $4,212 = $302 billion. Robert Murray-Watson, “Personal Healthcare Spending in the United States,” HIPAA Journal, June 19, 2024.
6Estimate based on 16.4 percent Average Federal Tax Rate. Calculation: $578bn x .164 = 95bn. Tax Policy Center, “Historical Average Federal Tax Rates for All Households” (accessed May 6, 2026). Under current tax rules, individuals do not pay tax on their health benefits because of a tax subsidy. If we follow the Dutch model, individuals would pay with after-tax dollars. This allows the federal government to get some money back.
7Based on SSA 2023 wage distribution data: First calculation: $5,331bn (on all wages up to $94,999) x 6.51% = $347bn. This follows the Dutch financing model.
Second calculation uses Social Security numbers: $8,161bn in wages up to about $185,000 and $2,950bn above that amount. ($8,161bn × 7.65%) + ($2,950bn × 1.45%) = about $667bn.
8For this figure, I combined the funding gap for both households and businesses: $273bn + $300bn = $573bn
Selective References
Census Reporter. (n.d.). United States – Profile data. Retrieved May 6, 2026, from https://censusreporter.org/profiles/01000US-united-states/
Centers for Medicare & Medicaid Services. (2024). National Health Expenditure Accounts: Table 5 national health expenditures by type of sponsor. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/downloads
Murray-Watson, R. (2024, June 19). Personal healthcare spending in the United States. HIPAA Journal. https://www.hipaajournal.com/personal-healthcare-spending-in-the-united-states/
European Observatory on Health Systems and Policies. (2025). The Netherlands: Country Health Profile 2025. https://eurohealthobservatory.who.int/publications/m/netherlands-country-health-profile-2025
Social Security Administration. (2024). Wage distribution of workers with taxable earnings, 2023. https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2023