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Taxpayers could see increases higher than their health costs
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Sanders plan to pay for health care covers about half of cost
Senator Bernie Sanders says most people in America will have to
pay more in taxes to pay for his Medicare-for-All plan. But he insists that’s a
good deal -- and will save people money overall by lowering health costs.
For many Americans, though, that would not be true. Households
that spend a lot on health care already would be most likely to see the
benefit. But for many, higher taxes would exceed any savings.
Sanders, a top contender for the 2020 Democratic presidential
nomination, says the savings would come from eliminating insurance premiums,
co-pays and out-of-pocket expenses, he said in an interview with National Public Radio on Monday.
Under his Medicare For All plan, Sanders says Americans could
erase $20,000 of annual private health care expenses for $10,000 in additional
taxes.
“Is that a good deal? I think that’s a pretty good deal,” Sanders
said.
Yet the 181 million taxpayers with employer-sponsored coverage
could miss out on the benefits of the Sanders plan, and even those receiving
Medicaid could pay more, according to health-care policy experts on both sides
of the political spectrum.
Medicare For All is a central piece of Sanders’s argument to expand
access to health care and he made his pitch during the first Democratic
presidential debates last week in Miami.
That $10,000 per capita number in new taxes is an estimate of the
more than $30 trillion cost for Medicare-for-All over a decade spread across
the 330 million people living in the U.S. And it’s unlikely that $10,000 cost
would be spread evenly, said Cynthia Cox, a vice president at the Kaiser Family
Foundation. Corporations and the wealthy would pay more than lower-income
people, she said.
A family of four with two incomes that total $100,000 who buys
insurance on their own and has at least one member in poor health spends about
$30,400 on health costs annually, according to estimates from
the Kaiser Family Foundation. An identical family that has employer-sponsored
health care spends $15,000 annually.
Under Sanders’s plan, the family who buys insurance on their own
could pay $20,000 in additional taxes but come out ahead. If they had insurance
provided through their jobs, that’s a $5,000 net loss.
Sanders’s Senate office did not immediately respond to a request
for comment. He has introduced a Medicare-for-All bill in Congress that has
also been embraced by Senator Elizabeth Warren, one of his rivals.
Sanders has proposed a wealth tax, a bank levy and premiums paid
by employers and employees. But that only raises about half of what is needed,
meaning that payroll taxes and income tax increases would necessarily have to
be part of the plan.
“There are likely to be a lot more losers than winners, ” Brian
Riedl, a senior fellow at the right-leaning Manhattan Institute. “It’s hard to
do the tax shift without making most families losers.”
Large families with lots of children and older, sicker people with
large out-of-pocket costs are likely to fare well under a Medicare-for-All plan,
said Marc Goldwein, a senior vice president at the Committee for a Responsible
Federal Budget, a think tank.
Many of the 181 million taxpayers with employer-sponsored coverage
are likely to see their taxes go higher than their current health care spending,
because about 56% of their medical costs are covered by their company,
according to the Milliman Medical Index, which tracks annual health care
spending.
For example, a person making $50,000 with employer-sponsored
coverage spends about $5,250 annually on health care, meaning that under
Sanders’s plan, her or his taxes would be nearly double the person’s current
health care costs. If that person bought her or his own insurance, it would
cost about $10,000, equalizing the $10,000 tax increase.
Those on Medicaid, the government-sponsored insurance program for
the poor, are likely to see their tax burdens rise far beyond their current
health spending, Riedl said. A family of four earning $30,000 spends about
$1,200 annually on health costs, according to the Kaiser Family Foundation
estimates.
Sanders’ plan also assumes that health providers will be
reimbursed at Medicare rates, about 40% below what they receive from private
insurers. Health care experts question whether a cut this large is feasible,
meaning that the cost for Medicare for All could be even higher.
“The overarching question is whether it could reduce spending by
paying doctors and hospitals less,” Cox said.
Sanders was defensive during last week’s debate when asked if the
middle class would pay higher taxes to fund Medicare-for-All. “Yes, they will
pay more in taxes, but less in health care for what they get,’’ he replied.
But higher taxes, even for more services, isn’t an easy sell
politically. Sixty percent of people oppose Medicare-for-All when told that it
could require more in taxes, according to Kaiser Family Foundation polling. But that flips -- with about 71% of respondents in
favor -- when people are told that it would guarantee health insurance.
“Of course some people are going to pay more in taxes,” Sanders
told NPR. “Health care costs money. Of course it does. No one says it is free.”
The details on the cost, however, have continued to be elusive as
Democrats seek to build political momentum behind the idea.
“Medicare-for-All, if it’s paid for responsibly, will shift money
around. As a society we might pay a little more or a little less,” Goldwein
said. “The question is how to spend it and whose pocket it comes from.”
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