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Warren ‘Medicare for All’ plan has $20.5 trillion price tag

The plan would dramatically reshape the health care system and the nation’s tax structure

Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., speaks in Iowa on August 9, 2019. On Friday she unveiled her ‘Medicare for All’ plan, after facing criticism that she hadn’t explained how to pay for the health care plan. (Caroline Brehman/CQ Roll Call)

Presidential contender Sen. Elizabeth Warren, D-Mass., unveiled a $20.5 trillion plan Friday to finance a government-run “Medicare for All” system, after facing criticism that she hadn’t explained how to pay for the pricey health care plan.

Warren’s plan would dramatically reshape the health care system and the nation’s tax structure. It would draw trillions of dollars from employers and raise taxes on the financial sector, large corporations and the richest 1 percent of Americans. She says she also would pay for the shift to a single-payer program that would cost less than some projections of the existing system by reducing health costs, cutting defense spending and assuming an immigration overhaul saves $400 billion.

[Harris introduces health care plan building on Medicare with 10-year transition]

The plan allows Warren to say that the middle class will not see a tax increase, but would see their health care costs go down. Under a Medicare for All plan, the government would run a single-payer health care plan that covers everyone, leaving little room for private insurers. People would not pay premiums, deductibles or most out-of-pocket costs.

“A key step in winning the public debate over Medicare for All will be explaining what this plan costs — and how to pay for it,” an outline of her plan says. “This task is made a hundred times harder by powerful health insurance and drug companies that make billions of dollars off the current bloated, inadequate system — and would be perfectly happy to leave things exactly the way they are.”

Warren has become one of two major Democratic presidential candidates still actively calling for Medicare for All, after initially distancing herself from the policy pushed by Sen. Bernie Sanders, I-Vt. Warren and Sanders have continued to advocate for Medicare for All, while rival Sen. Kamala Harris, D-Calif., proposed a plan she says would cover everyone but allow people to purchase private insurance plans. Others, including former Vice President Joseph R. Biden Jr., have pushed for a government-run public option plan to compete with private plans.

Opponents have said that people do not want to be forced off of their private insurance plans.

Support for Medicare for All has fallen in recent months while support for a public option has risen, according to an October poll by the Kaiser Family Foundation, which tracks support for health care plans.

Enacting any sort of health care overhaul would be a challenge for the next president, and the ideas by Warren and Sanders are generating the fiercest opposition from the health care industry and groups that would pay for the changes. Sanders’ Senate bill has only 14 co-sponsors.

Warren said she will release a plan in the coming weeks on a transition for Medicare for All, including for health care industry workers.

Sanders’ legislation, which Warren co-sponsors and says she continues to support, would eliminate all private insurance, the source of coverage for roughly half the country. Over four years, people would enroll in a government-run plan covering all essential health care services, including vision, dental and hearing services and long-term care not currently covered by Medicare. Consumers would not pay premiums.

Criticism from other Democrats

Some members of Warren’s own party are wary of a massive health care overhaul after winning control of the House last year in part due to campaign promises to expand the 2010 health care law.

House Speaker Nancy Pelosi told Bloomberg News Friday that she isn’t “a big fan of Medicare for All,” noting that three House committees held hearings on the topic this year.

“Hopefully as we emerge into the election year, the mantra will be more health care for all Americans because there is a comfort level that people have with their current private insurance,” the California Democrat said.

During the hearings, many Democrats sought to show that the party favors expanding health insurance coverage in some way, contrasting themselves with Republican policies that could decrease enrollment, including a pending lawsuit that would nullify the 2010 health care law.

“There’s no way [Warren’s plan] would ever get 218 votes in the House, let alone 60 votes in the Senate,” Rep. Ami Bera, D-Calif., a physician and member of the moderate New Democratic Coalition, told CQ Roll Call in a Friday interview. “We as Democrats all believe in universal coverage but we ought to put out realistic plans that have potential to be enacted.”

Kate Bedingfield, Biden’s deputy campaign manager and communications director, said in a statement that Warren’s plan would put a $9 trillion tax on American workers and require revamping not just the health care system, but also tax, defense and immigration policy.

“By putting forward an unrealistic plan, she will be left with only two choices: even further increase taxes on the middle class or break her commitment to these promised benefits,” she said.

Industry groups are continuing to fight Medicare for All. Lauren Crawford Shaver, executive director of the Partnership for America’s Health Care Future, a coalition of health care trade groups that opposes more government involvement in health care, also said Medicare for All would raise families’ taxes.

“This has been confirmed not only by economists, but by the bill’s own author, who acknowledges that its tax hikes would need to hit Americans making as little as $29,000 a year,” she said about Sanders’ proposal in a statement.

Funding

Warren argues that savings from within the health care system, including lower reimbursements to providers, lower drug costs and administrative savings, would reduce costs by $7 trillion over a decade.

The plan calls for lower payments for most hospitals and doctors.

Most hospitals would be paid at 110 percent of current Medicare rates, with exemptions for rural and teaching hospitals and other providers with “challenging cost structures.” Warren noted that would be more than Medicaid rates — but it would be a significant decrease in what most private insurance plans pay hospitals.

Physicians and other providers would get current Medicare rates on average. Warren says that primary care providers would receive a higher rate than they currently get, while specialists would be paid at a lower rate.

The plan would also require Medicare to negotiate prescription drug prices, with no limit on the number of drugs affected. The price for any drug could not exceed 110 percent of the average international market price. Warren also proposed using compulsory licensing and creating a public agency to manufacture pharmaceuticals if negotiations fail.

About $6 trillion over 10 years that the states currently spend on Medicaid and the Children’s Health Insurance Program would be redirected to contribute to Medicare for All costs.

That would leave $20.5 trillion over a decade in new federal revenue that would be needed, which Warren’s economic team says would come from the following places:

  • Employer Medicare contribution ($8.8 trillion): A higher contribution would basically replace all of the current costs borne by employers for workers’ health insurance premiums, disability and workers’ compensation and administrative costs. It would save employers $200 billion over a decade, the plan says. Small businesses would be exempt unless they already provide insurance. Employers with collective-bargaining agreements would get a discount if they pass on savings to employees.
  • Additional take-home pay subject to taxes ($1.4 trillion): Workers receiving higher wages in place of employer-sponsored insurance would generate $1.15 trillion in additional income and payroll taxes. Additionally, $250 billion would be generated by getting rid of tax breaks like health savings accounts, medical savings accounts and itemized deduction for large medical expenses.
  • Targeted taxes on financial firms ($900 billion): Imposition of a tax on securities and derivatives transactions is estimated to raise $800 billion. A “systemic risk fee” on financial institutions with more than $50 billion in assets, intended to hit “roughly the forty biggest banks in the country,” according to the plan, would raise about $100 billion more.
  • Taxes on large corporations ($2.9 trillion): The plan would eliminate accelerated-depreciation schedules for large businesses, requiring them to deduct the cost of capital expenditures, research and advertising and other costs more slowly over time, saving an estimated $1.25 trillion. A separate country-by-country minimum tax of 35 percent on foreign earnings would raise an estimated $1.65 trillion.
  • Taxes on wealthy individuals ($3 trillion): The plan would build on Warren’s earlier proposed wealth tax by raising, from 3 percent to 6 percent, the rate assessed on net worth above $1 billion. It would also eliminate the preferential tax rates on capital gains and dividends and impose “mark to market” taxation — or annual taxes on paper gains even if investors don’t sell their assets — for the top 1 percent of earners, raising an additional $2 trillion.
  • Bolster tax enforcement ($2.3 trillion): Warren would boost IRS tax enforcement resources, expand reporting requirements and strengthen enforcement of a 2010 law (PL 111-147) requiring foreign financial institutions to report holdings and income of U.S. taxpayers, increase reporting requirements for cryptocurrencies and take other steps.
  • Immigration overhaul ($400 billion): The plan envisions a comprehensive immigration overhaul similar to one that passed the Senate in 2013. The Congressional Budget Office previously estimated that bill could have generated $400 billion in revenue.
  • Eliminate Overseas Contingency Operations funding ($800 billion): The plan would eliminate a special designation that exempts military spending for troops in conflict zones from annual spending caps.

Peter Cohn contributed to this report.

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