Editorial

Ways to Pay for Med4A

As Sen. Elizabeth Warren has gained a narrow lead in the Democratic presidential field, pundits and many of her Democratic rivals have demanded that she specify where she would get the money to pay for expanding Medicare to cover everybody. She has wisely avoided the trap.

Reporters want a sound bite that Medicare for All will increase taxes on the middle class. Sen. Warren explained at the Oct. 15 debate in Ohio that no middle-class family would see an increase in overall health care costs. “Costs will go up for the wealthy,” Warren said. “They will go up for big corporations. And for middle-class families, they will go down. I will not sign a bill into law that does not lower costs for middle-class families.”

There are many ways to come up with the estimated $3.5 trillion to pay for expansion of Medicare to cover practically all medical expenses for everybody. The health insurance industry, which stands to be the big loser, wants desperately to muddy the debate.

The Affordable Care Act was a good first step in providing access to health coverage for millions of people who don’t get health insurance with their job, and the ACA provides minimum standards for that coverage. But coverage that cost hundreds of dollars per month for adults, and more than $1,000 for a family, with copays and annual deductibles of $6,000 or more made it less affordable. Republicans’ answer was to allow insurance companies to offer “skinny” insurance plans that offer lower monthly premums, but also provide skimpier coverage.

Some moderates have proposed simply expanding Medicare to people in their 50s, so more people qualify for Medicare, and eventualy covering everybody. But that won’t do away with copayments, deductibles and the need for supplemental “Medigap” insurance.

In 2018, the last year with complete data, nearly 60 million Americans received Medicare benefits. Most were elderly residents, as well as nine million disabled people. Total spending was over $700 billion, or an average of $11,800 per recipient, Gerald Friedman, a professor of economics at University of Massachusetts Amherst noted. Of course, that group includes the oldest and most medically needy people.

Physicians for a National Health Plan (PNHP) notes that 60% of our health care system already is financed by public money, including federal and state taxes, property taxes and tax subsidies that pay for Medicare, Medicaid, the Veterans Administration, coverage for public employees, elected officials, military personnel, etc. There are also hefty tax subsidies to employers to help pay for their employees’ health insurance.

Public funds already funneled to Medicare and Medicaid would be retained. PNHP figures the gap between current public funding and what we would need for a universal health care system would be financed by a payroll tax on employers (about 7%) and an income tax on individuals (about 2%). The payroll tax would replace all other employer expenses for employees’ health care, which would be eliminated. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and other out-of-pocket payments. For the vast majority of people, a 2% income tax is less than what they now pay for insurance premiums and out-of-pocket payments such as co-pays and deductibles, particularly if a family member has a serious illness.

Under the current system, the typical non-elderly family in the US spends $8,200 per year, or 11% of their income, on health care – not including employer contributions – but this can vary substantially by income, type of insurance, and health status, the Kaiser Family Foundation reports.

For example, a family of four with employer coverage with $50,000 income spends, on average, $7,450, or roughly 15% of income, on health care. This includes $2,100 in out-of-pocket costs, a $3,950 premium contribution, and $1,40 in state and federal taxes to fund health programs. Under the PNHP plan, the family would pay $1,000 more in tax instead of $3,950 in premiums.

Employers who now provide coverage would also see savings. They pay, on average, $5,500 toward each employee’s annual premium and $750 in Medicare payroll tax. That would decline to $3,500 for an employee who earned $50,000. And skinflint employers who don’t provide insurance for their workers would finally have to ante up.

A single person earning $50,000 who now obtains insurance on the individual market instead of through his or her employer now can expect to spend 20% of income — $10,000 — on health care. Medicare for All could cut that to $1,000.

Many pundits assume that organized labor won’t support Medicare for All, because they already have insurance as a result of collective bargaining, but many union leaders say they would be glad to have Medicare for All take health insurance out of contract negotiations, so they could spent their time pushing for better wages and other priorities. Protection of health-care benefits was a major issue in contract negotiations between US Steel and the United Steelworkers last year, as well as the recent UAW strike of GM

The AFL-CIO endorsed Medicare for All in 2009, but support varies from one union to another.

“While we would like to see universal health care, we want to make sure that there is a role for employer-bargained plans in that plan,” AFL-CIO President Richard Trumka told reporters in July after the second Democratic debate. Though the union voted in 2017 on a resolution to “move expeditiously toward a single-payer system, like Medicare for All,” Trumka has endorsed a much narrower coverage expansion plan: lowering Medicare’s eligibility age to 55.

Other union leaders would rather take care of health coverage once and for all.

“Wouldn’t it be great if we had a single, universal access point for health care and we could instead spend our time bargaining for lower class sizes and wrap around services and increases to people’s pay?” said Randi Weingarten, president of the 1.7 million-member American Federation of Teachers, which endorsed Medicare for All earlier this year. “Wouldn’t it be great it if it wasn’t always dominated by health care fights?”

Jonathan Cohn, who covers health care for HuffPost, noted Oct 17 that progressives in New York have been promoting a state-level New York Health Act that is structurally similar to Sanders’ Medicare for All proposal. The New York plan would be financed with taxes on payrolls and non-wage income (interest, dividends, etc.).

The Rand Corporation noted that the New York bill, which hs not advanced in the legislature, would cover all residents of New York state with comprehensive health benefits (except long-term care benefits, which could be added later). Patients would have no deductibles, copayments, or other out-of-pocket payments at the point of service for covered benefits.

Rand researchers determined the NYHA as designed would reduce overall spending on medical care in New York. And as long as taxes to pay for the program were sufficiently progressive, the benefits would flow primarily away from the rich and toward lower- and middle-income groups.

Specifically, the richest 10% of New Yorkers would be paying more for health care on average, while the other 90% would pay the same or less, Cohn noted.

“That sounds a lot like the kind of plan that Sanders and Warren promise — which is to say, it sounds a lot like a plan that would work out well for most Americans.”

Make that deal for Americans, Democrats. — JMC

From The Progressive Populist, November 15, 2019

Populist.com