Sen. Elizabeth Warren says paying for "Medicare for All" would require $20.5 trillion in new federal spending over a decade. That spending includes higher taxes on the wealthy but no new taxes on the middle class.
The Democratic presidential candidate released her plan to pay for Medicare for All on Friday after being dogged for months by questions of how she would finance such a sweeping overhaul of the health care system. That pressure has been intensified by the fact that Warren has made detailed proposals a central part of her brand as a candidate.
Medicare for All is a single-payer health care proposal introduced by Sen. Bernie Sanders and cosponsored by multiple candidates in the presidential race, including Warren. It would virtually eliminate private insurance, including employer-sponsored coverage.
It also represents a political risk, as multiple polls show that introducing a public option for health insurance coverage is more popular than a Medicare for All plan that almost entirely does away with private insurance.
Here's a look at what Warren has laid out to provide single-payer health care, including proposals to cut costs, where new revenue would come from, where funds would not be taken from and what comes next.
Warren bases her plan off of a recent analysis from the Urban Institute, which estimated that under current law, Americans would spend $52 trillion over the next decade on health care — that includes many types of spending, from employers, individuals and all levels of government.
In that analysis, the Urban Institute calculated that under a single-payer plan that looks a lot like Medicare for All, costs would total $59 trillion over a decade, which would require $34 trillion in new federal spending.
Warren's plan estimates that total health costs could be held to $52 trillion and that $20.5 trillion in new federal spending would be necessary.
Like Urban, Warren's plan assumes that Medicare for All would pay doctors what Medicare pays them right now. It would also pay hospitals 110 percent of what Medicare pays right now — slightly less than Urban's 115 percent assumption.
This question — what to pay hospitals and doctors — is a big part of what determines how much Medicare for All would cost. That's because Medicare pays doctors and hospitals much less than private insurance.
"This plan aggressively constrains the price of health care, paying doctors, hospitals and drug companies much less," said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. "There would be a lot of adjustment required from from hospitals and doctors as their incomes go down."
Just how seismic such a shift would be would depend in part on how fast the transition is, he added.
"I think how quickly she proposes to transition to this new system will be really important because it would be very disruptive to the health care system," Levitt said. "You know, a quick transition would be hard and potentially result in shortages or increased wait times for health care."
Sanders calls for a four-year transition to Medicare for All — a pace that Levitt characterized as "quite quick." In a Friday blog post spelling out her proposal, Warren said she plans to unveil her transition plan "in the weeks ahead."
A letter from economists supporting the plan, provided by Warren's team, argued that these payment rates would work in part because doctors and hospitals would save substantially on administrative costs. Warren's team also says there would be ways to ensure that vulnerable hospitals, like those in rural areas, would get paid more, so they could stay in business.
Her proposal also establishes savings by projecting that Medicare for All could substantially slow medical cost growth. Warren also stipulates that state and local governments would redirect the more than $6 trillion they currently spend on Medicaid and the Children's Health Insurance Program (CHIP) to the federal government.
One thing that's notable about this plan is where the revenue doesn't come from. Warren had promised at a recent debate that she would not sign a bill that raises health care costs for the middle class.
This plan goes further: Middle-class Americans would no longer pay health premiums or copays and would also not pay new taxes to replace those costs. They would, however, pay taxes on whatever additional take-home pay they would receive from this plan. That would add $1.4 trillion in revenue, her team estimates.
This is a departure from Bernie Sanders' ideas about how to fund Medicare for All. One of his options is a 4% tax on families earning more than $29,000. At the Democrats' October debate, he explained that taxes would go up for many Americans under his plan.
"At the end of the day, the overwhelming majority of people will save money on their health care bills. But I do think it is appropriate to acknowledge that taxes will go up," he said. "They're going to go up significantly for the wealthy. And for virtually everybody, the tax increase they pay will be substantially less — substantially less than what they were paying for premiums and out-of-pocket expenses."
Employers are one of the main sources of revenue in this proposal. Warren says she would raise nearly $9 trillion here, a figure that comes from the roughly $9 trillion private employers are projected to spend over the next decade on health insurance. The idea here is that instead of contributing to employees' health insurance, employers would pay virtually all of that money to the government.
In addition, she will boost her proposed 3% wealth tax on people with over a billion dollars to 6% and also boost taxes on large corporations. Altogether, she believes, taxes on the rich and on corporations would raise an estimated $6 trillion. An additional $2.3 trillion would come from improving tax enforcement.
But there are lingering questions about how much revenue some of these taxes would bring in or how easy it would be to impose a wealth tax in particular.
"Something like half of the wealth of the wealthiest people in America are held in privately held corporations, privately held businesses," said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. "And it's really hard to value those assets for tax purposes."
Warren also includes comprehensive immigration reform as part of her plan. Giving more people a path to citizenship would mean more taxpayers, which would mean more tax revenue.
While Medicare for All is Sanders' plan, his bill does not include set methods to pay for the plan. Rather, Sanders has included "options" to pay for his health care plan. In a recent interview with CNBC, he said "we'll have that debate" over how exactly to finance the plan.
As the candidate with "a plan for that," as one of her slogans goes, Warren has been asked repeatedly whether her health care overhaul plan would raise taxes on the middle class. Warren repeatedly said in response that she would not raise costs for the middle class.
This proposal gives Warren an answer for the next time she is asked how she would pay for Medicare for All, and it means she can say that she wouldn't impose new taxes on middle-class Americans.
But it also gives her opponents potential new fodder for attacks. Former Vice President Joe Biden has already come out swinging, accusing Warren of fuzzy math. In addition, his team argues that that nearly $9 trillion that employers would pay the government would ultimately hurt workers.
"To accomplish this sleight of hand, her proposal dramatically understates its cost, overstates its savings, inflates the revenue, and pretends that an employer payroll tax increase is something else," said Biden deputy campaign manager Kate Bedingfield in a statement released Friday.
AILSA CHANG, HOST:
Elizabeth Warren today answered some big questions about how she would implement "Medicare for All" if she's elected president. Rivals and reporters have been pressing Warren for details on how she would fund a government-run health insurance program that covered every American. Well, NPR's Danielle Kurtzleben has been going through Warren's new plan and joins us now with the details.
DANIELLE KURTZLEBEN, BYLINE: Hey, Alisa.
CHANG: All right, let's start with the big question here. How much does Warren say this plan would cost in total?
KURTZLEBEN: Fifty-two trillion dollars. That's a...
CHANG: A lot of money.
KURTZLEBEN: ..Lot. Yes, yes, over the span of 10 years. Now I want to be clear that is total. That is not all new funding. And we will get to the details on that in a minute here. Now she is saying $20.5 trillion, over 10 years again, would be in new federal funding, so new revenues the government has to bring in. To put some perspective around this, by one estimate, that would be a nearly 50% increase in federal revenues over the next 10 years.
KURTZLEBEN: Right. You say wow. And that's a lot of money. And it gets at just a sweeping program this would be - a total overhaul.
CHANG: That said, the whole time, Warren's been stressing that middle-class families would pay less than they do now, that overall, the country would save on health care. How could that possibly happen given that there's this huge price tag?
KURTZLEBEN: Right. So let's go back to that initial number, that $52 trillion. That is an estimate from a think tank called the Urban Institute for how much money will be spent in the entire American health care system over the next 10 years - so employers, consumers on private coverage, by the federal government, by state governments, everybody. Under Warren's plan, she thinks that cost would stay roughly the same while insuring everybody. So she says this is a bargain.
Now some of this, she says, is just money shifting around. For instance, employers are currently estimated to pay about $9 trillion over - toward health care over the next 10 years. Warren's plan says they would pay nearly all of that, instead of to private insurers, just to the government in the form of a tax. Now opponents are already coming out against this - Joe Biden, for example, saying this tax will just end up being passed on to middle-class workers. So this is going to be a point of contention, I would bet.
CHANG: And even with that, that still leaves - what? - trillions more to fill in here, right? Warren's been confronted about this over and over, this question, will this raise middle-class taxes. How has she answered that?
KURTZLEBEN: So this plan says that there won't be any new taxes on middle-class Americans, rather she leans a lot on new taxes on people who have more than a billion dollars in wealth, so even higher wealth taxes than she has proposed in the past - in addition to that, new taxes on large corporations. Now, in fact, she's touting that many middle-class Americans will have more take-home pay because they won't be handing that money over in terms - in the form of premiums.
KURTZLEBEN: However, that additional take-home pay will now be taxable. So some revenue will come from some middle-class Americans.
CHANG: So does the math actually work out the way Warren is claiming it works out?
KURTZLEBEN: OK, so this is a detailed plan from a woman who is known for detailed plans.
KURTZLEBEN: So yeah, the numbers add up. But the assumptions underlying these numbers are the things that we are going to be picking apart, that experts will be for the coming weeks. For example, this plan would pay doctors what Medicare currently pays doctors. It would pay hospitals a little more than that. Now what's important here is that is far less than private insurers generally pay those places. So there is a big question as to how doctors and hospitals would weather this plan.
There are also questions about other taxes. Now since she introduced the idea of a wealth tax, there have been big questions about how do you enforce that. How do you assess a person's wealth accurately? How easy would it be to evade? Now those are real questions that will continue. And almost to preempt that, she has said that tighter tax enforcement is going to be a big part of how she wants to bring in more revenues. One other thing here is just that this plan is very complex. It involves potentially immigration reform. It involves some cuts to defense spending. So there are a lot of assumptions here...
KURTZLEBEN: ...A lot of moving parts.
CHANG: And how long would Warren allow for a transition to Medicare for All from what we have now?
KURTZLEBEN: That is a great question. This would be a huge transition. She has said her transition plan will be coming in the coming weeks. But that transition is really where some of these tough choices, some of the tough things could happen to get us to Medicare for All.
CHANG: That's NPR's Danielle Kurtzleben.
KURTZLEBEN: Thank you.
(SOUNDBITE OF BONOBO'S "LINKED") Transcript provided by NPR, Copyright NPR.