Sen. Elizabeth Warren (D-Mass.) released more than 40 pages of tax and health-care policy Friday, unveiling a massive plan to overhaul the nation’s health-care system and shift tens of trillions of dollars in the U.S. economy.
Warren’s plan adopts virtually in its entirety the vision for American health care set out by Sen. Bernie Sanders (I-Vt.) in his Medicare-for-all legislation. It would place all Americans on a single government insurer, virtually eradicating more than 150 million private health insurance plans, while levying more than $15 trillion in new taxes on businesses and the rich to fund a generous and universal benefits package.
Warren, who criticized “single-payer” coverage as recently as 2012, had already embraced this part of Medicare-for-all in her 2020 presidential election bid. But unlike Sanders, she has now specified exactly how she envisions to pay for such a radical shift — a move that could earn her praise for precision but also open her up to new lines of attack. (Sanders has released a menu of options for how he could pay for Medicare-for-all but has not detailed which one he prefers.)
“Warren has laid out the most specific Medicare-for-all plan ever, which she will and should get credit for,” said Larry Levitt, a health-care expert at the Kaiser Family Foundation. “But it is also now a juicy target for critics, who will now have lots to shoot at.”
Warren’s plan relies on math that some economists have already begun to question, including optimistic estimates for how much revenue certain plans — like beefing up tax enforcement — would bring into federal coffers. To avoid being branded a middle-class tax hike, the plan also creates a large new tax aimed at employers, which some critics say will probably have the effect of suppressing workers’ wages and could create perverse hiring incentives.
But the legislation gives something to health-care experts, voters and Democratic presidential rivals: a key document to evaluate. It may represent the largest government expansion in recent history, reflecting the slow embrace of single-payer by an increasing share of the Democratic Party, and aims to address an enormous slew of problems in the American health-care system.
Warren embraces Bernie Sanders’s promised benefits, requiring huge new tax increases.
If Warren’s plan were implemented, every person in America would be automatically enrolled in the new Medicare-for-all system, regardless of his or her personal preference.
The average American household currently spends $5,000 per person on health care. About 30 million Americans have no insurance, and tens of millions more are considered “underinsured,” meaning they do not get adequate coverage. Hundreds of thousands of people go bankrupt every year in part because of their medical bills.
The plan aims to address all these problems at once. Under this new Medicare-for-all system, every American would be guaranteed medical, dental, vision and auditory care with virtually no deductibles, premiums or co-payments of any form. There is no apparent limit on how many times people can go to the doctor or the dentist and have the government pick up the tab.
This structure is exactly the same as Sanders’s bill, from which it draws inspiration. That decision insulates Warren from potential criticisms by Sanders allies who have bashed other lawmakers who do not support offering universal and free government care when they walk in the door, or what’s known as “point of service” care. A number of presidential candidates who signed onto Sanders’s bill in 2017 have since wavered on some of these key components.
“No one other than Sanders and Warren have offered a plan that would cover everyone in America and eliminate the pernicious barriers to care,” said Adam Gaffney, a doctor and president of Physicians for a National Health Program, which supports single-payer.
The flip side of embracing the maximal package of health- care benefits is that it also dramatically increases the proposal’s price tag. Although single-payer advocates say their universal plan will lower health-care spending by forcing providers to accept lower payments, the legislation in other ways expands what will be spent on health care.
The legislation gives insurance to more than 30 million Americans who currently do not have it. Those who already have it may use more health care — going to the doctor or dentist more frequently, for instance — since they face little or no financial cost for doing so. And Warren is already on record for supporting health care for undocumented immigrants, potentially further increasing the proposal’s cost.
The estimates for how much this would all cost vary wildly but are crucial for evaluating whether Warren’s math checks out. A letter from her campaign cites seven different estimates for how much single-payer would cost — ranging from conservative groups to liberal economists — that vary by many trillions of dollars.
The campaign cited the estimate of national health spending provided by the Urban Institute, a nonpartisan think tank, which projects a robust single-payer plan would cost $34 trillion over a decade. Several European countries with single-payer systems have forms of cost-sharing that require patients to spend their own money while going to the doctor, said Harold Pollack, a health-care expert at the University of Chicago.
Warren rejects that approach. By eliminating even minimal patient costs and private spending, Warren is offering a plan as aggressive on benefits as Sanders. But in doing so, she is also forced to propose controversial, eye-popping tax increases.
Warren would force doctors, hospitals to accept lower payments.
The Urban Institute says the federal government needs $34 trillion to pay for Medicare-for-all, money that would be expected to be raised in new taxes. But Warren’s first move is to take a huge bite out of that number, which both makes her tax math easier and opens her up to new attacks.
Warren argues that she can make her single-payer plan cheaper than Urban’s estimate in a number of ways. The first — and probably most contentious — is to drive down the payment rates for hospitals, doctors and other health-care providers.
Citing research on the Canadian health-care system, Warren proposes setting physician payment rates in line with the current Medicare system — an effective 6.5 percent cut to doctor pay. She also would pay hospitals 110 percent of their Medicare payment rate, a cut from what they currently are paid by private insurers.
Warren says these cost restraints would knock about $3 trillion off the plan’s overall price tag. Single-payer advocates argue that doctors would be compensated by cutting their administrative fees under single-payer, as well as having more patients because everyone has robust insurance.
But doing so would likely elicit a backlash from the doctors and other providers who have political clout and have already sunk previous Democratic-led health-care efforts, such as health legislation proposed during the Clinton administration.
Warren says the design of her plan would also save $6 trillion by redirecting existing federal and state health-care spending on programs like Medicaid and the Department of Veterans Affairs. That, too, has drawbacks, since one of the arguments for a national federal health program is that it frees states to spend money on things other than health care.
Her campaign contends she will save about an additional $2 trillion from cutting administrative waste in the health-care system, as well as $1 trillion from slowing the growth in medical costs. Some experts have cast doubt on her numbers.
“We did not think those levels were realistic,” said Linda Blumberg, an analyst at the Urban Institute who worked on the report that formed the baseline of Warren’s estimates. “They are assuming they could do better on a number of costs than we thought was likely to be possible.”
But even after all those divisive moves, Warren is still about $20 trillion short. So she targets firms and the rich.
Warren wants unprecedented tax increases on the rich, businesses.
To find the remaining $20 trillion to fund her plan, Warren proposes a suite of taxes that would primarily — but, depending on whom you ask, not entirely — fall on the rich and corporations.
The list of new taxes pitched for businesses and the wealthy is long: an $8.8 trillion tax on firms that matches their existing health-care spending; $3 trillion in new taxes on the richest 1 percent of Americans, including an expanded wealth tax; about $3 trillion in taxes on what she calls “large corporations”; $2.3 trillion in new tax collections by beefing up enforcement; and about $1 trillion from a new Wall Street tax.
Some experts praised Warren’s team for finding so much in revenue from the upper echelons of the wealth ladder.
“I’m astonished they could come up with this much,” said William Gale, a tax policy expert at the Brookings Institution who served in the George H.W. Bush administration. “They’re really loading up on high-income households and corporations, but the math is close enough.”
But other experts have begun asking if Warren is overestimating how much money these taxes would really bring in. For instance, Warren’s taxes on the top 1 percent include a plan known as “mark to market,” which would increase taxes on capital gains taken primarily by the wealthy. But if other taxes on the rich were in place, such as her proposed wealth tax or Wall Street tax, it may be unlikely that such a plan would net as much revenue.
Warren also may be overstating how much can be realistically clawed back by the government by beefing up tax enforcement. Mark Mazur, a former Obama administration economist, said the “tax gap” between what is owed and what is paid is about $500 billion, making it difficult but not impossible to imagine Warren could rein in $230 billion a year.
“If you’re Sen. Warren’s staff, you say, ‘We could get a lot of that.’ But others may say it’s too harsh and could trigger privacy concerns,” Mazur said, depending on how aggressive the Internal Revenue Service would have to become.
Other economists raised questions about Warren’s plan to raise $8.8 trillion with a Medicare charge on employers, exempting firms with fewer than 50 employees. Warren is pitching this plan as a tax cut, since employers are currently expected to spend $9 trillion on health care, and her plan would require them to pay in taxes slightly less than what they currently pay in health care. Over the first decade of the plan, the system would transition to one in which firms are charged the same amount for each employee to fund the Medicare-for-all system.
This move helps insulate Warren from criticisms that her plan will increase middle-class taxes. But some critics have warned that companies would have strong incentives, particularly in the years before such a law’s enactment, to make it appear their health-care costs are low. Jared Bernstein, a former aide to rival Joe Biden who has talked to Warren’s campaign about health care, also warned that the apparent “head tax” that charges employers the same amount per employee could be harmful.
“That’s going to be regressive for a lot of low-wage employers and their workers,” he said. “But Warren has done a great service here. Finally someone has laid out a plan with pretty granular details, with a cost estimate and pay-fors.”