You are a member of a presidential commission appointed to consider a mandatory national health insurance plan and the question of how to fund the plan is being discussed.
Specifically, three separate options are being considered to generate an average of $4,000 per worker-a flat mandatory premium, a doubling of the current 7.65% payroll tax that comes out of people's pay to cover social security and Medicare, and a 7% increase in income tax.
Think about funding plans from the perspective of three workers:
• One who makes $25,000 per year
• One who makes the same in salary but also has $1,000 in investment income
• One who makes $85,000 per year, including $10,000 in investment income
Based on the above scenario, answer the following questions:
Identify the economic implications of each plan for the individuals listed in the above scenario. How does each approach affect each individual and which is the best approach for all -- based on the numbers?