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Elizabeth Warren Proposes $20.5 Trillion Health Care Plan Elizabeth Warren Proposes $20.5 Trillion Health Care Plan
(about 8 hours later)
WASHINGTON — Senator Elizabeth Warren on Friday proposed $20.5 trillion in new spending through huge tax increases on businesses and wealthy Americans to pay for “Medicare for all,” laying out details for a landmark government expansion that will pose political risks for her presidential candidacy while also allowing her to say she is not raising taxes on the middle class to pay for her health care plan. WASHINGTON — Senator Elizabeth Warren on Friday revealed her plan to pay for an expansive transformation of the nation’s health care system, proposing huge tax increases on businesses and wealthy Americans to help cover $20.5 trillion in new federal spending.
Ms. Warren, who has risen steadily in the polls with strong support from liberals excited about her ambitious policy plans, has been under pressure from top rivals like former Vice President Joseph R. Biden Jr. to release details about paying for her biggest plan, “Medicare for all.” Her new proposal marks a turning point for her campaign, in which she will have to sell voters on a tax-and-spending plan that rivals the ambitions of the New Deal and the Great Society while also defending it against both Democratic and Republican criticism. The plan represents a significant bet that enough voters will favor an approach that dismantles the current system and replaces it with “Medicare for all,” a government-run health insurance program. And it comes after decades in which Democrats have largely tiptoed around policy proposals that relied on major tax increases and Republicans ran on tax cuts.
Under Ms. Warren’s plan, employer-sponsored health insurance — which more than half of Americans now receive — would be eliminated and replaced by free government health coverage for all Americans, a fundamental shift from a market-driven system that has defined health care in the United States for decades but produced vast inequities in quality, service and cost. While the proposal allows Ms. Warren to say she is not raising taxes on the middle class, it opened her to renewed charges that her plan is too radical to pass through Congress. It represents an extraordinary embrace of the tax system to redistribute wealth and re-engineer one of the pillars of the American economy, with measures that would double her proposed wealth tax on billionaires and impose new levies on investment gains and even stock trades.
Ms. Warren would pay for the $20.5 trillion in new federal spending through a mix of sources, including: “This debate has moved so far and so fast within the Democratic Party, it makes your head spin,” said Larry Levitt, the executive vice president for health policy at the Kaiser Family Foundation. “Ideas that used to be political third rails are now being proposed by one of the leading candidates for president.”
Ms. Warren, of Massachusetts, is not the only Democratic presidential candidate envisioning a large new government program funded by tax increases. Senator Bernie Sanders of Vermont, Ms. Warren’s top rival in the party’s progressive wing, is the architect of Medicare for all and has also proposed sweeping changes.
Together they are presenting a profoundly different vision from the one Democrats promoted as recently as the mid-1990s when President Bill Clinton declared in a State of the Union address that “the era of big government is over.” While President Barack Obama pushed through the Affordable Care Act and managed to bring down the number of uninsured, he preserved a major role for the private sector in the country’s health insurance system.
Under Ms. Warren’s plan, private health insurance — which now covers most of the population — would be eliminated and replaced by free government health coverage for all Americans. That is a fundamental shift from a market-driven system that has defined health care in the United States for decades but produced vast inequities in quality, service and cost.
Ms. Warren would pay for the new federal spending, $20.5 trillion over 10 years, through a mix of sources, including:
Requiring employers to pay the government a similar amount to what they are currently spending on their employees’ health care, totaling $8.8 trillion over a decade.Requiring employers to pay the government a similar amount to what they are currently spending on their employees’ health care, totaling $8.8 trillion over a decade.
Changing how investment gains are taxed for the top 1 percent of households, raising $2 trillion, and ramping up her signature wealth tax proposal to be steeper on billionaires, raising another $1 trillion.Changing how investment gains are taxed for the top 1 percent of households, raising $2 trillion, and ramping up her signature wealth tax proposal to be steeper on billionaires, raising another $1 trillion.
Creating a tax on financial transactions like stock trades, bringing in $800 billion.Creating a tax on financial transactions like stock trades, bringing in $800 billion.
She is also counting on $800 billion in cuts to military spending. Beyond the $20.5 trillion total, she is also counting on states and local governments to contribute an additional $6.1 trillion to help pay for the system.
Like Senator Bernie Sanders of Vermont, Ms. Warren would essentially eliminate medical costs for individuals, including premiums, deductibles and other out-of-pocket expenses. But it is not clear if her plan would cover the costs for free health care for everyone. It relies on ambitious assumptions about how much it can lower payments to hospitals, doctors and pharmaceutical companies, and how cheaply such a large system could be run. Several economists have said providing free health care would cost trillions more over a decade. Like Mr. Sanders, Ms. Warren would essentially eliminate medical costs for individuals, including premiums, deductibles and other out-of-pocket expenses. But it is not clear if her plan would cover the costs of free health care for everyone. It relies on ambitious assumptions about how much it can lower payments to hospitals, doctors and pharmaceutical companies, and how cheaply such a large system could be run.
“We made different assumptions, because we didn’t think these kinds of assumptions were realistic,” said Linda Blumberg, a health economist at the Urban Institute, whose detailed assessment of Medicare for all found it would cost $34 trillion. Several economists have said providing free health care would cost trillions more over a decade.
Ms. Warren’s new plan would not raise taxes on middle-class Americans, a question she has been asked over and over but has not answered directly until now. When confronted on the campaign trail and debate stage, she emphasized instead that her plan would result in higher overall costs for wealthy people and big corporations but lower costs for middle-class families. “We made different assumptions, because we didn’t think these kinds of assumptions were realistic,” said Linda Blumberg, a health economist at the Urban Institute, whose detailed assessment of Medicare for all found it would require $34 trillion in added federal spending.
Her lack of specificity became a vulnerability as the primary race heated up, especially because she had established herself as the candidate who had a plan for everything. Democratic rivals like Mr. Biden and Mayor Pete Buttigieg of South Bend, Ind., who prefer building on the existing system of health coverage, have pointedly criticized her on the issue, with Mr. Buttigieg calling her “extremely evasive.” Two weeks ago, with no sign that the pressure would relent, she announced she would soon release her own financing plan. As Ms. Warren has risen steadily in the polls, with strong support from liberals excited about her ambitious policy plans, she has been under pressure from top rivals like former Vice President Joseph R. Biden Jr. to release details about paying for health care. She has been asked over and over whether she would raise taxes on the middle class to pay for it, but had not answered directly until now.
Her lack of specificity became a vulnerability as the primary race heated up, especially because she had established herself as the candidate with a plan for everything. Democratic rivals like Mr. Biden and Mayor Pete Buttigieg of South Bend, Ind., who prefer building on the existing system of health coverage, have pointedly criticized her on the issue, with Mr. Buttigieg calling her “extremely evasive.” Two weeks ago, with no sign that the pressure would relent, she announced she would soon release her own financing plan.
“A key step in winning the public debate over Medicare for all will be explaining what this plan costs — and how to pay for it,” Ms. Warren wrote in her plan. To do that, she added, “We don’t need to raise taxes on the middle class by one penny.”“A key step in winning the public debate over Medicare for all will be explaining what this plan costs — and how to pay for it,” Ms. Warren wrote in her plan. To do that, she added, “We don’t need to raise taxes on the middle class by one penny.”
Mr. Biden’s campaign quickly criticized Ms. Warren’s plan. Kate Bedingfield, a deputy campaign manager for Mr. Biden, called the plan “unrealistic” and said the required contribution from employers would “fall on American workers.” But whether such a detailed plan will end up as a strength or a liability is unknown, and represents a gamble for a candidate who has stirred doubts about her electability among establishment Democrats. Some in the party believe that concerns about income inequality and corporate greed have become such a powerful motivator that her stance will win her converts. Others say such a strong alignment with Medicare for all will haunt her if she gets to the general election.
“The mathematical gymnastics in this plan are all geared towards hiding a simple truth from voters: It’s impossible to pay for Medicare for all without middle-class tax increases,” she said in a statement. “This is not a symbolic proposal,” Mr. Levitt said. “This is the most specific plan for Medicare for all that’s ever been proposed by a candidate.”
The issue of health care helped Democrats win control of the House in last year’s midterm elections, after unsuccessful attempts by President Trump and Republicans in Congress to repeal the Affordable Care Act. It has been a central issue again this year as Ms. Warren of Massachusetts and other Democrats have competed for their party’s presidential nomination, highlighting a divide on policy between the party’s moderates and its liberal wing that favors transformative change. “Candidates often pivot to the center on issues in the general election,” he added. “This proposal will make it more difficult for Warren to do that on health care.”
But in responding to her rivals and more tightly embracing Medicare for all, Ms. Warren is taking a significant political risk. Although she is not proposing broad tax increases on individuals, her proposal will still allow Republicans to portray her as a tax-and-spend liberal who wants to vastly expand the role of the federal government while abolishing private health insurance. Her plan’s $20.5 trillion price tag is equal to roughly one-third of what the federal government is currently projected to spend over the next decade in total. For Ms. Warren to achieve her desired health care transformation, she would need to persuade Congress to pass far-reaching legislation, an enormous political challenge and a virtual impossibility unless Democrats win control of the Senate.
Still, the idea of government-run health insurance excites many liberal voters seeking a more equitable health care system. Mr. Sanders, one of Ms. Warren’s top rivals in the Democratic primary race, has long championed single-payer health care, and Ms. Warren has aligned herself with him on the issue. She co-sponsored his Medicare for all legislation in the Senate, and speaking on health care at the first Democratic presidential debate in June, she declared, “I’m with Bernie.” Mr. Biden’s campaign quickly criticized Ms. Warren’s plan as “unrealistic.”
Polls have found that while support for a national health plan has grown over time — particularly since Mr. Sanders made it a centerpiece of his 2016 presidential campaign — it swings depending on the terms used and the questions asked, and has nudged down somewhat this year. People generally support the idea of coverage for all Americans, but are far more tentative when they hear it could require raising taxes or giving up the option of private insurance. “The mathematical gymnastics in this plan are all geared towards hiding a simple truth from voters: It’s impossible to pay for Medicare for all without middle-class tax increases,” Kate Bedingfield, a deputy campaign manager for Mr. Biden, said in a statement.
Recent polling from the nonpartisan Kaiser Family Foundation has found that more Democrats and independents who lean Democratic would prefer expanding health coverage by building on the Affordable Care Act, especially by letting people buy into Medicare or Medicaid. Such “buy-in” proposals also have some support from Republicans, who strongly oppose single-payer plans that would eliminate private insurance, according to Kaiser. In response, Ms. Warren told reporters in Des Moines, “Democrats are not going to win by repeating Republican talking points and by dusting off the points of view of the giant insurance companies and the giant drug companies who don’t want to see any change in the law that will bite into their profits.”
The polls also suggest that among most Americans, the single-payer concept remains poorly understood, as does the “public option” alternative favored by Mr. Biden, Mr. Buttigieg and several other Democratic candidates. She said anyone defending the profits of the insurance and drug companies was “running in the wrong presidential primary.”
Those candidates’ proposals, which differ somewhat in their details, would create a government-run health plan to compete with private insurers. They would allow some Americans to voluntarily buy public coverage if they wish, while automatically enrolling others. The Republican National Committee described Ms. Warren’s plan as a “fairy tale,” adding that it would have the effect of “bankrupting the country and hurting the quality of care.”
The comments sent a signal of how President Trump and Republicans would portray her: as a tax-and-spend liberal who wants to vastly expand the role of the federal government while abolishing private health insurance. Her plan’s price tag is equal to roughly one-third of what the federal government is currently projected to spend over the next decade in total.
Still, the idea of government-run health insurance excites many liberal voters. Mr. Sanders has long championed single-payer health care, and Ms. Warren has aligned herself with him on the issue.
A New York Times/Siena College poll of likely Iowa caucusgoers released Friday found that about three-quarters of likely Democratic caucusgoers supported creating a single-payer system, while about nine in 10 supported the creation of an optional government plan that any American could buy.
Asked whether they would be likelier to support a candidate who promises to replace the existing health care system with Medicare for all or a candidate who promises to improve the current system, likely caucusgoers said by a 14-point margin that they preferred the second option.
Ms. Warren’s proposal shows just how large a reorganization of spending Medicare for all represents. By eliminating private health insurance and bringing every American into a federal system, trillions of dollars of spending by households, employers and state governments would be transferred into the federal budget over the course of a decade.Ms. Warren’s proposal shows just how large a reorganization of spending Medicare for all represents. By eliminating private health insurance and bringing every American into a federal system, trillions of dollars of spending by households, employers and state governments would be transferred into the federal budget over the course of a decade.
Ms. Warren attempts to minimize fiscal disruption by asking the big payers in the current system to keep paying. Her taxes on employers are meant to replace the amount that companies now pay directly to health insurers. (Small businesses would be exempt if they are not currently paying for their employees’ health care.) She has also proposed that states pay the federal government what they currently spend to cover state workers and low-income residents under the Medicaid program. Ms. Warren tries to minimize fiscal disruption by asking the big payers in the current system to keep paying. Her tax on employers is meant to replace the amount that companies now pay directly to health insurers. (Small businesses would be exempt if they are not currently paying for their employees’ health care.) She has also proposed that states pay the federal government what they currently spend to cover state workers and low-income residents under the Medicaid program.
But to help replace an estimated $11 trillion in health care spending that would be borne by American households over a decade — on premiums, deductibles and other out-of-pocket costs — Ms. Warren lays out a series of new taxes on corporations and wealthy people.
But to replace the health care spending currently borne by American households — on premiums, deductibles and direct payments for services not covered by insurance — Ms. Warren lays out a series of new taxes and spending cuts. She would raise $3 trillion in total from two proposals to tax the richest Americans. She has previously said that her wealth tax proposal would impose a 3 percent annual tax on net worth over $1 billion; she would now raise that to 6 percent. For the top 1 percent of households, she would tax investment gains annually instead of when the investments are sold.
She would raise $3 trillion in total from two proposals to tax the richest Americans. She has previously said that her wealth tax proposal would impose a 3 percent annual tax on net worth over $1 billion; she would now raise that to 6 percent. She would also change how investment gains are taxed for the top 1 percent of households. Ms. Warren is also counting on stronger tax enforcement to bring in more than $2 trillion in taxes that would otherwise go uncollected, as well as $800 billion in cuts to military spending. And she is banking on passing an overhaul of immigration laws — which itself would be a huge political feat — and gaining revenue from taxes paid by newly legal residents.
In addition to imposing a tax on financial transactions, she would make changes to corporate taxation. She is also counting on stronger tax enforcement to bring in $2.3 trillion from taxes that would otherwise go uncollected. And she is banking on passing an overhaul of immigration laws — which itself would be a huge political feat — and gaining revenue from taxes paid by newly legal residents. Ms. Warren’s plan would put substantial downward pressure on payments to hospitals, doctors and pharmaceutical companies. She expects that an aggressive negotiation system could lower spending on generic medications by 30 percent compared with what Medicare pays now, for example, and spending on brand-name prescription drugs could fall by 70 percent.
Ms. Warren’s plan would put substantial downward pressure on payments to hospitals, doctors and pharmaceutical companies. She expects that an aggressive negotiation system could lower spending on generic medications by 30 percent compared with what Medicare pays now, for example, and spending on prescription drugs could fall by 70 percent. Payments to hospitals would be 10 percent higher on average than what Medicare pays now, a rate that would make some hospitals whole but would lead to big reductions for others. She would reduce doctors’ pay to the prices Medicare pays now, with additional reductions for specialists, and small increases to doctors who provide primary care. Payments to hospitals would be 10 percent higher on average than what Medicare pays now, a rate that would make some hospitals whole but would lead to big reductions for others. She would reduce doctors’ pay to the prices Medicare pays now, with additional reductions for specialists, and small increases to doctors who provide primary care.
When Mr. Sanders introduced the latest version of his Medicare for all legislation in April, he released a list of options that could help pay for it, including a 4 percent “income-based premium” for employees and a 7.5 percent “income-based premium” for employers, and an increase to the top marginal income tax rate to as high as 70 percent for people making above $10 million. Mr. Sanders has acknowledged that taxes would go up on middle-class families. Jim Tankersley contributed reporting from Washington, and Alexander Burns from New York.
Still, he has not produced a definitive plan for how to pay for Medicare for all, and in a recent interview with CNBC, he declined to do so. “You’re asking me to come up with an exact detailed plan of how every American — how much you’re going to pay more in taxes, how much I’m going to pay,” he said. “I don’t think I have to do that right now.”