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While Pete Buttigieg, left, and Joe Biden have howled about the cost of universal coverage, there’s a deception at the heart of their own plans.
Over the weekend in Indianola, Iowa, Elizabeth Warren announced that she would soon roll out specific details for financing Medicare for All, the culmination of a week of “but how will you pay for that” demands from the media and rival presidential candidates. That a nation with millions of uninsured people and tens of thousands of unnecessary deaths from lack of access to health care is consumed with talking about taxes, rather than the revolution in human rights that would come from universal coverage, tells you a lot about life in the United States, and why we still suffer from a broken system.
But this triumph of budgetary scolding is being applied unevenly. If we want to talk about “paying” for universal coverage, we should expand the discussion to all the candidates who claim to support it. While Joe Biden and Pete Buttigieg and others have howled about cost, there’s a deception at the heart of their own plans: either they put just as much health care costs on the federal government as the Warren-Sanders single-payer model, or they’re effectively useless.
Biden and Buttigieg have separately proposed public options that would compete with private insurance. In Biden’s plan, even those with employer-sponsored insurance could opt out and choose the public plan. Buttigieg would offer subsidies to help people pay for the public option, capping the cost of insurance at 8.5 percent of income.
Both explicitly pitch this as a cheaper way to establish universal coverage. But that claim relies on a hide-the-ball scenario. Biden or Buttigieg’s public option, over time, will either serve as a weak alternative to private coverage, with high premiums and substandard coverage. Or, backed by government bargaining power, it will outshine private insurance and gradually supplant it. Buttigieg himself talks about his plan as a “glide path” to Medicare for All.
If it doesn’t work, the public option will certainly be cheap, but it also won’t help anybody at a meaningful scale. If it does attract millions of customers, then in the long run, it would approach a single-payer system. At that point, on the “how will you pay for that” question that Biden and Buttigieg are posing, it faces the same challenges as the Warren-Sanders model.
Biden and Buttigieg take advantage of the fact that we use a bizarre and often faulty system to “score” legislation in the Congressional Budget Office, which only looks at a ten-year window for budgetary impact. If the public option is good, and it eventually becomes a kind of Medicare for All, the cost spike would all happen outside the ten-year window. So Biden and Buttigieg are either lying about how effective their public options will be, or they’re lying about how much they will ultimately cost. They can’t have it both ways.
Notice that I’m using the deficit-scold framing here. In reality, Medicare for All saves money, and maybe even more than we expect. The infamous libertarian Mercatus Center study estimated that Medicare for All would save $2 trillion over ten years, due to lower provider reimbursements, administrative costs, and drug outlays. But the CBO recently looked at a relatively modest prescription drug bargaining proposal from House Democrats, which would directly negotiate prices on just 25 pharmaceuticals per year, and found it would save $345 billion in federal spending for Medicare. If that’s the payoff on just 25 drugs, increasing bargaining power across the health care space would presumably go well beyond $2 trillion.
The problem with cost debates on health care is that much of the current system is largely submerged, set up to hide the true cost to the individual. Quick—how much does your employer-provided health care actually cost in total, beyond just the number that shows up on your paycheck and in co-pays? Most of us have no idea unless we work in a corporate HR department. When you surface these submerged payments, they feel like brand-new tax burdens. But you’ve been paying them all along.
All candidates intending to shake up the system must deal with this tension, a feat they accomplish in different ways. Biden and Buttigieg play games with the budget window to keep those costs hidden. As journalist Libby Watson has pointed out, they rely on the ignorance of the public and especially the media, who shouldn’t let them get away with it. Really, it shouldn’t be so hard to ask: “Mr. Vice President, do you expect your public option to be any good, and if so, wouldn’t you face the same cost challenge you decry in other candidates’ plans?”
Sanders has put together a menu of twelve options to finance Medicare for All, none of which he commits to and some of which, like the wealth tax, he has subsequently used for other proposals like his housing policy. But it does include an income-based premium that would replace insurance premiums and co-pays with middle-class taxes.
Warren has been far more vague thus far, refusing to offer a soundbite that she’ll raise taxes on the middle class and saying only that overall health care costs will drop (which is true, and the primary selling point for reducing the administrative burden of our current fragmented system). This has sparked enough concern that she’s now turning to specifics.
They’re not as daunting as you might think. First of all, if you think about it rationally, insurance premiums are just forced taxes paid out to private monopolies (insurance, drug companies and health care providers) instead of a public one (the federal government). When you add premiums to overall taxes, Americans pay a level commensurate with high-tax single-payer countries while getting health care far below their standard. It breaks all unwritten laws of journalism (which apparently require reporters to focus solely on federal taxes) to see things this way, but that doesn’t make it untrue.
But even as it is, state and federal governments pay about $1.6 trillion of the current $3.6 trillion annual cost of providing health care. That comes out of dedicated taxes and general fund expenditures. The answer to the “how will you pay for that” question could be “first of all, we already pay for almost half.”
The more costs you wring out of the system by breaking up entrenched health care monopolies, eliminating middleman payments, setting drug prices like every other nation does, and forcing down reimbursement, the more you reduce that remaining $2 trillion per year. The Mercatus study shrinks it to $1.6 trillion; with a dedicated effort, you could probably drop well below that.
As to the rest, there are plenty of approaches. An employer head tax achieves the semantic distinction of “not raising taxes on the middle class,” and would likely cost at or below what companies spend currently on health care. You could add modest co-pays and reduce that even further, or a health care “premium fee” on a sliding scale. Sanders’s menu includes several taxes on the wealthy. We have a military budget that in no way needs to be as large as it is. You don’t even have to get that creative to hit the number.
None of this will probably matter to media trolls looking for an “I will raise your taxes” soundbite. But they’re letting their slip show by absolving the Bidens and Buttigiegs of the world from having to answer that question, while doing the Republicans’ work for them through relentless, nonsensical right-wing framing. The truth is that we can have nice things in America. We just have to tune out the noise.
