Commentary on Commentary on Sanders’s Single Payer National Health Insurance Proposal
Bernie Sanders has proposed a federal national health insurance system which will provide no-deductible no copay insurance to all US legal residents.
Needless to say, this will be expensive. Amazingly, Sanders focused on what taxes he proposes be increased to pay for the program.
Kevin Drum is very favorably impressed by the (relatively) honest budgeting
“Bernie Sanders Releases Outline of Universal Health Care Plan—And It’s Pretty Good”
Drum also summarizes the plan very briefly and clearly
Here are his basic claims:
He will raise $630 billion by increasing the employer part of the payroll tax by 6.2 percent.
He will raise $220 billion via a 2.2 percent progressive income tax on everyone (he calls it a “premium”).
He will raise $548 billion in various taxes on the rich along with the end of current tax breaks that subsidize health care
That’s a total of $1.4 trillion
Current public spending on health care (mostly Medicare and Medicaid) runs around $1.2 trillion.
This means that Sanders is figuring that under his plan total national health care spending will be about $2.6 trillion.
This is considerably less than the $3 trillion we spend now, and Sanders also says that his plan will keep spending growth down. This accounts for his claim that his plan will reduce total national spending on health care by $6 trillion over ten years.
So is this credible? It’s close. His taxes will probably raise about what he says. I’m not sure that he can reduce spending as dramatically as he hopes, but he can probably reduce it some. In other words, his sums might not add up perfectly, but they’re pretty close.
I am going to discuss the taxes.
Ezra Klein (who is very expert on health care financing) is not impressed
“It’s everything critics fear a single payer plan would be, and it lacks the kind of engagement with the problems of single-payer health systems necessary to win over skeptics.”
I strongly disagree with one of Klein’s arguments. Klein objects to Sanders’s reliance on higher taxes on high income and on capital income.
The rest of the financing would come through a raft of new taxes on the rich. Sanders would raise marginal rates on income over $250,000, he would raise the tax rate on capital gains and dividend income, he would hike the estate tax, and he would close sundry deductions and loopholes.
In general, I’m comfortable with higher taxes on the rich — though they’ve risen substantially in the Obama era already — but tax increases of the scale Sanders proposes here would begin to have real economic drawbacks. European countries tend to pay for their health-care systems through more broad-based, economically efficient taxes like VATs; Sanders’s effort to fund a universal health-care system so heavily on the backs of the wealthy would be unprecedented.
Klein really wants to discuss the insurance providing side of the plan not the taxes — the argument which I contest is tossed off. But it’s there in pixels and I will take it seriously.
I think the second paragraph is nonsense. Klein presents no historical evidence supporting his claim that the taxes Sanders proposed would have real economic drawbacks. The reason is that there is no such evidence. His argument is that European countries don’t do that (although in fact European income tax rates are high — the VAT is in addition to high income taxes). This isn’t an argument. It is based on the assumption that average European policy is optimal. I personally find this very irritating as the argument is very common in Italy where reverse nationalism means that if it is noted that Italian policy differs from the European average it is just assumed that everyone must agree that Italian policy should be changed.
Notably European economic performance must make reasonable people doubt European policy makers’ understanding of what is “economically efficient.” What is the argument that a VAT is economically efficient ?
Here I assert that an important part of the support for that view comes from people who equate regressive with efficient — who assume that redistribution from people with high income to people with low income is economically inefficient. This is based partly on an absurd definition of “economic efficiency” in which it is just assumed that the welfare of the rich is more important than the welfare of the non rich (I am not exaggerating google “Money metric welfare”). But it is also based on confident assertions on matters of fact which are not supported by the evidence. It is certainly *not* true that simple growth regressions suggest any “real economic drawbacks” of the marginal tax rates proposed by Sanders.
The official argument for a VAT is that, by taxing consumption not income it encourages saving. Now it just so happens that one of my PhD supervisor’s obsessions was on how to increase saving rates. Now he is obsessed with the risk if secular stagnation. Top economists are now arguing that a high tendency to save causes stagnation and instability. Yet the argument that policy should encourage saving is not affected at all. This reminds me of the way in which the great recession had only a brief and limited effect on hatred of budget deficits. Rich countries have had slack demand and a liquidity trap for 7 years now. It’s time people considered whether this is relevant to the debate on taxes and tax incentives.
Ezra Klein is better than this. I will now try to psychoanalyze the paragraph. First I think that Klein has a serious case of Europhilia — to him the fact that European countries didn’t do this implies that it shouldn’t be done.
Second I think he has internalized the political constraints. Such tax increases are outside the inside the beltway Overton window. But so, at the moment, is single payer. Any serious attempt to introduce a VAT would immediately reveal that it is politically impossible. “Soak the rich” is popular populism. “Soak the old” is political suicide. Large tax increases on high incomes might be politically possible some day. I don’t think a VAT tax ever will be.
Third I have to expect he hopes to have a lot of influence on the Clinton administration (if not a job with them). I sure hope so. If this requires a little bit of breazy dismissal of progressive taxation which won’t be enacted anyway, it’s fine by me.
When we talk about the cost of universal health care — or really, any government program where the govt, not individuals would be the buyer — I sure wish we would talk about cost in terms of the level of service received, as distinct from (not instead of) the government cost.
Presumably, giving everybody access to medical care would mean more of it was used. No duh there. Also presumably, those who today use very little in the way of health care services, have more pressing and more valuable treatments when they can get services they previously couldn’t. Versus those of us who are well-off, and address relatively minor concerns without nearly so much concern about the cost.
I have no doubt the cost of universal care would rise from what we now spend. But I have to believe it’d result in better utilization of medical care overall, that dollar-for-dollar, it’d be money better spent than what we have today. Americans would live longer and fewer debilitating conditions would require intensive care or take workers out of the workforce. This seems so consistent with ordinary econ that I’m surprised nobody calls out the huge increase in Americans’ well-being that’d result from the government picking up a higher share of costs.
Another voice on this – Paul Krugman. He pans the Bernie Plan:
“Bernie Sanders is wrong about this
and Hillary Clinton is right”
Of course PK is a big supporter of Hillary, so this is just a political position. Normally PK gets comments on his articles that read, “PK – You are so so smart and right!” Not this time. The comments blast him for playing politics.
Nonsense. I agree with EMichael, you are blowing smoking and stirring the pot here in an attempt to conflate the issue and move people in the wrong direction on healthcare. The people on the commentary are missing the point.
US cannot find a way to pay for human need but has no limit on the checkbook cashing perpetual war on Iran……….
More bombing more arming Sunnis like Bush did to get the withdrawl underway, more calling Iran evil…..
But no money for making Americans healthy.
Then let’s go to Mars!
US G crony capital spending remains high by world “standards”.
Like the commenters, you should reread PKs article enough times until you can figure it out.
I am also confused about Klein’s comment on raising taxes on the rich. I understand “internalizing” the political constraints, but if that is the case there would be no reason to even talk about changing our healthcare system(or anything else for that matter).
EM – You red the PK article and conclude that is supportive of the Sanders plan for Medicare for all??
I don’t read that. Consider the closing line:
“So progressives must set some priorities.
And it’s really hard to see, given this picture,
why it makes any sense to spend political
capital on a quixotic attempt at a do-over”
Help me, show me where PK supports the Sanders plan??
No, I read the Krugman article and saw that it really had nothing to do with Sanders healthcare plan.
Concentrate on the last word, “Health Reform Realities”.
You go, guy! THANKS for this, Robert.
Just one nit to pick: Sanders will be soooo much more powerful in the Senate than he would be in a Clinton administration. No how, no way, would he join a Clinton administration.
Btw, was I the only one who caught Clinton’s cute sleight of hand that her and her daughter’s misrepresentations–er, criticisms–about Sanders’ 2013 single-payer proposal were ACCURATE, and that he issued a new proposal two hours before the debate because those misrepresentations weren’t misrepresentations but instead were accurate?
I just about fell out of my chair when she said that. Then I padded myself on the back. I’d predicted exactly this type of outlandish weirdness from her in a post I posted here at AB a couple of hours before the debate, at
It’s habitual with her.
I have become a single issue observer, that being war in the middle east.
Clinton is misleading, she says one thing on stage and others at other places.
The line where she said “arm Sunnis” almost exploded my head [although it fits her G W imitation].
Clinton is down on the side of Saudi theocracy, which funded al Qaeda etc….
Kudos to Waldmann. On the spending side I’d like to horn in with this:
At the risk of being annihilated by the Pollack-Krugman axis, keeping in mind the equal intransigence of the GOP Congress under either administration, an argument for the visionary approach of Medicare-for-all is that it whets the political appetite for incremental improvements. It’s not as if a Bernie administration would start off spending all their time banging their heads into a brick wall. They deserve a little more credit than that.
The who-will-pay bit is trolling. It should be obvious that a narrow critique of single-payer focused on tax increases is just demagogy, from the standpoint of liberal values, as Hillary herself said in 2008. Any large-scale reform will have losers. We have losers now under ACA, people with high premiums and high deductibles, for whom health insurance has devolved to catastrophic care insurance. Going through a $10K deductible would wipe a lot of people out. It’s better than nothing, but obviously the program needs more dough.
To reject a reform because there are losers is to reject the possibility of reform itself. A defensible critique of BernieCare would be to propose an alternative system of payments to support universal coverage. Seeing as how economies in spending are politically very difficult and will take time to establish, bringing more people under the umbrella of health care will cost more, and rejecting anything that costs more means rejecting the expansion of coverage.
Max!! At AB! Schweeet!
EM – you say:
“I read the Krugman article and
saw that it really had nothing to do
with Sanders healthcare plan.”
Really? Well others read what I read.
From Daily Koos:
“First, I’m going to acknowledge Krugman’s column and blog post, as well as TeacherKen’s diary on the subject, which support Clinton’s health plan, pointing out that Sanders’ plan is not politically feasible.”
“Paul Krugman: Why I Support Hillary’s Vision for Health Care – Not Bernie’s”
Paul Krugman on Bernie’s single payer plan: “A distraction from the real issues”
“In a blunt column, Krugman makes it clear which side he stands on.”
A question: Do you really believe that PK (a big HRC supporter) writes the column for the NYT on the day after Sanders releases his plan is just a coincidence?
This is HRC at her best. She calls on support from all types when she needs it (including PK). Today her hired guns are pointed at Bernie. Soon it will be some hapless Republican.
Again nonsense. What Krugman makes clear and Dean Baker acknowledges are healthcare costs must be addressed. I posted Bernie’s plan and while Bernie gives credence to tax hikes in bullet points, cost controls is relegated to two sentences at the end of a paragraph. This is not politics it is reality. Ezra Klein acknowledges this flaw. Maggie Mahar acknowledges this major weakness on the part of Bernie’ plan as well as other knowledgeable people.
EM is correct.
Clinton is a big fan of running US money through Wall St insurance. When we she go “privatize SS in Wall She insurance scammers’ money.t”…..?
Clinton reluctance on universal medicare is paying back t
Klein has jumped the shark.