Whatever their many flaws, Medicare for All advocates used to have a decent answer to the question of how they’d pay for it. Taxes would go up, they’d admit, but these taxes would be de facto premiums, because they’d replace the money Americans already spend on premiums and other health costs. On top of that, the taxes would be progressive, increasing with income, unlike normal premiums — and aggressive price controls would reduce costs overall.
I mean, good luck with that, both politically and practically. But you can’t deny that there’s a logic to it.
For whatever reason, though, Elizabeth Warren today opted for a different approach: one where premiums go away, middle-class taxes don’t go up (not even a penny!), and taxes on the rich make up the difference. In other words, it’s a system where everyone else gets their health care at the expense of the wealthy. Even if that sounds appealing, her plan for doing this shows how silly it is.
First, the plan doesn’t keep its promise. Nearly half the funds come from redirecting the money that employers spend on health benefits to the government. Sorry, but your health benefits are part of your compensation. Sending that money to the state instead is a tax on you, not your employer.
And second, in trying to force rich people to pay for (much of the other half of) everyone’s health care, the plan basically blows every dollar the government could hope to collect from the wealthy in the coming years. The corporate tax goes back up to the uncompetitive 35 percent rate it was before the tax reform, and would be collected far more aggressively too. (Part of the burden of the corporate tax is borne by workers, by the way.) Warren’s wealth tax for “ultra-millionaires” gets a new 6 percent annual rate for those with more than $1 billion.
We already have a ton of debt and frightening obligations to provide old-age entitlements to hordes of retiring Baby Boomers, and yet this plan would eat up trillions in new revenue sticking the rich with the health-care bills of middle-class Americans who say they like their current insurance.
And as if all this weren’t politically infeasible enough, Warren also thinks she can chop defense spending. Oh, and pass comprehensive immigration reform so the government can collect $400 billion more from immigrants. And bring in trillions through more aggressive tax enforcement. Don’t forget the financial-transactions tax.
Or the fact that up until now I’ve set aside the question of whether the plan’s cost estimate is overoptimistic and taxes would actually have to be still higher than what she suggests. Warren starts with an evaluation from the Urban Institute . . . but dials it back $7 trillion on the idea she can hold costs down better than Urban assumed.
The easy solution is just to go back to the old argument, where taxes do go up but they’re more progressive than premiums and lower on average. But maybe middle-class Americans won’t want to give up their health insurance unless you bribe them with buckets of rich-people money.