Earlier this month the Urban Institute released a new analysis of various versions of health care reform, up to and including the Medicare for All plan being touted by Bernie Sanders and Elizabeth Warren. What Urban concluded was that the cost of the plan would be substantial [Emphasis added]:
The modeled “enhanced” single-payer system would cover everyone, including undocumented immigrants. The reform would include benefits more comprehensive than Medicare’s—including adult dental, vision, hearing, and long-term services and supports—with no premiums or cost sharing. All current forms of insurance for acute care would be eliminated, including private insurance, Medicaid, and Medicare, and everyone residing in the US would be covered by a new public insurance program. Providers would be paid rates closer to Medicare’s. Health spending by employers would be eliminated, and household and state health spending would decline considerably while federal spending would increase significantly…
This reform option covers the entire US population. National spending on health care would grow by about $720 billion in 2020. Federal government spending would increase by $2.8 trillion in 2020, or $34.0 trillion over 10 years.
As you’ve probably noticed by now, Elizabeth Warren has repeatedly refused to admit that taxes would need to go up sharply to cover these costs. All Warren will say is that “for middle-class families, for hard-working people costs are going to go down.” In other words, yes, taxes might go up but that rise will be more than offset by not having to pay monthly premiums, co-pays, etc. But is that true?
Yesterday, Jennifer Rubin at the Washington Post took a break from her incessant Trump-bashing to point out that there is some reason to think costs will not decline for most people under Medicare for All. Specifically, she points to an analysis by Kenneth E. Thorpe of Emory. Thorpe was an adviser on the single-payer plan in Vermont. Here’s what he concluded about the tradeoffs:
Allies of the Medicare for All plan correctly points out there would be savings from the approach for families from out of pocket health care costs. Certainly not paying premiums or a deductible or a copayment would save many families money. We estimate that would average over $2 trillion per year over the next ten years. However, taxes would have to be increased by an average of $3.2 trillion over the same period. A Medicare for All plan would create enormous winners and losers that have not been discussed in the debate. My recent analysis compares the dollars savings households with private health insurance would receive through the elimination of premiums and cost sharing to the new federal taxes they would pay to fund the program. The analysis shows that 71 percent of households with private insurance today would pay more in new taxes than they would save through the elimination of premiums and cost sharing.
For example, two-thirds of workers in small firms under 50 would pay more in taxes under a Medicare for All plan than they would save in the elimination of premiums and cost sharing. The tax increases would also hit the middle class. Two-thirds of families of 4 earning $50,000 to $75,000 would pay more in taxes than they would save through a Medicare for All plan. Overall over 10 million households earning between 200 and 300 percent of poverty would pay more in taxes than they would save through the elimination of premiums and cost sharing. Overall nearly 70 million households would pay more in higher taxes than they would save under Medicare for All.
If Warren is committed to not raising “costs” on families to pay for Medicare for All then she’s going to have to either limit the taxes on those 71 percent of households who would wind up paying more or, alternatively, she could limit the cost of the plan by reducing the benefits it offers. If she limits the taxes on the middle class, where is the money going to come from? Her wealth tax proposal (assuming it’s constitutional) is already spent on her other plans like free college tuition. Finally, there’s one more bit of bad news in Thorpe’s analysis. Medicare for All will result in a lot of lost jobs:
Medicare for All advocates point out that paying providers at Medicare rates and administrative savings would reduce what we spend on health care. That ignores the fundamental equation that expenditures equal income. For example, paying the over 5,000 community hospitals at Medicare rates would reduce their revenue by 16 percent and eliminate 1.5 million jobs. Hospitals are often the largest employer in many small and mid-size communities that reductions of this magnitude would have enormous economic and social implications for them. The elimination of private insurance would also result in lost jobs through the elimination of health insurance, by some estimates nearly 1 million in the health insurance industry.
Maybe Warren has a plan for that too but so far she hasn’t shared it.