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Two competing plans for Medicare for All, from Elizabeth Warren and Bernie Sanders, provide a proxy for a debate on how the candidates think politics truly works.
The long-awaited Medicare for All funding plan from Elizabeth Warren has been released, and Bernie Sanders has criticized it, saying his vision for funding Medicare for All is “far more progressive.” That is an easy boast to make and impossible to rebut, since Sanders has very explicitly said he doesn’t intend to release a fully detailed funding plan. But while the disagreement between the campaigns might seem like a strange diversion about tax policies unlikely to get through Congress, it is a proxy for one of the more important political-strategy disagreements in progressive circles.
At its core is the rarely discussed question of whether the best way to achieve progressive reform is by highlighting the inherent “fairness” of a policy, or whether the only politically viable path to improvement is by focusing on Pareto improvements, where no one is made worse off.
Rhetorically, the two candidates have chosen opposite sides on this issue. Sanders takes the first approach, arguing that not only will Medicare for All cover everyone equally, but it will also be paid for with much fairer, progressive taxes. Not only will the whole package be progressive, but every individual part of it will be.
During the last debate, Sanders claimed, “For virtually everybody, the tax increase they pay will be substantially less than what they were paying for premiums and out-of-pocket.” Of course, how he defines “virtually everybody” and “what they were paying” is doing a lot of work here. The amount each person paid for health care last year, even people with the same official income, varies dramatically based on location, coverage type, family, age of people at their company, and health. For example, half of people had basically no out-of-pocket health care costs last year while just 5 percent of people paid nearly half of all out-of-pocket costs. So does “virtually everybody” mean 95 percent of middle-class people? 90 percent? 75 percent? Is that compared to last year, or an assumed ten-year window of average medical risk?
These are questions impossible to answer because Sanders has strategically chosen the Schrödinger’s cat of funding. He provides a list of possible options to pay for his plan that are treated as both his plan and not his plan. Even adopting all of them would not be enough money without a more explicit cost control provision that could upset health care providers. Sanders has even used one of the more major provisions in his funding menu, the wealth tax, to fund his housing plan.
Listing the low-hanging fruit is the easier part. The final designations determine if it is 5 percent or 35 percent of middle-class people who will technically pay more than they did last year. Sanders’s thesis is that if he can rally people around the principles of fairness, solidarity, and progressive taxation, he can get a critical mass to look beyond their personal trade-offs when the hardest details are unveiled at the last minute. Of course, fairness is an easy principle to get people to agree to in the abstract, but harder to get people to agree to on the particulars, especially when you tell them what they are currently paying is unfairly low.
Sanders should know that trying to find the last, most difficult piece of funding has imperiled state reform efforts. A major reason single-payer failed in Vermont, Sanders’s home state, is that every tax plan they looked at would have left a noticeable share of middle-class people feeling that they were paying more.
Warren’s goal, by contrast, is to never use qualifiers like “virtually,” and never talk about average premiums and out-of-pocket costs. Instead of trying to create a tax that sort of replicates what companies currently pay in premiums and what people pay in out-of-pocket costs, she will just make companies pay 98 percent of what they currently pay in private insurance premiums as an “employer Medicare contribution.” She sees this as the least disruptive financing solution relative to the status quo.
At the same time, she is pushing explicit cost control measures and taxes on the rich to make up for the highly uneven amount people pay in employer-side premiums and out-of-pocket costs. She is willing to more explicitly take on hospitals and providers to shift that money to the middle class. She wants to be able to promise non–health care workers that not a single one of them will pay more, period.
The massive variation in what people pay for health care makes her desire to completely eliminate losers impossible. Instead, she just hides them. Her employer requirements reward “bad” companies that did not offer insurance or only offered low-quality insurance while punishing “good” companies that offered good insurance. Over an unspecified time frame, the Medicare contribution shifts to a national average, which does nullify this disparity somewhat, but definitely puts at least some businesses on the hook for paying more than they did previously. Meanwhile, small businesses that didn’t offer insurance will pay nothing, but ones that did will still be on the hook for thousands of dollars per employee, while also losing their biggest recruitment advantage. On the margin, this will likely make some businesses go under, and creates bad incentives for companies to try to classify workers as contractors, although both Sanders and Warren have vowed to attack worker misclassification through the National Labor Relations Board.
Warren’s extreme pursuit of pure Pareto improvement for workers has compelled her to embrace a bad and unfair policy, even if the worst parts are only temporary. Warren’s plan could easily be modified to reduce most of the disruption without rewarding bad players, but that would cost her the talking point.
Warren has made the calculation that to summon the coalition to take on drug companies, insurance companies, and hospitals, she can’t afford to make even a few percent of workers nominally pay more. Given people’s loss aversion, the most important political question to her is not how much things are improved on average, but how many people feel like they are losing.
From one perspective, the policy differences between the two sides are smaller than they appear. While Warren’s employer Medicare contribution is in isolation regressive, it is just one part of the plan, with the other elements heavily targeting the rich. Since we don’t have a true funding plan from Sanders, you can’t say whose entire package is actually more progressive, though Sanders would certainly stress that his is.
Similarly, Sanders also embraces some significant bad policy designs to try to minimize losers. He calls for unfairly favoring small businesses by exempting the first $2 million in payroll from the 7.5 percent employer payroll tax. This is unfair to workers at bigger companies, would benefit higher-income workers in companies like early-stage tech startups, and similarly creates a bad incentive for companies to try to classify workers as contractors. Without this concession, the number of regular workers paying more under Sanders’s plan than they do now would likely rise significantly.
What makes the two concepts significant, though, is that they allow the two sides to at least indirectly talk about their real differences in political strategy and philosophy. It is a proxy for a debate on how the candidates think politics truly works, and provides insight into how they will try to negotiate getting a 51st vote from Senator Joe Manchin (D-WV) or Senator Kyrsten Sinema (D-AZ).
Sanders is putting his faith in the ability to build a movement around grand principles and expects that people might be willing to sacrifice if you build solidarity. Warren seems to believe there is so much waste and corruption in all aspects of our economy, the way forward is to focus only on policy designs that are as close to a pure win for every member of the middle class as possible. All her detailed plans are designed to convince these voters that she’s not just putting forward vague platitudes but something she can pull off.
The fairness versus disruption debate almost never gets discussed explicitly in progressive politics. We should appreciate that Sanders and Warren’s differences have created a space to talk about it.
