If you have been wondering why Elizabeth Warren took so long to release the details of her Medicare-for-All plan, wonder no longer. Friday, in her 20-page explanation, Warren details her plan on cost-saving and new revenue that, according to the WSJ, are a “fiscal and health-care fantasy.”
Ms. Warren’s ambitious plan for a government takeover of American health care would include the elimination of private insurance that about 170 million Americans now have.
She continues to claim that this will cost “not one penny in middle-class tax increases.” She walks on water too.
The Fiscal Math Is Staggering
She concedes that her plan will cost only “slightly” less than the $52 trillion that the U.S. is expected to spend on health care in the next 10 years. She deducts from that what the feds now spend on Medicare and Medicaid, plus $6 trillion that the states contribute to Medicaid, the state-federal children’s health program and government worker benefits.
That leaves $30 trillion to finance, but Senator Warren waves her wand and says the bill will really be $20.5 trillion. She makes the rest vanish by positing magical savings from things like “comprehensive payment reform.” One of her ideas is the hardy perennial known as “bundled payments,” which have failed to reduce costs as promised by Obama Care.
Hospitals Would Be Reimbursed An Average 110% of Medicare Rates?
But hospitals now rely on private insurance payments to stay in business, and 110% of what Medicare now pays will hardly be enough to compensate for the loss of that private money.
Savings by “Restoring Health Care Competition”?
Because everyone will have good insurance, she says, “providers will have to compete on better care and reduced wait times in order to attract more patients.”
But if government is controlling all prices and reimbursements, what incentive is there to compete at all?
Every Government-Run Health System in the World Rations Care
If U.S. health-care spending exceeds GDP growth, (Warren) says, “I will use available policy tools, which include global budgets, population-based budgets, and automatic rate reductions, to bring it back into line.”
In a word, rationing.
Raise the Corporate Tax Tate to 35% from 21%
(Warren) claims this would generate $1.75 trillion over 10 years, which is fanciful since it would be an immediate incentive for companies to relocate overseas.
Doubling Down on Soaking the Rich
… assuming there are any left after her other tax proposal. … a new annual tax on unrealized capital gains of the wealthiest 1% of households (raising $2 trillion over 10 years), which would mean you owe a tax even if you haven’t sold the asset.
She graciously says taxpayers could offset the gains with losses in bad years, but that would lead to extreme revenue fluctuations from year to year.
A 2% Wealth Tax on $50M and 6% on $1+ B
Warren claims this would raise $3 trillion.
Most economists, including Democrat Larry Summers, believe a wealth tax would raise far less due to tax avoidance, which is why so many European countries have repealed their wealth taxes.
A Value-Added Consumption Tax on the Middle Class
The political vulnerability of all this isn’t lost on Ms. Warren’s Democratic competitors. A spokeswoman for Joe Biden said Saturday that Ms. Warren is “lowballing the cost of her plan by well over $10 trillion” and isn’t telling the truth about her taxes “that would come out of workers’ pockets.”
The likeliest outcome, if her plan ever became law, would be a value-added consumption tax on the middle class.
Read more here.