How Elizabeth Warren Plans To Pay For 'Medicare For All'

Elizabeth Warren’s $52 trillion health care plan. We look at the big picture and unpack the details.

Jonathan Cohn, senior national correspondent at the Huffington Post who writes about health care, politics and policy with a focus on social welfare. (@CitizenCohn)

Simon Johnson, he co-wrote two "expert letters" for Sen. Elizabeth Warren's campaign analyzing the costs and revenue projections for the "Medicare for All" plan. Former chief economist at the International Monetary Fund. Professor of entrepreneurship and economics at the MIT Sloan School of Management. Co-author of "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream." (@baselinescene)

Mark Pauly, professor of health care management, business economics and public policy at the University of Pennsylvania's Wharton School of Business (@Wharton). Former commissioner on the Physician Payment Review Commission, and has been a consultant to the Congressional Budget Office, the Office of the Secretary of the U.S. Department of Health and Human Services and the American Enterprise Institute.

On the claim that Warren’s plan would not raise taxes on the middle class

Jonathan Cohn: “It's one of those questions, that statement, that really depends on how you interpret it. You know, on paper, she's right. I mean, she has constructed a plan that does not impose a new tax that falls directly on the middle class. And she has — insofar as she's sort of looking for new taxes to help finance that — she has really put them exclusively on the wealthy, and on corporations. You know, that's a big part of her financing. You know, the asterisk there — there's actually several asterisks there – but, I would say one of the most important is that she does ask employers to contribute towards the cost of insurance. … The way she's structured it, she's basically said to employers, ‘I want you to keep paying what you're paying now.’ So, there's not really a new tax. On the other hand, if you talk to most economists, they would say that, ‘Well, you know, when employers pay for insurance, even if it's out of their own pockets, eventually that's coming out of wages, and you kind of roll down the line.’ And in the grand scheme of things, some people would say, ‘Well, that's actually still a tax on health care. It just is on the employers, which eventually passes to the employees.’ You know, I would say that you could say it's a true statement. But, you know, it's true with a lot of caveats that you need to understand.”

How does the plan reduce overall spending?

Jonathan Cohn: “This is a really important part of the discussion, when we talk about what the plan is going to cost. What is it going to cost to give everybody health insurance through this new ‘Medicare for All’ system? And we have sort of forces that are going to kind of push in two directions, right? So, on the one hand, when you go to a single-payer system, the government’s more efficient than having all these private insurers, hospitals don't have to spend all that money on billing, so that saves money. In addition, when the government is running the whole insurance program, it can set an overall budget and it can sort of dictate to hospitals and doctors what they're going to get paid. It can negotiate directly with drug makers, and that can save money. On the other hand, you're giving a lot of people insurance who don't have it already. And, remember, the insurance for people who already have coverage — say, through an employer — your insurance is about to get better. Your deductibles are going to go away; your out-of-pocket costs are going to go away. And that's really one of the main goals of ‘Medicare for All.’

"But, of course, when you give people better insurance, or you give people insurance they didn't have, they consume a lot more health care. And so that's going to drive costs up. So, when we sit and decide, ‘Well, how much is ‘Medicare for All’ going to cost?’ you have to take into account both: What's pushing the cost up? All these new people getting health care. What's pushing the cost down? Savings, the administration savings, dictating costs to hospitals and doctors. And the cost comes out to how you assume that's all going to net out. She has kind of come up with numbers that she says, ‘Look, I kind of put that all together, and we stay right at the same level we are today.’ Some people would say, ‘Is that right? Is that wrong?’ That's the debate we're having.”

What would an average person pay under a Warren plan?

Simon Johnson: “Nothing. … So, right now, in the forecast, the best forecast that we have — which are not our forecasts, they’re official government forecasts. American families – so, households — will pay, over the next 10 years, a combined $11 trillion in insurance premiums, co-pays, deductibles and other out-of-pocket expenses. That's an enormous amount of money. Under the Warren plan, that goes to zero. Absolutely to zero. You don't pay anything. So, where does the extra funding come from, to cover that $11 trillion? That's what comes from the taxes on the wealthiest individuals, the largest corporations. They go after tax avoidance — global tax avoidance — which is a huge number. And all they do is move our tax rates on those large companies — in terms of collecting from these people — to the OECD [Organization for Economic Co-operation and Development] average, because we're so bad at this right now. Rich people are not like you and me … they don't pay tax."

"American families – so, households – will pay, over the next 10 years, a combined $11 trillion in insurance premiums, co-pays, deductibles and other out-of-pocket expenses. That's an enormous amount of money. Under the Warren plan, that goes to zero."

Simon Johnson

How do you think the math in this health care plan checks out?

Mark Pauly: “Any projection by economists is all fuzzy math. As Yogi Berra might have said, ‘Fuzzy math projections are fuzzy math, especially about the future.’ And so is this one. There is a set of assumptions — cleverly — I have to give credit for the team that put together these set of numbers, to make the target hit the bullet, to have no explicit tax on the middle class. They did a wonderful job with a kind of tight squeeze. But, as the saying goes, there's no guarantees. And really, I think what people ought to think about is, what assumptions do you need to make in order for these guesses to be true? What bets would you be making if you decided that the numbers could be correct? That's important to say. What bets would you be making that would have to be true to have that happen?”

Can we call this a single-payer health care plan? 

Simon Johnson: "Single-payer means that you have one social insurance company, or fund, or government-run entity. So, that's one important concept here. Another important concept is universal coverage. And it is true that most of our competitive nations have near universal coverage, and they have a single-payer system. What they differ on is who runs the providers. So, in Britain, where I was born, the hospitals — and many of the doctors — worked for the government, through the National Health Service. That's not on the table here. It's private providers in the United States, currently. It'll be private providers in the United States going forward. The only difference is we're replacing this incredibly inefficient and, frankly, wasteful private insurance structure — with all the billing, and all the costs involved in that, which are enormous for everybody throughout the system — we're replacing that with a single-payer."

"We're replacing this incredibly inefficient and, frankly, wasteful private insurance structure — with all the billing, and all the costs involved in that, which are enormous for everybody throughout the system — we're replacing that with a single-payer."

Simon Johnson

HuffPost: "Elizabeth Warren’s Most Anticipated Plan Of All Has Arrived" — "Massachusetts Sen. Elizabeth Warren on Friday unveiled a plan to pay for 'Medicare for All' that, at least on paper, fulfills the 2020 Democratic presidential candidate’s ambition of financing the program with no new taxes on the middle class.

"The plan, modeled on the bill from rival 2020 Democratic candidate Sen. Bernie Sanders, envisions wiping away most existing insurance arrangements, private and public, in order to enroll nearly all Americans into a new government-run program that would cover all necessary medical expenses. It is designed both to cover those who don’t have insurance and to make health care more affordable for those who already do.

"The 9,000-word, 21-page plan is sprawling ― including everything from an expansion of Warren’s signature wealth tax to incentives for unionization to a pathway to citizenship for undocumented immigrants ― and contains aggressive measures to contain the spiraling cost of health care almost certain to generate opposition from doctors, drugmakers and hospitals. It would be funded using heavy tax increases on the wealthy and a new per-employee tax meant to replace what business previously spent on health insurance.Massachusetts Sen. Elizabeth Warren on Friday unveiled a plan to pay for  'Medicare for All' that, at least on paper, fulfills the 2020 Democratic presidential candidate’s ambition of financing the program with no new taxes on the middle class."

New York Times: "Billionaires Only? Warren Errs in Saying Whom Her Health Plan Would Tax" — "When Senator Elizabeth Warren laid out her plan for 'Medicare for all' on Friday, she said she would raise taxes on the top 1 percent of households to help pay for it. The middle class, she said, would not pay 'one penny' more.

"On Saturday night, Ms. Warren presented an even narrower description of who would face higher taxes under her plan. She told reporters that billionaires would be the only people to see their taxes go up — a misstatement of what she had proposed a day earlier.

"'It doesn’t raise taxes on anybody but billionaires,' Ms. Warren told reporters in Dubuque, Iowa, when asked what income bracket she defined as 'middle class.' She added, 'And you know what? The billionaires can afford it.'

"Anyone with under $1 billion in net worth, she said, 'is not paying a penny more.' Asked again how she defined middle class, she repeated the assertion. 'Understand this,' she said. 'This is no increase in taxes for anyone except billionaires. Period. Done.' "

New York Times: "Warren Health Plan Tightens Democrats’ Embrace of Tax Increases" — "Three years after President Trump rode a wave of populist anger into office, some of his top Democratic challengers are calling for a fundamental reordering of American capitalism, arguing that voters will embrace bold plans to reverse decades of rising inequality by raising taxes on corporations and the rich.

"The $20.5 trillion proposal for 'Medicare for all' released by Senator Elizabeth Warren of Massachusetts on Friday is the most prominent example of how a party that once bet on centrist economic policies to win elections is moving toward far more ambitious efforts to redistribute wealth and expand the government’s role in the economy.

"In doing so, Democrats are trying to push the boundaries of how much a country can rely on a sliver of high-end investors and other wealthy citizens to fund widely used social programs and bankroll other services traditionally paid for by individuals.

"Ms. Warren, who is leading in many polls, has proposed a wealth tax on billionaires, along with new taxes on corporations and financial transactions like selling or buying stocks. Senator Bernie Sanders of Vermont has embraced raising taxes on billionaires and corporations, as well as on the middle class, to fund universal health care, free college, clean energy and other government programs. Another Democrat who is climbing in the polls, Pete Buttigieg, would reverse Mr. Trump’s corporate tax cuts to pay for a less expansive and expensive health plan and has also expressed support for higher taxes on the rich."

Axios: "Elizabeth Warren's dream health care world" — "Sen. Elizabeth Warren's Medicare for All plan takes on every major health care industry — insurers, doctors, hospitals and drug companies — in her pursuit of expanding coverage and lowering costs for the middle class.

"Why it matters: We've never tried any cost containment measures that are remotely close to being as aggressive as Warren's, and there could be consequences if payment rates are slashed so low.

"The big picture: Experts say you can only wring so much money out of the system before it starts to impact the care people receive — and Warren is wringing out a lot.

"Private insurance would be eliminated. Warren argues that would save hundreds of billions of dollars in administrative spending, and relieve patients of the hassle of dealing with their insurer."

CNN: "Sanders criticizes Warren's health care plan: 'I think we have a better way'" — "Vermont Sen. Bernie Sanders criticized his 2020 presidential rival Sen. Elizabeth Warren's funding plan for 'Medicare For All,' calling his plan 'more progressive' and squaring up the two most progressive candidates in the race for the Democratic nomination to do what neither of them have wanted to do: draw distinctions between each other.

"Sanders, who has centered his candidacy around the fight for his single-payer Medicare for All legislation, told ABC News in an interview published Sunday that although he and Warren believe everyone should have health care, they differ on how to fund it. Her plan, he also said, would "have a very negative impact on creating jobs."

"'We do disagree on how you fund it,' Sanders told ABC News. 'I think the approach that (I) have, in fact, will be much more progressive in terms of protecting the financial well being of middle income families.'

"Sanders specifically criticized the Massachusetts senator's nearly $9 trillion tax on employers."