On Friday, Democratic front-runner Elizabeth Warren presented her Medicare for All plan. New taxes for the wealthy as well as corporations are supposed to finance the proposal that costs 20.5 trillion US dollars over one decade. It is a risky paradigm shift in an American health care system that continues to rely on individualism rather than collectivism. Questions remain whether the plan’s facilitation without taxing the middle class is conceivable.
It is a crucial step for Warren at a time when polls show her moving to the top of the pack in key states such as Iowa. Warren will occupy a pioneering role moving forward, as she is the first of the Democratic candidates to detail how to finance a Medicare for All plan, that many of the party’s progressives passionately support.
Warren claims that a Medicare for All system could cover everyone in the US while providing extended benefits. The cost for the federal government would amount to approximately 20.5 trillion US dollars over the next ten years – an increase of the federal budget by 33 per cent. It is the cost of abolishing private insurance that would subsequently eliminate deductibles, premiums, and co-payments – while converting everyone into a single-payer system without raising taxes for the middle class.
According to Warren, half of these overall costs would be covered by generating $9.1 trillion in additional taxes off businesses and high-income families over the next ten years. The amount even surpasses the wealth tax that Warren had previously proposed to finance policies such as student debt cancellation and the free public college.
Warren’s tax proposal asks for a substantial increase in their wealth tax, which is primarily directed at billionaires. Taxes on assets of more than $1 billion would rise to 6 per cent, doubling what an earlier proposal. In addition to taxing assets more punitively, Warren also aims to hit the top 1 per cent of Americans with a new annual capital gains tax, while also aiming to generate trillions of dollars in taxes on financial companies and large corporations. The latter would put a rapid end to the tax cuts signed by President Trump.
Much of the remaining $11.4 trillion would be covered by urging employers, to pay the government a similar amount as they are paying for their employees’ health care currently. Over the ten years, this would generate $8.8 trillion in total. According to Warren, the costs will be less burdensome than the cost employers are currently facing, as they would be protected from the existing price hikes in health care. Many small businesses that currently do not provide health care to their employees would be exempted, while the states continue to pay for government employees and low-income Medicaid residents.
Under the current system, 156 million Americans are insured through their employer. In Warren’s plan, the role of the federal government would significantly inflate. It is what makes her plan risky for her campaign as she will ask voters to essentially favour a system- a change that many may still see as too radical. Critics have moreover noted that the maths in her plan simply do not stand the test and that the middle class would be facing an increase in taxes also.
It does not only apply to voters but Congress alike. Not even her party stands in unity behind the concept of Medicare for All. While it more or less symbolises downright socialism to Republicans. While Warren can rightfully claim to be the first candidate to have outlined and committed to a plan, it also means Warren will occupy the term Medicare for All for the 2020 election circle – which, if she cannot sell it, could turn out to be a significant detriment to her candidacy.