The Eight Big Problems with Warren’s Medicare-for-All Plan

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Source: The Washington Post

Sen. Elizabeth Warren (D-Mass.) released her spending plan to finance Medicare-for-all, a single-payer health-care scheme that would eliminate private insurance. The Post reports:

—The plan is designed to hit corporations and the wealthy, including a provision requiring companies to send most of the funds they currently spend on employee health contributions to the federal government. It also expands Warren’s signature wealth tax proposal, cuts military spending and takes advantage of what she says would be significant savings from eliminating private insurance’s vast bureaucracy….

—The proposal comes on top of roughly $5 trillion in new taxes that Warren had already advocated to cover a range of new programs, including through a levy on those with more than $50 million in assets. It doubles down on Warren’s strategy of winning the Democratic nomination by consolidating support from the party’s liberal wing, rather than reaching out to more centrist Democrats.

The plan, as one would expect, was roundly criticized by former vice president Joe Biden’s campaign, which put out a statement that said it “hinges not just on a giant middle class tax hike and the elimination of all private health insurance, but also on a complete revamping of defense, immigration, and overall tax policy all at once in order to pay for it — a hard truth that underscores why candidates need to be straight with the American people about what they’re proposing.”

About the only thing all the Democratic candidates might agree upon is that this is the most sweeping proposal we have seen from any major-party candidate, one which would revamp the entire federal budget and the health care of every American.

There are (at least) eight problems she will have to contend with:

First, her plan raises a purported $20.5 trillion, around $10 trillion less than independent cost estimates for the plan from progressive groups such as the Urban Institute. Even Sen. Bernie Sanders (I-Vt.) concedes it would cost $30 trillion or more. Perhaps voters’ eyes will glaze over, and they will decide that everyone can find an economist to justify anything, but others might see the sort of standard sleight of hand — trillions in administrative savings! stronger tax enforcement! — as confirmation that it really is impossible to come up with a plan this extensive and not further burden the middle class.

Moderate Sen. Michael Bennet (D-Colo.) blasted Warren’s plan in a written statement. “Voters are sick and tired of politicians promising them things that they know they can’t deliver,” he said. “Warren’s new numbers are simply not believable, and have been contradicted by experts. Regardless of whether it’s $21 trillion or $31 trillion, this isn’t going to happen, and the American people need health care.”

Second, there is not much of a justification as to why we need this when Affordable Care Act premiums are decreasing and other issues (e.g. extending coverage, premium costs) can be addressed through much cheaper proposals, such as the public option. (As Biden’s campaign put it, “Most voters want to protect and strengthen the Affordable Care Act.”)

Third, it is pretty clear to all but the horribly naive that this is never going to happen. An $800 billion cut in defense? What’s the justification for that, and what national security concerns does it raise? What moderate Democrat is going to sign on to this? The bigger and more complicated it is, the more obvious it becomes a fantasy — one that could prevent more modest and achievable ends such as prescription drug cost containment. Warren is relying, for example, on a wholesale immigration reform plan (something that frankly does not seem politically attainable) to generate hundreds of billions of dollars (above and beyond revenue going to state and local governments). At some point, this fails the straight-face test.

Fourth, eliminating all private insurance has real-world impacts on health-care providers. The New York Times reports: “Ms. Warren’s plan would put substantial downward pressure on payments to hospitals, doctors and pharmaceutical companies. … 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.” Do rural hospitals survive by protecting against the uninsured or go bust without the much higher reimbursement rates that private insurers provide? If doctors’ salaries get chopped, how will this affect time with patients and the availability of specialists?

Fifth, her proposal tests the limits of her electability argument. The Times observes: “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 dramatically 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.” Simply put, this really is the sort of plan President Trump would use to scare voters into sticking with him rather than plunging into a “socialist” abyss.

Sixth, Warren winds up handing the health-care issue right back to the Republicans. Andy Slavitt, who headed the Medicare and Medicaid trust funds under President Barack Obama, tells me: “In my view, 90 percent of the Democratic focus on health care should be on Trump’s lawsuit and his other plans to get rid of the ACA and pre-existing condition protections.” He suggests, “The other 10 percent can be on policy differences between the candidates on how they would ideally make universal coverage happen.” He warns, “Doing the reverse is like spending 90 percent of the time on environmental issues debating the Paris Accord vs. the Green New Deal instead of spending 90 percent of the time remembering they are running against a climate denier.”

Seventh, Warren doesn’t seem to consider the downsides from slashed reimbursement (nurses pay?), elimination of private insurance companies (jobs for all those white-collar workers?) and/or mammoth tax hikes (growth? jobs?). This embodies one of the major criticisms of the super-progressive wing of the Democratic Party: blind faith in centralized federal government with little or no regard for unintended consequences.

Eighth, the plan does damage to her brand. Warren’s plan is a reminder of how far to the left of the rest of the field she really is. The notion that she is a “compromise” between Sanders and center-left candidates will be harder to sustain. Moreover, she was supposed to be the straight-shooter, the candid progressive who could tip the scales in favor of working-class Americans. There are plenty of voters (including more moderate African American voters with whom she has struggled to connect) who might regard this as akin to Trump’s magical health-care plan (better! cheaper!) or other snake oil peddled by politicians. People have become a bit too savvy to think you can have everything for nothing.

Warren will have ample opportunity to defend her plan at the next debate. In the meantime, Democratic voters can mull over whether this makes it easier or harder to defeat Trump.

Last Updated 11/13/2019

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