Some Medicare for All Suggestions for Warren

 

In spite of health care being a major concern of the voters, Warren's web site does not list health care or Medicare for All on its home page. To get to MCA, one has to click first on "Jump to all plans," and click second on "Ending the Stranglehold of Health Care Costs on American Families." Then comes a ling set of paragraphs dealing mostly with financing.

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I believe this is not the correct priority.

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I believe than MCA should be and remain on the home page for the duration. The first click on MCA should take one to a table or short list of what MCA will do for the 99%. No premiums. No deductibles. No co-pays. No out-of-network costs. Hearing, vision, dental, mental, physical therapy, and long-term care coverage. Pre-existing condition coverage. And a call to compare this with your current insurance.

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Warren's campaign should meet soon with the major unions which are skeptics, and invite comparisons between health care under their contracts, and health care under the MCA. I suspect that their endorsements would follow.

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Elizabeth Warren is right to challenge her competitors to state clearly what their health care plans would cover, how much they would cost, and how they plan to pay for them. She shoud hammer them on it, as the only one who has done this to date.

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She also should make clear that everyone would automatically be enrolled as soon as Congress acts to pay for MCA. People need to know that they can keep their current insurance if they want to, but that MCA will cover them anyway. And in a few years, who would want to pay for what MCA provides free? Supplemental private insurance will be there for those who want it and can afford it. This is unavoidable, and not worth much discussion.

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The voters care a lot about health care. Elizabeth Warren should be the leader on their behalf.

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6 January 2020

Also posted on Warren's community site

 

Untangling the Costs of Medicare for All

 

In the last Democratic debate, there was a quick exchange between Biden and Sanders. Biden said Bernie’s plan would cost $32 trillion over ten years, and was too expensive to pay for. Bernie responded that health care would cost $50 trillion over ten years, and that his plan was cheaper and better. So, I wanted to take a quick look at the facts, and try to untangle the cost debate over Medicare for All. The numbers are rounded, for a quick and dirty estimate.

 

The total spending on health care in 2017 was about $3.5 trillion. 1 Without inflation, this projects to $35 trillion over ten years. Assuming a 5%/year increase in spending (very conservative estimate) gives about $50 trillion in total health care costs over 10 years. This makes Sanders’ estimates projecting the costs of the status quo fairly reasonable.

 

Next, I looked at what might increase Federal expenditures under Medicare for All.

 

First, over 9% of the population currently is uninsured. So, adding coverage for them would start at about $350 billion a year.

 

Second, covering everyone’s out-of-pocket expenses would cost nearly $400 billion a year.

 

Third, covering private health insurance spending would cost nearly $1.5 trillion a year.

 

Finally, improving coverage, such as eye care and dental expenses, would add perhaps $150 billion a year.

 

Thus, Federal expenditures could increase about $2.4 trillion a year.

 

Possible reductions in Federal expenditures need to be estimated, too.

 

Reductions in administrative overhead could save $100-150 billion a year.

 

Phasing out the employer/employee insurance subsidy could save $300 billion a year.

 

Negotiating lower costs for prescription drugs might save another $150 billion a year.

 

These savings could add up to $600 billion a year.

 

The net impact would be about $1.8 trillion a year in higher Federal spending.

 

Before considering tax increases, there is a simple first step: reduce our bloated defense budget by $200 billion a year. We still would have the largest defense budget in the world.

 

As for tax increases, there are any number of options. My preference would be increasing taxes on the corporations. For example, corporate income tax receipts in 2018 were about $200 billion, while individual income tax receipts were about $1.7 trillion.2

 

This is a ratio of corporate vs individual income tax receipts of about 15% vs 85%. Increasing corporate income tax receipts to $800 billion would return the corporate share to about 40%, which was the historical average for most of the years after WWII, up to the Reagan tax cuts. This would produce about $600 billion a year. Obviously the numbers could be adjusted to change the burden between the military and the corporations.

 

The second step could be doubling taxes on the top 1% of individuals, from an effective tax rate of 20% to about 40%. This, too, would produce about $600 billion a year.

 

These three steps would add about $1.4 trillion a year to Federal income, leaving a Medicare for All funding gap of about $400 billion a year. While a big number, it is a much smaller number than we started with. Time to discuss additional options for closing the gap.

 

Important side note: health insurance companies now spend about $1.2 trillion a year. Medicare for All would substantially reduce these expenditures, with the savings going to individuals who reduce or drop their private health insurance. Simply put, these three steps could give a $1 trillion a year bonus to our people.

 

My conclusion: Medicare for All is feasible. Paying for it is not the big issue some might pretend it is. Let’s move on to discussing the details.

 

Allan Abramson, 18 Sep 19

 

1  Centers for Medicare and Medicaid Services, National Health Expenditure Accounts

2  Center on Budget and Policy Priorities, 20 June 2019, “Policy Basics: Where Do Federal Tax Revenues Come From?”