September 18, 2019 | Updates

Families Can’t Afford New Government-Controlled Health Insurance Systems

WASHINGTON – During last week’s Democratic presidential debate, proponents of Medicare for all, most notably Senator Bernie Sanders (I-VT) and Senator Elizabeth Warren (D-MA), failed to explain how American taxpayers would pay for their proposed new government-controlled health insurance system – despite the fact that independent analysts estimate the cost at more than $32 trillion over 10 years, and the nonpartisan Committee for a Responsible Federal Budget (CRFB) finds that “would mean increasing federal spending by about 60 percent (excluding interest)” and “require the equivalent of tripling payroll taxes or more than doubling all other taxes.”

In one notable exchange, “ABC moderator George Stephanopoulos asked Warren several times to clarify whether private insurance would be eliminated under Sanders’s Medicare-for-all plan – and whether taxes would have to increase for middle-class families,” The Washington Post reports, yet Warren “never directly answered the question…”  And while Sanders acknowledged that his one-size-fits-all system would both eliminate Americans’ existing coverage and raise taxes on middle class familiesBloomberg examines the claim that families would ultimately save money under Medicare for all, and finds that “[f]or many Americans, though, that would not be true,” and “higher taxes would exceed any savings.”  They report:

Yet the 181 million taxpayers with employer-sponsored coverage could miss out on the benefits of the Sanders plan, and even those receiving Medicaid could pay more, according to health-care policy experts on both sides of the political spectrum … Sanders has proposed a wealth tax, a bank levy and premiums paid by employers and employees.  But that only raises about half of what is needed, meaning that payroll taxes and income tax increases would necessarily have to be part of the plan … Many of the 181 million taxpayers with employer-sponsored coverage are likely to see their taxes go higher than their current health care spending, because about 56% of their medical costs are covered by their company, according to the Milliman Medical Index, which tracks annual health care spending.  For example, a person making $50,000 with employer-sponsored coverage spends about $5,250 annually on health care, meaning that under Sanders’s plan, her or his taxes would be nearly double the person’s current health care costs … Those on Medicaid, the government-sponsored insurance program for the poor, are likely to see their tax burdens rise far beyond their current health spending, [Brian] Riedl [a senior fellow at the right-leaning Manhattan Institute] said.  A family of four earning $30,000 spends about $1,200 annually on health costs, according to the Kaiser Family Foundation estimates.  Sanders’ plan also assumes that health providers will be reimbursed at Medicare rates, about 40% below what they receive from private insurers.  Health care experts question whether a cut this large is feasible, meaning that the cost for Medicare for All could be even higher.

Fact-checkers for The Washington Post note that “[a]ccording to a study from the Urban Institute (and a follow-up paper) … Senator Sanders’s proposed tax increase would be insufficient and that additional revenue would be needed.”  CNN reports that “[t]ax experts … say that you can’t raise enough money from taxing the rich and that the levies on all Americans may exceed the savings for more people than Sanders expects.  This may be particularly true of low-income folks who get heavily subsidized coverage on the Obamacare exchanges … ‘His plan still doesn’t add up,’ [Marc] Goldwein [of the Committee for a Responsible Federal Budget (CRFB)] said … ‘To generate the kind of revenue that Sanders is talking about to pay for something as big as his version of Medicare for All … would be vastly more expensive than any of the kinds of things he’s talking about,’ said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, a nonpartisan think tank.  ‘He’s going to have to come up with more money from some place.’”  That place is the bank accounts of middle-class Americans: “There’s no possible way to finance [Medicare for all] without big middle class tax increases,” CRFB’s Goldwein explained to The Washington Post.

And as some try to paint the public option as a ‘moderate’ alternative to Medicare for all, 2020 presidential hopefuls and others acknowledge it would ultimately lead down the same path to a one-size-fits-all system – with all the same unaffordable costs.  In a story headlined “How a Medicare Buy-In or Public Option Could Threaten Obamacare,” The New York Times reports that the public option “could also lead to a 10 percent increase in premiums for the remaining pool of insured people.”  The Times adds:

More younger people with expensive medical conditions have enrolled than insurers expected, and insurers would have to increase premiums to cover their costs, Mr. Haltmeyer said.  Tricia Neuman, a senior vice president at the Kaiser Family Foundation, which studies insurance markets, said a government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs … Dr. David Blumenthal, the president of the Commonwealth Fund, a foundation that funds health care research, said a government plan that attracted people with expensive conditions could prove costly.  “You might, as a taxpayer, become concerned that they would be more like high-risk pools,” he said.

And, as Dr. Scott Atlas of Stanford University explains in The Wall Street Journal, such a system would raise costs for families and “mainly erode, or ‘crowd out,’ private insurance, rather than provide coverage to the uninsured.”  He writes:

The public option would cause premiums for private insurance to skyrocket because of underpayment by government insurance compared with costs for services … A single-payer option is not a moderate, compromise proposal.  Its inevitable consequence is the death of affordable private insurance.  Even Democratic presidential candidates calling for “a public option” openly admitted in the recent debate that it would inevitably lead to a single-payer-dominated system … Massive taxation would be needed to expand Medicare, whether optionally or not.




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