Cost of Medicare for All pt. 2 - the Warren plan

So to follow up from yesterday's post, let's go into Elizabeth Warren's plan to pay for Medicare for All. Warren begins by pointing out that the price tag of her Medicare for All plan isn't as big as other ones, because putting all payments under a single-payer plan will dramatically reduce overhead costs.

Medicare for All will save money by bringing down the staggering administrative costs for insurers in our current system. As the experts I asked to evaluate my plan noted, private insurers had administrative costs of 12% of premiums collected in 2017, while Medicare kept its administrative costs down to 2.3%. My plan will ensure that Medicare for All functions just as efficiently as traditional Medicare by setting net administrative spending at 2.3%.

Warren also says there would be savings by putting more limits on costs of service and the resulting payments to providers.

A heart bypass surgery that costs nearly $16,000 in the Netherlands costs an average of $75,000 in the United States. A CT scan that costs $97 in Canada costs an average of $896 here. And in the United States can hospitals charge new parents for holding their newborn after delivery....

If we expect the American people to be able to afford health care, we need to rein in these costs. Comprehensive payment reform, as part of Medicare for All, will reduce this component of health care spending. Under my approach, Medicare for All will sharply reduce administrative spending and reimburse physicians and other non-hospital providers at current Medicare rates. My plan will also rebalance rates in a budget neutral way that increases reimbursements for primary care providers and lowers reimbursements for overpaid specialties. While private insurance companies pay higher rates, this system would be expected to continue compensating providers at roughly the same overall rate that they are currently receiving. Why? This is partially because providers will now get paid Medicare rates for their Medicaid patients - a substantial raise. But it’s also because providers spend an enormous amount of time on billing and interacting with insurance companies that reduces their efficiency and takes away from time with patients. Some estimate that hospitals will spend $210 billion on average annually on these costs.

While I agree with the overall point on how single-payer will allow a better chance at putting a lid on the absurd costs often associated with health care, I can see a lot of highly-paid specialists and insurance/hospital execs hating it because it removes some of the big money they've been raking in. And they have the time and money to lobby and deform the conversation. These reductions should probably be linked with Warren's plans to reduce student loan debt, because a lot of medical professionals have taken on big-time debts in the hopes of having their high future salaries pay it back.

The other cost reduction Warren proposed is $6 trillion in aid that gets cut from states, to reflect the savings that those states will get because they don't have to pay for Medicaid, CHIP, or their employees' health care. Put those cost-containment measures in place, and Warren estimates the 10-year price tag on Medicare for All will drop from the $34 trillion that the Urban Institute estimated down to $20.5 trillion.

Cool if it works out. Will it?

So how do we find the money to pay for the added federal spending? Warren's big selling point is that the middle and working classes won’t be the ones paying anything, while getting big savings with zero-cost health care. The first way Warren proposes is to redirect the costs that companies already pay to give their employees health care.

Let’s start with a basic fact: American companies are already paying a lot for health care for their employees. They are projected to pay nearly $9 trillion over the next ten years, mostly on employer contributions for employee health insurance and on health-related expenses for employees under workers’ compensation and long-term disability. My idea is that instead of these companies sending those payments to private insurance companies, they would send payments to the federal government for Medicare in the form of an Employer Medicare Contribution.

In fact, it’ll be a better deal than what they have now: companies will pay less than they otherwise would have, saving $200 billion over the next ten years.

Basically this would pass 98% of the cost that companies take on for providing health care, and turn it into a tax to the government, while allowing the businesses to save that 2%. It also exempts small businesses that have less than 50 employees who don't provide health care to employees. My only complaint is that I don't see companies like Wal-Mart and Amazon have to pay something for NOT giving health care to many of their employees.

Another $1.4 trillion in revenues come from changes in the tax code that result from people not getting a tax deduction for health care premiums and HSA contributions...because that cost would be $0! Cynical jagbag GOPs might try to call that a back-door tax increase, but the average person won't care because he/she will have a whole lot more money in the wallet due to not having to pay money toward health care in the first place.

So where's the rest of the funding come from?

1. $2.3 trillion from crackdowns on tax dodges and other loopholes that are overwhelmingly used by the rich and corporate.

2. $800 billion from a 0.1% tax on the sale of stocks, bonds and derivatives, and another $100 billion on banks to "encourage them to take on fewer liabilities and reduce the risk they pose to the financial system."

3. Closing certain corporate loopholes and making foreign companies pay a 35% tax rate on the profits over what they sell in America - $2.9 trillion.

4. Making the rich pay more, above Warren's proposal for a 2% wealth tax on mega-millionaires. But Warren points out that the lower classes already pay a version of wealth tax through what they tend to invest in.

The tax burden on ultra millionaires and billionaires is less than half that of working families in the United States. In 2019, the bottom 99% of families will pay 7.2% of their wealth in taxes, while the top 0.1% of households will pay just 3.2%. My Ultra-Millionaire Tax, a 2-cent tax on the wealth of fortunes above $50 million, tackles this head on. Under this tax, the top 0.1% – the wealthiest 75,000 Americans – would have to pitch in two cents for every dollar of net worth above $50 million and three cents for every dollar on net worth over $1 billion. With this version of the Ultra-Millionaire Tax in place, the tax burden on the wealthiest households would increase from 3.2% to 4.3% of total wealth – better, but still below the 7.2% that the bottom 99% are
projected to pay.

Today, I’m going one step further. By asking billionaires to pitch in six cents on each dollar of net worth above $1 billion, we can raise an additional $1 trillion in revenue and further close the gap between what middle-class families pay as a percentage of their wealth and what the top one-tenth of one percent pay.

5. Warren would use the 2013 plan to give a path to citizenship to undocumented immigrants, which she says would allow for $400 billion in additional revenues through the taxes these new American citizens would pay for.

The move to both legalize and tax undocumented immigrants also takes care of what would be a likely complaint by hate radio and other righties – that those immigrants would get benefits of Medicare for All. This gets undocumented immigrants covered and makes them pay in, instead of having them either go without coverage, delay treatment, or have medical costs go up for others due to usage of emergency services (although the Kaiser Family Foundation indicates those bits of race-baiting fears of ER usage are largely overstated).

6. Lastly, Warren would cut nearly $800 billion from the military, by getting rid of an $80 billion-a-year contingency fund that's used to throw extra money to the Pentagon on an "as-needed" basis, and to keep the costs of war off the government's books. Oh, but Republicans are the "budget hawks", right?

I’m sure the corporate, Coastal media won’t like this at all, as Warren’s plan pushes the costs onto them and other rich people vs the average American. I don’t have a lot of sympathy for those who would pay the higher taxes under this plan, given that they’ve gotten so many breaks over the last 40 years while the other 80% aren’t much better off. But I can bet that corporate media and GOPs will portray Warren’s Medicare for All plan as “a huge tax increase” without mentioning that most majority of Americans (and small businesses who provide health insurance) will likely be better off.

Given that slanted field of information, the only way this plan will avoid scaring off voters is with a strong framing that shows how badly the average citizen is being screwed under the currently uncontrollable and corrupt health care system we have today, and that sticking with the corporatist status quo is the worst option of all. Fortunately, it appears Warren gets this.

Every candidate who opposes my long-term goal of Medicare for All should put forward their own plan to cover everyone, without costing the country anything more in health care spending, and while putting $11 trillion back in the pockets of the American people by eliminating premiums and virtually eliminating out-of-pocket costs. Or, if they are unwilling to do that, they should concede that they think it’s more important to protect the eye-popping profits of private insurers and drug companies and the immense fortunes of the top 1% and giant corporations, rather than provide transformative financial relief for hundreds of millions of American families.

And every candidate who opposes my long-term goal of Medicare for All should put forward their own plan to make sure every single person in America can get high-quality health care and won’t go broke - and fully explain how they intend to pay for it. Or, if they are unwilling to do that, concede that their half-measures will leave millions behind.

I have my fears that risk-averse Americans won't understand that, because they'll get their "facts" from corporate media which will put their own spin on what Warren's plan entails (between a few messages from drug and insurance companies), and that this might put a lid on Warren's support.

Please America, prove me wrong, and compare the Medicare for All plans of Warren, Sanders and others with the huge costs of inaction that exist today, and will grow larger in the future.