CRFB’s irresponsible report on financing Medicare for All

October 29, 2019

Topics: Quote of the Day

Committee for a Responsible Federal Budget, October 28, 2019

In the coming months, the Committee for a Responsible Federal Budget will publish a detailed analysis describing numerous ways to finance Medicare for All and the consequences and trade-offs associated with each choice. This paper provides our preliminary estimates of the magnitude of each potential change and a brief discussion of the types of trade-offs policymakers will need to consider.

We find that Medicare for All could be financed with:

• A 32 percent payroll tax
• A 25 percent income surtax
• A 42 percent value-added tax (VAT)
• A mandatory public premium averaging $7,500 per capita – the equivalent of $12,000 per individual not otherwise on public insurance
• More than doubling all individual and corporate income tax rates
• An 80 percent reduction in non-health federal spending
• A 108 percent of Gross Domestic Product (GDP) increase in the national debt
• Impossibly high taxes on high earners, corporations, and the financial sector
• A combination of approaches

Each of these choices would have consequences for the distribution of income, growth in the economy, and ability to raise new revenue. Some of these consequences could be balanced against each other by adopting a combination approach that includes smaller versions of several of the options as well as additional policies.

Consequences could also be mitigated through aggressive efforts to lower per-person health care costs and/or by substantially scaling back the generosity or comprehensiveness of Medicare for All.

While the financing options above are quite large in magnitude, they could be reduced significantly by reducing the cost of Medicare for All itself.

These cost reductions could be achieved in part by reforming or reducing provider payments, improving care coordination, and identifying policies to reduce excessive utilization of care.

From the Conclusion

In deciding how to finance Medicare for All, policymakers must consider the distributional, economic, and policy consequences of replacing premiums and cost sharing with various alternatives. Most of the options we put forward are more progressive on average than current law but would shrink economic output and bring the top tax rate up to its revenue-maximizing level – leaving little capacity for further taxes.

http://www.crfb.org…

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Comment:

By Don McCanne, M.D.

The Committee for a Responsible Federal Budget is an influential organization that professes to advance bipartisan concepts that would place controls on the federal budget, but if you check the list of Directors (on the first page of their report) you will see that those on the left are predominantly neoliberals, with a stark absence of authorities with more progressive views – at best some may be classified as neutral academics. Understanding this is important because it seems to explain why they selected for this report their unusual framing of the options for financing Medicare for All.

They list eight different options plus a ninth option of combining various approaches. Most of the analysis is an evaluation each option isolated separately with the assumption that it would finance the entire health care system – nearly one-fifth of our economy. On the face of it, these assumptions are ridiculous. Opponents of single payer Medicare for All can take any one of them and hold the concept of trying to finance our entire health care system up to ridicule. As an example, they say that the concept of paying for health care by taxing the rich – high earners, corporations, and the financial sector – is an impossibility because at 100% tax rates there is not enough money there to pay for health care for all. They seem to ignore the fact that nobody has suggested paying for all health care in this manner nor through any of the other financing methods listed when used as the sole source of health care revenues. They end the list with a consideration of enacting a combination of approaches, almost as if it were an afterthought.

In discussing the trade-offs, they caution that most of the options “would shrink the economy,” with the potential of even greater damage to the economy should a decision be made to use deficit-financing for Medicare for All. Also they caution that there is risk that each of these options would bring the top rate close to the “revenue-maximizing rate” beyond which there is not much tax capacity left, reducing the ability of government policymakers to raise revenue in the future.

In spite of the distinguished officers and directors of this organization, this appears to be a hit piece designed to extinguish the flames of the passionate supporters of single payer Medicare for All. This is a preliminary report, and they say that in the coming months they will be publishing more detailed analyses, obviously timed to coincide with the election season. Unfortunately these reports will be suited only for the electronic trash heap, though we must keep our guard up so that they do not gain traction amongst the public at large.

That said, it is imperative that we understand how we can finance Medicare for All so that it works for everyone. Yesterday’s message was on the new book, “The Triumph of Injustice” by Emmanuel Saez and Gabriel Zucman. They describe tax policies that would make health care affordable for absolutely everyone while actually increasing the incomes of those who have been stuck in wage stagnation for the last several decades. If you did not followup on this yesterday, please do so now; health care justice depends on it:

https://pnhp.org…

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