One of the reasons that Bernie Sanders has been a fairly effective advocate for single-payer health care is that he hasn’t focused too hard on how to pay for it. When the senator introduced a version of his bill in 2017, he relegated the messy issue of covering its cost to a side document titled “Options to Finance Medicare for All.” It was a helpful menu of ideas that included everything from payroll to wealth taxes, and it gave inquisitive reporters a sense of his thinking. But all of the options only added up to about $16.2 trillion, far less money than would likely be required to realize his ambitions.
These days, Sanders says there will eventually be a “vigorous debate” about how to pay for “Medicare for All.” Onstage he tells audiences that, yes, their taxes will go up, but families will save money because their premiums and out-of-pocket expenses will disappear, which is a fine way to explain the basic trade-off he envisions, if not really a plan per se.
Sanders’ strategy has proven canny. Talking generally about trading premiums for taxes has won him points for honesty while helping him cement single payer as a mainstream idea without getting overly bogged down by its daunting math. But now Elizabeth Warren has decided to make the math work, and it’s threatening to become a policy quagmire for her campaign. After getting dinged for her awkward refusal to admit during the last Democratic debate that, yes, “Medicare for All” would require higher taxes, she said this week that she would release a full-blown funding proposal in the next few weeks.
It is not hard to see Warren’s logic here. She is, after all, the candidate of plans, and her conspicuous lack of a plan to fund a wholesale transformation of the American health care system has threatened to hurt her wonk credibility and raise questions on the left about her commitment to “Medicare for All.” Plus, even if the chances of single payer passing Congress in the next four years is close to zero, producing a plausible financial road map to accomplish what Sanders has previously only promised would reinforce her image as the progressive candidate with an idea of how to actually realize her goals.
But pulling this exercise off without affixing a political anchor around her neck is going to be extremely difficult.
The optimistic case for single payer is that eliminating private insurers and cutting payment rates to providers will allow the federal government to squeeze enough savings out of our bloated medical system to cover everybody while spending less money on health care than Americans collectively do today. If Washington can reduce costs enough, then the tax increases shouldn’t be too steep, and families should save money, on average.
That last part is what Warren has promised. As she said at the last debate: “I will not sign a bill into law that does not lower costs for middle-class families.” But she faces at least three big hurdles to making good on that vow.
The first hurdle is that moving to single payer might not actually reduce U.S. health care spending much, if at all. At the moment, cost estimates for “Medicare for All” vary by trillions of dollars. The lowest one circulating was produced by a team from the University of Massachusetts–Amherst, which concluded that the Sanders bill would require an extra $13.5 trillion in extra public funding over a decade. It arrives at that conclusion by assuming that the law would reduce our total national health spending—that is, all expenditures by the public and government combined—by 19 percent, mostly by crushing excessive administrative costs (no more insurers or giant hospital billing departments) and lowering prescription drug prices.
Most other analyses suggest that single payer will save far less money or even increase our national health spending. There are various reasons why. Some expect lower administrative savings. (It’s actually unclear how much bloat exists in the system.) Some think Americans will simply use a lot more health care in a world where everyone is insured and nobody owes a copay. But analyses by the conservative Mercatus Center and center-left Urban Institute both anticipate that the Sanders bill (or a plan very similar to it) would cost the government more than $30 trillion over a decade. We can’t raise that much money just by soaking the 1 percent. It would require some significant middle-class tax hikes.
It is possible that those increases will add up to less than what families pay for coverage today, on average. But that brings us to hurdle No. 2: Most people aren’t average. Households spend vastly different amounts on health care. Some workers pay high premiums. Some pay low ones. Some people have chronic illnesses that leave them with huge out-of-pocket costs. Some see the doctor once a year for a physical, and that’s it. What this means is that any plan designed to save families money on average will still risk creating winners and losers within the middle class, which would arguably violate the spirit of Warren’s promise to lower costs.
The third hurdle is purely about optics but is still important: Many people with private insurance probably don’t realize how expensive it actually is or how much they spend out of pocket over time, so any tax designed to fund a public replacement that covers all of those costs might just sound high. Employer-based coverage for a family of four now costs more than $20,000 (which is an objectively ludicrous and shameful figure). But workers only pay about $6,000 of that directly; the rest gets kicked in by their companies, which employees experience through lower salaries but don’t necessarily see. How are voters going to react when they hear that single payer would require raising taxes $10,000 or $15,000 per worker (or maybe more), when they think they pay maybe half that? Probably not well.
In the end, Warren will likely have to choose between crafting a realistic plan or a politically palatable one. She can placate the wonks and the press by piecing together a plan that might actually survive scrutiny by the Congressional Budget Office one day. Or she can placate voters, by baking in some heroic assumptions about cost control and keeping tax hikes in her plan to a minimum. But ultimately the best plan of all might have been to just keep the details vague.