Warren's $30 Trillion Medicare for All Problem Has a Solution

Warren's $30 Trillion Medicare for All Problem Has a Solution

(Bloomberg Opinion) -- It’s not easy being the front-runner.

Massachusetts Senator Elizabeth Warren, the leading Democratic presidential hopeful, has come under increasing attack from the rest of the pack for her backing of fellow candidate Bernie Sanders’s “Medicare for All” proposal and her disinclination to explain how she’d pay for it. They’ll continue to do so as they attempt to prevent her from running away with the race.

There’s plenty to critique: Sanders’s plan would boost government spending by an estimated $30 trillion over 10 years and almost certainly require a middle-class tax increase. This is something Warren is reluctant to admit out loud. She’s already pledged support for a wealth tax — one of the highly ambitious and controversial centerpieces of her campaign — which is set to raise $2.75 trillion over a decade for other initiatives. Talk of another tax aimed at raising multiples of that amount could cement the interventionist image some have of her, and turn off some voters.

While this situation would seem to be intractable, the fact is, Sanders’s plan isn’t the only route to universal coverage — it’s just a particularly expensive one. There are more affordable ways of getting to a similar place, and one of these other options could provide a workable solution for Warren. 

America currently pays for health care via an expensive and regressive muddle of employer contributions, premiums, and out-of-pocket spending by patients. Medicare for All would replace all of those costs with a tax, which would make the health-care system more straightforward and equitable. If the tax that finances it is progressive and a single-payer system can reduce health expenses while providing quality care, many Americans would come out ahead. Making sure no chunk of the middle class loses out in such a transition, as Warren pledged Tuesday, will be exceptionally difficult, though. 

Financing a health care plan gets a lot easier if it costs the government less. The Sanders proposal is much more generous than the single-payer health systems of other developed nations; these countries generally don’t eliminate out-of-pocket costs or cover as expansive a set of services. A few edits could go a long way toward reducing spending. 

Adding some limits to coverage, excluding undocumented immigrants and retaining limited out-of-pocket charges cuts the cost of a single-payer plan nearly in half, according to an analysis of a variety of different proposals released Tuesday by the center-left think tank Urban Institute. The report also suggests that such a plan — which they dub “Single-Payer ‘Lite’” — would also lead to significantly lower overall health spending relative to something like the Sanders plan, while still eliminating premiums and covering all documented residents. 

 Warren may not embrace all of the cost-cutting measures included in Single-Payer Lite, let alone the bigger savings that would result from retaining a role for premiums or private insurance. But there are clear benefits to diverging from what Sanders has proposed, and they should be on the table when she finally stakes out her own detailed position on health care. 

Shifting her stance won’t be easy politically and it won’t come without trade-offs. But if she’s going to offer a plan that treads as lightly on the middle class as she wants it to, it’s all but unavoidable.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

©2019 Bloomberg L.P.

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