Budget Hawks Hate Agreeing With Warren, Agree With Warren
After last week's Democratic debate, which really did take place just eight days ago instead of in another era, the deficit-hawky Committee for a Responsible Federal Budget crunched some numbers on how to fund Medicare for All (M4A) and found that, heavens to Betsy, it would require some kind of tax increases on the middle class. This is hardly an astonishing conclusion, as we discussed last week. Of course, it's also just as clear that talking about taxes in isolation completely misses the point. You have to discuss the larger question of how much we already pay for our existing broken patchwork of healthcare systems.
The CRFB analysis, though brief, is worth a read, and it's especially valuable not simply because CRFB is a respectable think tank, but because CRFB is what you'd have to call a hostile witness, given the group's opposition to federal spending in general and its support for "reforming" Social Security and Medicare -- through big cuts -- in particular. It's a bit like that Koch-funded think tank that found M4A could actually cost a couple trillion dollars less than the current mess would, while covering everyone. When the deficit hawks tut tut that M4A would be expensive but really could reduce the cost of healthcare for many Americans, we're ready to look at their numbers. But remember: Just framing it in terms of taxes is bogus from the get-go.
First, the overview: The CRFB analysis found that yes, Medicare for All would have to be funded with tax increases on the middle class. It can't be done solely with higher taxes on the wealthy, because there are practical limits to how much the rich can be soaked:
Even with extremely aggressive revenue-raising policy changes, we only identify enough revenue increases from high earners and businesses to cover about 40 percent of the cost of Medicare for All.
But the fiscal hawks at CRFB agree with crazy socialists like Bernie Sanders, Elizabeth Warren, Pete Buttigieg (in the before times of the first debate), and Yr Dok Zoom that the meaningful metric isn't taxes, it's the overall cost of making M4A work:
[Higher] taxes don't necessarily mean higher costs, and depending on the details many households could end up paying less in taxes under Medicare for All than they currently pay in premiums and cost sharing.
Let's dig in, shall we? To start with, CRFB explains that even if we somehow managed to confiscate 100 percent of assets of the richest individuals and businesses, that wouldn't cover the projected $30 trillion cost of M4A over a decade, no matter how much fun it might be. Their model
assumes policymakers raise the top two tax rates from 35 and 37 percent up to 70 percent, phase out most deductions and exclusions for higher incomes, double the corporate income tax rate from 21 to 42 percent, impose a tax on wealth or tax capital gains mark-to-market for high net worth individuals, establish a tax on financial transactions and large financial institutions, and pass a variety of other tax increases.
At best, such measures would only generate about $11 trillion over a decade, about 40 percent of the cost of Medicare for All, to say nothing of fomenting armed rebellion by Fox News viewers who think they'll lose their chance to become billionaires. Yes, the estimate also considers innovations like Elizabeth Warren's Eat the Rich wealth tax, too.
To some degree this part of the analysis is a bit of a strawman, since nobody's claiming the rich would pay for it all; Elizabeth Warren simply says the very wealthy would see their costs increase, while middle class people would see overall costs decline. The CRFB report says she's "evading the question" by framing the argument in terms of costs, but then goes on to all but say she's exactly right for many Americans:
While taxes would need to go up on the middle class in order to pay for Medicare for All, total costs for middle-class families may go up or down -- and median costs are likely to fall, as most taxes are more progressive than current premiums.
Currently, a large share of health care is financed from individual premiums, employer-paid premiums (which ultimately result in lower wages), and out-of-pocket costs paid by individuals and families. Under Medicare for All, the government would finance these costs, resulting in lower direct health care costs for individuals and families. Essentially, premiums and cost sharing would be replaced with taxes.
The details, of course, would depend on how an actual M4A proposal is structured, and which taxpayers we're looking at. Just to be jerks about it, the authors also imagine a flat tax rate to pay for it, which seems a tad disingenuous, although they temper that by noting that in reality, progressive taxation remains a thing:
For example, imagine Medicare for All were financed with a broad tax equal to 25 percent of income. In that case, a single 40-year-old making $100,000 and currently paying $10,000 in premiums and cost-sharing would end up paying $15,000 more; meanwhile, a family of four making $60,000 and paying $25,000 in premiums and cost sharing would end up paying $10,000 less (these figures exclude tax and wage interactions). The more progressive the revenue stream, the fewer people who will end up paying more but the larger net increase those people will face.
The piece also acknowledges that some people may be paying more but will be able to get more healthcare than they do now, which might even be a good thing for people needing care who can't afford it. A lot depends on the details, and on what incentives would be used to achieve savings. But perhaps it's enough that even the CRFB doesn't claim Medicare for All is impossible -- a relief, seeing as how other countries seem to make various universal care systems work right now.
Also, there are the parts of the debate that don't go on a spreadsheet, like not having to face situations like this one, as Joni Ernst's prospective opponent in 2020 reminds us:
I remember laying on a bed in the ER after a heart rhythm incident, crying because the huge bill I couldn't afford… https://t.co/mZM55N0prz— Kimberly Graham For US Senate (IA) (@Kimberly Graham For US Senate (IA))1571844403.0
So now all we have to do is try to escape the trap of the worst debate question ever, as WNYC's "On the Media" put it. Here, have some thinky listening!
Sure would be nice to not frame every damn part of the election using a misleading Republican gotcha, maybe.
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.