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Elizabeth Warren Is Asking the Most Important Question on Health Care Elizabeth Warren Is Asking the Most Important Question on Health Care
(about 3 hours later)
Last week, Senator Elizabeth Warren released the much-anticipated financing details of her Medicare for All proposal. And they look good — too good, critics say. She has managed to outline a plan that could, in theory, finance generous universal care without a middle-class tax increase.Last week, Senator Elizabeth Warren released the much-anticipated financing details of her Medicare for All proposal. And they look good — too good, critics say. She has managed to outline a plan that could, in theory, finance generous universal care without a middle-class tax increase.
Experts and opponents are diving in, and they’re already finding much to dispute. But we shouldn’t lose sight of what Ms. Warren is trying to do. She’s making an evidence-based case for shifting the debate away from the perilous place it’s now in. Rather than “Will taxes go up?” or “Will private insurance be eliminated?” she wants us to ask a more basic question: How can we move from a broken system — a system that bankrupts even families who have insurance and produces subpar health outcomes despite exorbitant prices — to one that covers everyone, restrains prices and improves results?Experts and opponents are diving in, and they’re already finding much to dispute. But we shouldn’t lose sight of what Ms. Warren is trying to do. She’s making an evidence-based case for shifting the debate away from the perilous place it’s now in. Rather than “Will taxes go up?” or “Will private insurance be eliminated?” she wants us to ask a more basic question: How can we move from a broken system — a system that bankrupts even families who have insurance and produces subpar health outcomes despite exorbitant prices — to one that covers everyone, restrains prices and improves results?
That’s a question I’ve been thinking about for a long time. I first started advocating a step-by-step path away from our current system toward universal Medicare almost 20 years ago. A partial version became the “public option” that was stripped from the Affordable Care Act before its passage. More recently, I contributed to the design of the Medicare for America Act introduced by Representatives Rosa DeLauro and Jan Schakowsky, which would allow high-quality employment-based health plans to continue but cover everyone else through Medicare. (Full disclosure: I’ve also offered advice to the Warren campaign.)That’s a question I’ve been thinking about for a long time. I first started advocating a step-by-step path away from our current system toward universal Medicare almost 20 years ago. A partial version became the “public option” that was stripped from the Affordable Care Act before its passage. More recently, I contributed to the design of the Medicare for America Act introduced by Representatives Rosa DeLauro and Jan Schakowsky, which would allow high-quality employment-based health plans to continue but cover everyone else through Medicare. (Full disclosure: I’ve also offered advice to the Warren campaign.)
Getting to affordable universal care has always been a problem of politics, not economics. Given that the United States spends much more for much less complete coverage than any other rich democracy, it’s easy to come up with a health care design that’s much better than what we have. The problem is figuring out how to overcome three big political hurdles: financing a new system, reducing disruptions as you displace the old system and overcoming the backlash from those the old system makes rich. Getting to affordable universal care has always been a problem of politics, not economics. Given that the United States spends much more for much less complete coverage than any other rich democracy, it’s easy to come up with a health care design that’s much better than what we have. The problem is figuring out how to overcome three big political hurdles: financing a new system, reducing disruptions as you displace the old system and overcoming the backlash from those the old system makes rich.
With her new blueprint, Ms. Warren hasn’t tackled the issue of disruptions, though she says she will soon have a transition plan. Still, she has shown how financing could be done in a way that minimizes new burdens for most Americans while delivering big new benefits. In doing so, she has also made clear she has a vision of how to overcome the inevitable backlash that is very different from the strategy that guided Democrats in the last round of reform.With her new blueprint, Ms. Warren hasn’t tackled the issue of disruptions, though she says she will soon have a transition plan. Still, she has shown how financing could be done in a way that minimizes new burdens for most Americans while delivering big new benefits. In doing so, she has also made clear she has a vision of how to overcome the inevitable backlash that is very different from the strategy that guided Democrats in the last round of reform.
The financing challenge isn’t about making the numbers add up. Our system is so expensive that a universal Medicare program that used all the tools at government’s disposal could conceivably cost less than our current system — and certainly would produce big savings over time.The financing challenge isn’t about making the numbers add up. Our system is so expensive that a universal Medicare program that used all the tools at government’s disposal could conceivably cost less than our current system — and certainly would produce big savings over time.
The challenge is that to get there, you have to move a lot of nominally private spending — spending that’s highly uneven and obscure — onto the public budget. The other leading advocate of Medicare for All, Bernie Sanders, has made clear he would raise taxes on the middle class to replace a lot of that private spending. His argument is that even with new taxes, what people will be paying overall will still be lower than what they’re spending now.The challenge is that to get there, you have to move a lot of nominally private spending — spending that’s highly uneven and obscure — onto the public budget. The other leading advocate of Medicare for All, Bernie Sanders, has made clear he would raise taxes on the middle class to replace a lot of that private spending. His argument is that even with new taxes, what people will be paying overall will still be lower than what they’re spending now.
But that’s a political nonstarter. Most well-insured Americans have no idea how much they’re now paying. They see their premiums and out-of-pocket payments; they don’t see the lower wages they receive because they get health benefits instead of cash, as well as a lot of other hidden costs. On the other hand, a big tax increase is going to be extremely visible.But that’s a political nonstarter. Most well-insured Americans have no idea how much they’re now paying. They see their premiums and out-of-pocket payments; they don’t see the lower wages they receive because they get health benefits instead of cash, as well as a lot of other hidden costs. On the other hand, a big tax increase is going to be extremely visible.
By contrast, Ms. Warren has avoided anything that looks like new taxes on the middle class. Her approach would require employers to contribute most of what they’re paying for insurance today directly to Medicare. It would also require states to pony up a large share of what they’re now spending on Medicaid, the State Children’s Health Insurance Program and state employee plans to finance universal Medicare. To fill the remaining gap, her plan identifies a bunch of new revenue raisers aimed at corporations and the rich that could plausibly cover the difference.By contrast, Ms. Warren has avoided anything that looks like new taxes on the middle class. Her approach would require employers to contribute most of what they’re paying for insurance today directly to Medicare. It would also require states to pony up a large share of what they’re now spending on Medicaid, the State Children’s Health Insurance Program and state employee plans to finance universal Medicare. To fill the remaining gap, her plan identifies a bunch of new revenue raisers aimed at corporations and the rich that could plausibly cover the difference.
Of course, it won’t be that easy. Critics will say her requirement on employers is really a tax rather than a “mandatory contribution,” as her campaign labels it. Others will ask whether, politically or constitutionally, states can be asked to finance a federal program even when Medicaid and S-CHIP are discontinued. For both employers and states, however, the Warren plan promises big savings relative to their forecast health spending. More important, it shifts the focus to the most significant issue: how we can get from here to there.Of course, it won’t be that easy. Critics will say her requirement on employers is really a tax rather than a “mandatory contribution,” as her campaign labels it. Others will ask whether, politically or constitutionally, states can be asked to finance a federal program even when Medicaid and S-CHIP are discontinued. For both employers and states, however, the Warren plan promises big savings relative to their forecast health spending. More important, it shifts the focus to the most significant issue: how we can get from here to there.
In the Medicare for America approach that I’ve advocated, everyone would be guaranteed coverage, but private workplace plans could continue. The idea is that the system would evolve toward universal Medicare if employers and individuals saw the expanded Medicare program as a better deal than private insurance.In the Medicare for America approach that I’ve advocated, everyone would be guaranteed coverage, but private workplace plans could continue. The idea is that the system would evolve toward universal Medicare if employers and individuals saw the expanded Medicare program as a better deal than private insurance.
The framework from the Warren campaign takes a different approach. Essentially, it envisions that employers will stop buying private insurance and instead finance Medicare for their workers. At first, this would basically lock in the current distribution of spending. But over time, contributions could be evened out across employers, so the system won’t penalize those who were already helping out their workers, or those workers themselves (who bear the cost in lower wages).The framework from the Warren campaign takes a different approach. Essentially, it envisions that employers will stop buying private insurance and instead finance Medicare for their workers. At first, this would basically lock in the current distribution of spending. But over time, contributions could be evened out across employers, so the system won’t penalize those who were already helping out their workers, or those workers themselves (who bear the cost in lower wages).
In short, the Warren approach sacrifices some degree of rationality and equity to make the transition more politically realistic — which, given how far the system now is from rational or equitable, seems a reasonable trade-off. Further concessions will surely be needed, especially to address the concerns of those who have private insurance through their employer or Medicare (a third of beneficiaries, after all, are enrolled in private plans through Medicare Advantage).In short, the Warren approach sacrifices some degree of rationality and equity to make the transition more politically realistic — which, given how far the system now is from rational or equitable, seems a reasonable trade-off. Further concessions will surely be needed, especially to address the concerns of those who have private insurance through their employer or Medicare (a third of beneficiaries, after all, are enrolled in private plans through Medicare Advantage).
But the message of Ms. Warren’s new plan is that American health care is so costly because it is so inefficient and because it is so lucrative for a narrow segment of American society. By showing how broad the benefits could be if costs were really tackled, she is also outlining a political approach fundamentally different from the strategy followed by President Barack Obama and his allies, who cut expensive deals with the medical-industrial complex and did all they could to minimize disruptions to the present system.But the message of Ms. Warren’s new plan is that American health care is so costly because it is so inefficient and because it is so lucrative for a narrow segment of American society. By showing how broad the benefits could be if costs were really tackled, she is also outlining a political approach fundamentally different from the strategy followed by President Barack Obama and his allies, who cut expensive deals with the medical-industrial complex and did all they could to minimize disruptions to the present system.
Ms. Warren instead is picking a fight with all the big interests that now depend on the system’s high prices and administrative overheads. As she sees it, the nation can’t afford to buy off the industry again to squeeze through legislation. It has to overcome resistance by promising something clear and simple that Americans can rally behind. Whether she’s right about that or not, her challenge to the narrow framing of the issue seems certain to shake up a familiar debate — and maybe even change it altogether.Ms. Warren instead is picking a fight with all the big interests that now depend on the system’s high prices and administrative overheads. As she sees it, the nation can’t afford to buy off the industry again to squeeze through legislation. It has to overcome resistance by promising something clear and simple that Americans can rally behind. Whether she’s right about that or not, her challenge to the narrow framing of the issue seems certain to shake up a familiar debate — and maybe even change it altogether.
Jacob S. Hacker, a professor of political science at Yale, is the author of “The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.”Jacob S. Hacker, a professor of political science at Yale, is the author of “The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.”
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