Warren’s Medicare for All isn’t affordable for anyone

Democratic presidential candidate Elizabeth Warren has released her new road map for Medicare for All. She’s proposing a series of executive actions and bills that would transition the country to a government-run health system during her first term in the White House.

Sen. Warren claims her brand of Medicare for All, once fully in place, would require $20.5 trillion in new federal spending over its first 10 years. Not a penny of that would come from the middle class, she promises.

She’s engaging in the kind of fuzzy math popular with presidential candidates. Every other analysis of Medicare for All pegs its cost at least 50 percent higher than Ms. Warren suggests.

Ms. Warren’s pathway to Medicare for All features a three-year transition. In the first 100 days of her presidency, she’d call on Congress to fast-track legislation creating a public option. The new government-run health plan would immediately cover the uninsured, children and Americans with incomes below 200 percent of the federal poverty level — roughly $51,500 for a family of four. Others could elect to join if they wanted.

She would pursue passage of Medicare for All in the third year. This last step toward single-payer would eliminate private health insurance and force all Americans into government health coverage.

Ms. Warren claims she can raise the $20.5 trillion needed for Medicare for All by raising taxes on the rich. She’s proposed increasing the corporate tax rate from 21 percent to 35 percent, generating $2.9 trillion over 10 years. The top 1 percent of households would pay new taxes on their capital gains, amounting to $2 trillion. Billionaires would also face a 6 percent wealth tax, which would supposedly deliver $1 trillion.

But the proposed levies wouldn’t come close to covering the cost of Medicare for All. A wealth tax “has significant practical problems,” said Mark Zandi, chief economist at Moody’s Analytics and adviser on Ms. Warren’s Medicare for All plan. Her plan also assumes unrealistically low payments to hospitals and doctors and significantly slower growth in health spending.

More credible estimates of Medicare for All’s cost start at $30 trillion. Take a recent study from the left-leaning Urban Institute. It pegged the 10-year cost of Medicare for All at $32 trillion. That estimate was in line with an earlier analysis from the libertarian Mercatus Center.

Even Sen. Bernie Sanders, the pied piper of Medicare for All, says his plan would cost somewhere between $30 trillion and $40 trillion over 10 years.

It would take far more than taxes on the rich to come up with that kind of money.

The non-partisan Committee for a Responsible Federal Budget posits, for example, that the government could impose a new 32 percent payroll tax, on top of the existing 15 percent levy. In other words, every job in America would face a 47 percent payroll tax. Workers’ take-home pay would take a hit.

Or the government could more than double individual and corporate income tax rates. That would give the United States the second-highest corporate tax rate in the developed world.

The government could also consider reducing non-health federal spending by 80 percent. The report says that an 80 percent cut to Social Security would slash the average new benefit from about $18,000 annually to $3,600.

Even confiscating all income above $204,000 per year for individuals and above $408,000 for couples would be insufficient to cover Medicare for All’s $30 trillion price tag.

Fuzzy math has been a hallmark of government-run health plans for decades. Fifty-plus years ago, the House Ways and Means Committee projected that the original Medicare program would cost $12 billion by 1990. They were off by a factor of eight; the actual cost was $98 billion.

It’s no secret why Ms. Warren is refusing to acknowledge that Medicare for All would require middle-class tax increases. Support for a single-payer system drops from 56 percent to 37 percent once voters learn it would result in higher taxes for most people, according to a recent poll from the Kaiser Family Foundation.

Ms. Warren is going to great lengths to downplay the trillions of pennies the middle class would have to pay for Medicare for All. She won’t be able to dodge the truth forever.

Sally C. Pipes is president, CEO and the Thomas W. Smith fellow in health care policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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