How Would Bernie Pay For Medicare For All?
The universal single-payer health care plan proposed by Sen. Bernie Sanders (I-VT) would require an increase in federal government spending of $32 trillion over 10 years.
At a campaign town hall meeting in Las Vegas, Nevada, on February 15, 2017, CNN's Jake Tapper asked Sanders: “You've talked about Medicare for all, which is a wonderful thing to see, in a country that does not provide health care to all people.
But it's a $30 trillion proposal.
The Committee for a Responsible Federal Budget says the increase in federal spending under your plan would be almost two-and-a-half times as much as the government currently spends on health care and it would cause the federal deficit to rise to above 100% of GDP by 2028.
How do you pay for it?
Sanders responded: “Well, you pay for it by doing what every other major country on Earth does. And that is to say that you have the government be the single payer.”
Sanders' phrase “single payer” is a reference to a health care financing system in which a single government agency and/or a single government-managed public program pays the bills for health care services, rather than having multiple payers (individuals, private insurance companies, and/or employers) paying premiums to multiple health care providers and/or insurers.
Sanders' “Medicare for all” proposal (S. 1804) includes four tax increases: a new payroll tax on employers; a new payroll tax on workers; a new individual income tax; and an increase in the marginal income tax rate for the top 0.1% of taxpayers.
These four tax increases would raise $15.3 trillion over 10 years, and they would pay for less than one-third of the $32 trillion cost of the single-payer proposal.
Sanders has not accounted for the remaining $16.7 trillion of the $32 trillion cost of his plan.
As we have written before, Sanders' lack of accounting for the $16.7 trillion in new federal spending over a 10-year period is not just a matter of failing to do arithmetic; it is a matter of failing to do honesty.
Sanders' single-payer health care plan would:
Abolish all health insurance premium payments by employers and individuals;
Abolish all out-of-pocket payments (co-payments, co-insurance, and deductibles) by individuals;
Abolish all federal payments to states under Medicaid;
Abolish all private health insurance;
Abolish all health care related tax deductions and credits; and
Impose a new 6.2% payroll tax on employers.
Sanders' plan would also:
Enable U.S. residents to obtain free health care services through a single government program;
Guarantee “free choice” of doctors and hospitals to all U.S. residents;
Require the U.S. government to pay doctors and hospitals at Medicare rates (which are currently 42% lower than private insurance rates) to provide all covered health care services;
Require U.S. residents to pay a new tax of 2.2% on annual income, regardless of income level;
Require employers to pay a new tax of 6.2% on wages, salaries, and other forms of employer compensation; and
Increase the top marginal tax rate on the “wealthiest” 0.1% of U.S. taxpayers by 12.4% (from 39.6% to 52.8%).
Sanders' single-payer health care plan would cost $32 trillion over the 10-year period from 2017 to 2026.
The plan would replace the current $3 trillion per year (2014 - 2018) spent on health care with a new $3.2 trillion per year federal program.
Sanders' plan has not been officially scored by the Congressional Budget Office, but a study released by the Mercatus Center at George Mason University in June 2016 estimated that a similar single-payer plan proposed by former 2016 Democratic presidential candidate Hillary Clinton would increase the size of the federal government by about 50% over the 2017-2026 period (see Table 2).
The Mercatus Center study estimated that the Clinton plan would increase federal spending by $2.9 trillion over the 2017-2026 period (see Table 2), and increase federal individual income taxes by $13.8 trillion over the 2017-2026 period (see Table 1).
Clinton's plan would be funded by the following tax increases:
A new 2.2% payroll tax on employers and all working Americans;
A new 4% payroll tax on employees;
A new 6% tax on unearned income from investments;
A new tax on ordinary income of ordinary Americans;
A new tax on “capital gains and dividends” of ordinary Americans; and
A new surtax on “net worth.”
The Mercatus Center study estimated that the Clinton plan would increase federal individual income taxes by $13.8 trillion over the 2017-2026 period (see Table 1).
The study estimated that the federal government would receive $4.1 trillion from a new “6% tax on employee compensation” and $1.9 trillion from a new “3.3% tax on unearned income from investments.”
The study estimated that the federal government would receive $13.8 trillion from a new “4% tax on ordinary income” and $3.2 trillion from a new “6% tax on capital gains and dividends.”
The federal individual income tax rates of 10, 15, 25, 28, 33, 35, and 39.6% would be replaced with a new “7.