August 5, 2019

The big question about 'Medicare for All' that keeps dividing Democrats

Daily Briefing

    Candidates seeking the 2020 Democratic nomination for president again squared off during back-to-back debates last week, and "Medicare for All" once again was a major point of contention.

    Where do the 2020 Democratic hopefuls stand on health care?

    But unlike in previous debates, candidates in these most recent debates zeroed in on how much it would cost to implement Medicare for All in the United States—and, perhaps more importantly, how the country would pay for it..

    The two Democratic camps on Medicare for All

    The debates took place Tuesday and Wednesday nights, and each debate featured 10 candidates. By the second night, Inside Health Policy's Ariel Cohen noted it had become clear that candidates largely fell into one of two camps on Medicare for All: those who support fully replacing the current insurance system with a federal single-payer program, and those who are concerned such a system would be too disruptive and would raise taxes on the middle class. 

    For instance, Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), and New York Mayor Bill de Blasio (D) supported a wholesale transition to single-payer—acknowledging that taxes would rise as a result. But Warren said she'd ensure the tax burden would not fall on middle-class families, and Sanders and de Blasio separately noted that tax increases would be at least partially offset by eliminating health insurance premiums, copayments, and deductibles.

    In contrast, former Vice President Joe Biden—who has criticized how disruptive Medicare for All would be and, instead, favors a public option plan that builds on the Affordable Care Act, suggested that Sanders and de Blasio were promising too much in claiming that a single-payer system wouldn't create a burden on middle-class families. "The fact of the matter is that there will be a deductible—there will be a deductible in their paycheck," Biden said.

    How would the US pay for Medicare for All?

    There's no precise estimate as to how much Medicare for All would cost to implement in the United States, nor whether implementing such a system would increase or lower total costs of health care. (And it's similarly unclear how much a public option plan—such as Biden's or Bennet's public option proposals—would cost and who would foot the bill.) 

    As Axios' Caitlin Owens explains, "We currently pay for health care through taxes, premiums, and our out-of-pocket spending. Medicare for All—whether it's full-blown single payer or a public option—shifts at least some of that spending on premiums and deductibles onto taxpayers."

    Sanders has proposed using a mix of taxes on employers and individuals to finance his proposal, including a new 7.5% tax on employers; a new 4% tax on households with annual incomes of $29,000 or higher; changing the federal income tax rate to be more progressive; an estate tax increase; taxing so-called "earned" and "unearned" income at the same rate; and implementing other tax-related changes and fees.

    Warren, meanwhile, said she'd focus tax increases on individuals with higher incomes and U.S. corporations.

    Sen. Kamala Harris (D-Calif.) similarly has proposed covering the cost of her Medicare-for-All plan by increasing taxes on the top 1% of earnings and taxing capital gains as an income. Harris' proposal states that she would limit tax increases to households with annual incomes of $100,000 or more. Harris also proposed imposing a fee on Wall Street transactions and making changes to the corporate tax rate.

    But as many of these proposals haven't been fully fleshed out or scored by the Congressional Budget Office, it's unclear whether the proposed revenue increases would fully fund the plans.

    Those 'pay fors' could be a sticking point for US voters

    Ultimately, "[h]ow receptive Americans are to a more expansive version of Medicare for All is almost certainly related to how they feel about their increasing out-of-pocket obligations," Owens writes—and evidence backs that up.

    A Kaiser Family Foundation poll released earlier this year found that, when respondents were told Medicare for All would "guarantee health insurance as a right for all Americans," 71% said they support the plan. However, when respondents were told the proposal would "require most Americans to pay more in taxes," support for the plan dropped to 37%—even though the poll also found that 77% of respondents were already aware they'd have to pay higher taxes to fund such a plan.

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