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Sen. Bernie Sanders (I-VT) has articulated, quite clearly, what type of health care system he'd like to see in the United States. His single-payer proposal envisions a system in which Americans pay nothing when they visit the hospital or a doctor — where there are no copayments for dentist visits, eyeglasses, or emergency room trips.
What he's articulated much less clearly is how much this system would cost — and how the government would raise that revenue. Instead, Sanders's office released a set of "options" on how to finance a universal coverage plan.
The biggest sources of revenue Sanders identifies are new taxes. He suggests a 7.5 percent payroll tax on employers, which his office expects to raise $3.9 trillion over the next decade (these numbers have not yet been evaluated by the Congressional Budget Office). Sanders would exempt a company's first $2 million in payroll from this tax, a way to shield small businesses from this provision.
He also proposes a 4 percent income tax surcharge on individuals. The standard deduction means that this would exempt families that make less than $29,000, a way to ensure that low-income Americans who might be on Medicaid now don't see their tax bills suddenly spike.
There are other financing proposals in the Sanders white paper too, including a wealth tax on the top 0.1 percent of American earners (which Sanders estimates to be approximately 160,000 households) and altering the estate tax to gain more revenue from especially high-value estates above $50 million.
Sanders certainly offers a wide array of financing options, and you can read through all them right here. What makes them difficult to evaluate, however, is that we don't know how much he expects his single-payer health plan to cost.
We know that Sanders wants to finance a very generous health care plan, one that doesn't charge copayments or any out-of-pocket fees when Americans go to the doctor, visit the emergency room, stay at a hospital, or get a dental cleaning or a new pair of glasses.
We don't know what that kind of price that health care system goes for. We can look abroad for some clues, but even that isn't a perfect analogue: The system Sanders has proposed is actually more generous than the single-payer ones in other countries like Canada or Australia. It covers more benefits with smaller contributions from patients when they go to the doctor, meaning it would likely need even more tax revenue.
One helpful frame of reference, however, is to look at Vermont's 2014 effort to build a single-payer system. The state ultimately estimated it would need to create an 11.5 payroll tax and a 9 percent income tax to finance a state-level, universal coverage plan. That plan also wasn't quite as generous as the one Sanders proposes.
My hunch — and it is just that; we need a lot more analysis from think tanks and the CBO to figure this out — is that the Sanders plan would need some revenue sources in the ballpark of what Vermont ultimately thought was necessary to finance its own single-payer plans.
Those are some pretty big tax increases. They mean some people pay less for health care — but that there are also people who pay significantly more in taxes.
Getting 17 Democratic senators to back a single-payer plan is no small feat. It represents a big shift to the left among the party in a very short time frame. Sorting out how much the Sanders plan costs, and what type of taxes can finance it, will be an even bigger challenge for this universal coverage proposal.
Chart of the Day
Did you hear another health care plan came out today? Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) led a group of five Republican senators in introducing a plan to repeal and replace the Affordable Care Act — the last such plan left standing in the Senate. Chances of passage are slim, but if you'd like to learn more about it, you can read my explainer here — and check out the Center on Budget and Policy Priorities analysis of how it would affect state budgets here.
Kliff’s Notes
With research help from Caitlin Davis
Today's top news
- “Medicare for All or State Control: Health Care Plans Go to Extremes”:“Liberals and conservatives in Congress were planning on Wednesday to set forth two radically different proposals for health care: a huge expansion of Medicare, which would open the program to all Americans, and a rollback of the Affordable Care Act, which would give each state a lump sum of federal money with sweeping new discretion over how to use it.” —Robert Pear, New York Times
- “Sanders' single-payer push splits Democrats”: “As Sanders prepares to unveil his Medicare for All legislation on Wednesday, most of the party’s congressional leaders and vulnerable Senate incumbents are steering clear. Even as the left celebrates Sanders’ ability to push the Democratic agenda leftward after his primary challenge to Hillary Clinton last year, that success appears to have its limits.” —Elana Schor, Politico
- “Insurers rail against Sanders healthcare plan”: “'Whether it’s called single-payer or Medicare For All, government-controlled health care cannot work,' David Merritt, executive vice president of America’s Health Insurance Plans, said in a statement Wednesday.” —Rachel Roubein, the Hill
Analysis and longer reads
- “Should states be allowed to semi-expand Medicaid?”: “As currently structured, states have little freedom to target the enhanced matching funds associated with the expansion of Medicaid at the beneficiaries in greatest need of assistance. This has inflated the cost of the program's expansion, eroded incentives for work, and deterred non-expansion states from extending funds to address the most acute unmet needs.” —Chris Pope, Washington Examiner
- “The effect of Medicaid expansion on the uninsured”: “States that didn't expand Medicaid have much higher uninsured rates compared with states that expanded Medicaid, according to the latest Census Bureau data.” —Bob Herman, Axios
- “Investing To Save: Marketing Builds Stable Marketplaces And Saves Money”:“If instead of cutting marketing and outreach spending, CMS increased spending to $480 million, or 1.4 percent of FFM [federally facilitated marketplace] premiums — the same percentage of premiums that Covered California spends on marketing and outreach, which complements spending by health plans — the FFM would see an increase in enrollment and a healthier risk mix, leading to lower costs for consumers.” —Peter V. Lee, Health Affairs
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