Financing Single-Payer Health Care

The Story:

Senator Elizabeth Warren (D – Mass), considered by some to be the front-runner for the Presidential nomination of the Democratic Party, recently set out some particulars on how, if elected, she will finance her proposed single-payer system for health care in the United States, which she calls “Medicare for All.”

Her Plan:

The Medicare system that currently exists for the health care of the elderly in the US is financed by a payroll tax; that is, by a specified percentage of each workers’ earnings. In Warren’s plan, “Medicare for All” would be financed, instead, by a payroll head tax, that is, by a dollar amount charged against the employer per worker.

That difference is important. A proposed head tax charges the employer as much for a worker making $20,000 a year as it does for a worker making $100,000 a year. The plan will allow Warren’s opponents to argue that the tax will ultimately fall on the workers’ shoulders, and that when it does, the effect will be regressive, hurting more those with less.

Another important feature of the Warren plan is its cost estimate. Warren’s team holds that the plan will cost $52 trillion in ten years, and that new federal spending will come to $20.5 trillion.

The Thing to Know: 

Those costs estimates will surely become one key to debate on this proposal going forward. The consensus among experts is that the figures are aggressively on the low side. If true, that means either that the system would be funded by increases in the national debt, or that the taxes/contributions involved will have to be increased.

 

 

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