5 ways opponents are going after Warren’s ‘Medicare for All’ plan
Pete Buttigieg called her $20.5 trillion estimate “controversial,” while Joe Biden’s campaign accused her of “lowballing the cost of her plan by well over $10 trillion while overcounting the revenue that would be gained from the sources she identifies.” Biden’s team sent reporters a roundup of citations from outside experts questioning, for example, Warren’s ambitious estimates for how much she could raise by stepping up IRS enforcement and how much would be saved by eliminating the overhead of the private insurance system.
Without an official Congressional Budget Office score of the Medicare for All bill, all candidates are currently relying on a set of assumptions about the impact of their health policies — something notoriously difficult to predict. Warren is upfront about this, and has brought in a team of health care and economics heavy-hitters to crunch numbers and argue that her plan has the necessary mix of revenue from states and employers, taxes on the rich, cuts to the military budget, and lower payments for doctors, hospitals and drug companies.
Health care experts who spoke to POLITICO say the math is fairly solid. What presents the real hurdle, they argue, are the policies she’s relying on to make it work.
“It’s technically possible but politically challenging,” said Larry Levitt, the senior vice president for health reform at the Kaiser Family Foundation.
Chris Pope, a health policy analyst with the conservative Manhattan Institute, pointed in particular to Warren’s reliance on global budgets to dramatically bring down national health spending as an example of this conundrum.
“It says to each hospital: This is the amount of money you get for this year and if you use it up, that’s it,” he said. “Even if you have more patients coming through the door, you won’t get more money to treat them. From a health policy perspective, this is really the most striking element of the plan. The numbers add up. It works as a math question. But people are not going to be happy with it.”
2. It misses a big opportunity to help low-wage workers
Warren stuck to her pledge — made on the debate stage — not to raise taxes on middle class workers. Instead, her plan raises trillions of dollars by requiring employers to take what they are now spending to cover their workers and send almost all of that money (98 percent, to be precise) to the federal government.
Biden’s campaign slammed this idea as “a new tax of nearly $9 trillion that will fall on American workers.” That’s because employer spending on health care usually translates into lower wages for workers. But the Warren plan — crafted by economists and health care experts who worked for the Obama administration — doesn’t impose a new cost on employers, it simply redirects the money. Say a company has health benefits that cost $10,000 per worker, with the business covering $8,000 and the employee paying $2,000 in premiums. Under Warren’s plan, the worker would get to keep that $2,000 and the company would have to pay about $7,840 per worker to Uncle Sam.
“It would be, roughly, a wash,” explained Matt Fiedler, a health policy fellow at the Brookings Institution.
But Warren is also fielding attacks from critics on the left who say this aspect of her proposal doesn’t go far enough, missing an opportunity to put more money in low-wage workers’ pockets. In particular, Sanders hit Warren for charging companies a flat per-employee fee across the board rather than the 7.5 percent payroll tax he suggested that would based on salary and take a bigger chunk from higher-paid workers.
“That would probably have a very negative impact on creating those jobs, or providing wages, increased wages and benefits for those workers,” Sanders said of Warren’s plan on ABC News on Sunday. “I think we have a better way.”
Matt Bruening, the president of the progressive think tank People’s Policy Project, told POLITICO that the formula Warren came up with is “most regressive of all the possibilities.”
“Among all the ways you can solve this piece of the puzzle, it’s the worst,” he said. “Even a payroll tax that’s a flat percentage instead of a flat amount would be more progressive, because if you make twice as much income, you pay twice as much into the system.”
Payroll taxes, he noted, can also be designed to exempt low-wage workers — or to take a bigger bite out of highly paid executives‘ paycheck.
Others note that Warren’s plan allows small businesses that were not providing health care before to avoid paying this new assessment for Medicare for All, while small businesses that had chosen to provide health care before will have to pay.
“She’d perversely punish those companies that offer the most generous (and costly) health insurance,” said the Tax Policy Center’s Howard Gleckman.
3. It would put struggling hospitals out of business
Warren’s plan goes farther than Sanders’ bill in detailing how aggressively payments to physicians, hospitals and drug companies would be reduced in a single-payer system. The hospital piece in particular drew fire from some health care experts who said that paying hospitals a rate just above the rate traditional Medicare pays now would have devastating effects, particularly because many hospitals in rural and underserved areas of the country are already teetering on the edge of insolvency. In addition, many hospitals today lose or make very little money on Medicare, but charge commercial payers more to make up for it and subsidize their other work.
Katherine Baicker, a health policy expert who is dean of the University of Chicago Harris School of Public Policy, said the Warren plan would push up demand for health care by making it free and universal — but would also pay doctors and hospitals less.
“That collision is likely to result in shortages, waiting times, or other consequences,” she said.
Anticipating these concerns, Warren’s plan preemptively argues that all hospitals would save money under Medicare for All since they would no longer have to spend time and money negotiating claims with a bunch of different private insurance companies. They would also no longer have to provide tens of billions of dollars worth of uncompensated care to uninsured people if everyone were covered. She also promised to make additional funds available for rural hospitals to keep their doors open.
Fiedler says while these benefits are real, there are certain to be both winners and losers in the hospital industry.
“If you’re a facility serving a lot of Medicaid and uninsured patients today, you might come out ahead here,” he said. “But the dominant hospitals in a lot of markets that are able to command extremely high private rates today will take a big hit. I don’t think we’d see hospitals closing, but the question is: What would they do to bring down spending?”
4. It rewards red states with stingy Medicaid programs
Warren’s plan is counting on about $6 trillion from state governments — a transfer of the money they’re already spending on Medicaid, CHIP, and insurance for state employees. Warren argues that states will see savings in the long run because of she’ll slow the ballooning cost of health care over time. But what states would have to pay at the outset would depend on what they pay now — and that varies widely from state to state based on whether or not they expanded Medicaid, how stingy or generous their traditional Medicaid programs are, and how much they offer to cover state and local employees.
“It would lock in all of the disparities that exist today between states on health spending,” Levitt said.
This structure, he and others said, open Warren up to criticisms that her plan would reward red states that have refused to cover more poor people under Obamacare’s Medicaid expansion while hitting hardest states that are spending hundreds of millions of dollars today to cover their populations.
“We shouldn’t penalize states that are doing the right thing,” California Democratic Rep. Ami Bera, a former physician who is not supporting Medicare for All, told POLITICO.
5. It relies on an immigration bill that couldn’t pass in 2013 — and may not be able to pass in 2021
Many critics of Warren’s Medicare for All financing plan have broadly called it unrealistic, and some point in particular to her inclusion of comprehensive immigration reform — specifically, the bipartisan bill that passed the Senate in 2013 only to languish in the House — as a massive pay-for. Immigration has only become a more partisan issue under the Trump administration, and Congress has been unable to pass even narrow fixes.
“One of the hallmarks of the Democratic Party should be seriousness,” Buttigieg said Monday morning on MSNBC. “If you’re counting on immigration reform for a trillion dollars of the funding for your health plan, that raises concerns about how achievable it is.”
While Warren is banking on immigration reform to deliver $400 billion, not $1 trillion, of the needed revenue, its inclusion in her financing plan adds yet another heavy legislative lift to a health care plan that already lacks the support of most Senate Democrats.