Warren Financing Plan Roils Medicare For All Debate | Mercer US

Warren Financing Plan Roils Medicare For All Debate

Our Thinking / Healthcare / Washington Weekly

Warren Financing Plan Roils Medicare For All Debate
Calendar07 November 2019

Senator Elizabeth Warren has revealed how she intends to pay for her Medicare for All plan, an expansive transformation of the nation’s health care system that relies on tax increases on businesses and wealthy Americans to help cover $20.5 trillion in new federal spending.

Medicare for All -- which would eliminate employer-provided health care coverage and private insurance and switch all Americans to a health system paid for by the government -- has become one of the biggest flashpoints in the Democratic presidential primary. By promising that her health plan could be financed without middle-class tax increases, Warren is breaking with Vermont Senator Bernie Sanders, a Democratic primary rival whose Medicare for All legislation she co-sponsored.

Warren’s plan would impose nearly $9 trillion in new taxes on employers over a decade and require them to pay to the government roughly what they’re currently spending for health care. Companies with bargained workforces could lower these payments if they raise wages. Employers would also lose their tax deduction for sponsoring coverage.

Warren assumes some additional tax revenue from workers, who she says will have higher taxable take-home pay than under existing law because they would no longer have out-of-pocket costs and would no longer need to fund health care expenses through HSAs or other tax-advantaged accounts.

While Sanders hasn’t advocated a specific, detailed plan to pay for his Medicare-for-All plan, he has outlined a menu of options that includes a 7.5% income-based premium tax on employers as well as big tax hikes for employers and individuals. 

Warren’s fellow Democrats aren’t exactly jumping to voice support for her financing plan, underscoring the divergent views within the party and how challenging it would be for a Democratic White House to shepherd a plan through Congress.

Beyond the costs, some voters also are also deeply concerned about whether they can keep their insurance under Medicare for All. An October poll from the Kaiser Family Foundation found that support for the idea has narrowed in recent months, while support surged for a public option that would let people buy into a government health plan that would compete with private insurance plans.

Democratic presidential hopeful Pete Buttigieg, the mayor of South Bend, Indiana, is critical of Medicare for All and is promoting a plan that would maintain private insurance and provide a public option. A similar proposal that that builds on the Affordable Care Act is being offered by former Vice President Joe Biden, who also is seeking the party’s nomination.

But several prominent Democrats said this week that their presidential candidates should focus more on their differences with President Donald Trump and Republicans than with each other. 

A ruling expected soon from the U.S. Court of Appeals for the 5th Circuit on the Texas v. US lawsuit may draw more attention to those differences. Republican state attorneys general are suing to overturn the ACA after Republicans zeroed out the law’s individual mandate penalty in their 2017 tax overhaul. 

While Republicans on Capitol Hill don't all support the lawsuit, there's not a consensus plan to restore popular parts of the law, like protections for people with pre-existing conditions, should the courts strike it down, but many Republicans have said they would like to protect pre-existing condition protections. 

This open legal question, differences within both parties, and who wins the Democratic nomination guarantee big changes ahead in how the health policy debate is framed heading into 2020.

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