One-Size-Fits-All System Would Hit Middle Class Families With Unaffordable Taxes
WASHINGTON – Amid tough questions on the campaign trail over how Medicare for All would be paid for, the bill’s author, Senator Bernie Sanders (I-VT), announced this week that he won’t release a plan to pay for the new one-size-fits-all government-controlled health insurance system. But while Medicare for All proponents continue to obfuscate about its unaffordable costs, a new analysis from the nonpartisan Committee for a Responsible Federal Budget (CRFB) outlines “ways to pay for Medicare-for-all, an issue that’s recently been a central question during Democratic debates,” The Washington Post reports.
The new analysis warns that Medicare for All “would require aggressive changes in taxes, spending or borrowing,” adding that “the middle class would be forced to shoulder some of the burden,” Axios reports. “No matter how you cut the numbers, there is absolutely no way to pay for Medicare for all without tax increases — or spending cuts — on the middle class,” Marc Goldwein of CRFB told POLITICO.
Some of the proposed tax increases to finance the new government health insurance system “included a 32 percent payroll tax, a 25 percent surtax on income above the standard-deduction amount, a 42 percent value-added tax, mandatory premiums averaging $7,500 per capita, and more than doubling all individual and corporate tax rates. The group estimated that Medicare for All could not be fully financed just by raising taxes on the wealthy,” The Hill notes. “These policies would have massive economic impacts, reverberating far beyond health care,” Axios adds.
This tracks with an analysis released from CRFB last week which warns that “fully offsetting the cost would require higher taxes on the middle class.” They wrote:
While there are numerous policy options available to finance the costs of Medicare for All, there does not appear to be any plausible path to finance it with tax increases on just wealthy individuals and businesses … To give a sense of how much could be raised from high earners, we compiled an extremely aggressive list of tax increases on the wealthy and corporations with very rough (and generally optimistic) estimates of how much revenue each option would raise. … Using our very rough estimates and excluding many interactions and economic feedback, we estimate these policies would raise a total of $11 trillion over a decade, enough to cover roughly 40 percent of the cost of Medicare for All.
While the list above does not technically include all possible taxes that could be imposed on the wealthy, the policies it does include are extremely aggressive, more aggressive than may be politically or even technically possible … It is unlikely that policymakers could agree to enact anywhere close to $11 trillion in tax increases only on the wealthy and corporations, let alone the $30 trillion needed to fund Medicare for All. As a result, funding Medicare for All will almost certainly require broad-based taxes that apply to the middle class, either directly or indirectly (for example through an employer payroll tax or consumption tax).
“[Medicare for All] is extremely difficult if not impossible to pay for by taxing the rich alone, according to both liberal and conservative economists,” The Washington Post confirms. That’s because “analysts on both the political right and left have estimated [Medicare for All], which [Senator Elizabeth] Warren has said she wholly backs, could cost more than $30 trillion over a decade. By comparison, the overall federal government spent about $4 trillion last year,” The Post reports.
Shedding additional light on some of these new unaffordable costs, a new study from the Urban Institute finds “that federal spending on health care would increase by roughly $34 trillion under a single-payer plan similar to Medicare for All,” CNN reports. Ronald Brownstein of The Atlantic notes that the “eye-popping” cost is “more than the federal government will spend over the coming decade on Social Security, Medicare, and Medicaid combined.”
Bloomberg previously reported that “for many [Americans], higher taxes would exceed any savings … [T]he 181 million taxpayers with employer-sponsored coverage could miss out on the benefits of [Medicare for All], and even those receiving Medicaid could pay more, according to health-care policy experts on both sides of the political spectrum … [A] wealth tax, a bank levy and premiums paid by employers and employees … 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.”
And, “economists say that most taxpayers would pay more in taxes than they would save from having the federal government absorb the cost of health-care premiums,” The Post also reports. Additionally, “71% of households with private insurance would wind up paying more than they would under the current system,” Kenneth Thorpe, chairman of the health policy and management department at Emory University, told The Wall Street Journal.
The simple fact is, “[t]here’s no possible way to finance [Medicare for All] without big middle class tax increases,” Marc Goldwein of CRFB previously explained to The Washington Post.