Apr 11, 2019

Medicare for All redistributes who pays for health care

Sen. Bernie Sanders speaks on his Medicare for All bill. (Photo: Mark Wilson/Getty Images)

Sen. Bernie Sanders' Medicare for All plan would drastically change not only how health care is paid for, but who ultimately pays for it.

Between the lines: While the wealthy and the poor usually pay the same premium for today's employer-based insurance, Sanders' plan would beef up insurance coverage for everyone and pay for it by increasing taxes disproportionately on the wealthy.

Driving the news: As part of yesterday's rollout, Sanders released a white paper with several "options" on how to raise the additional revenue it would take for the government to pay for everyone's health care without any premiums or out-of-pocket costs.

  • While most people's taxes would go up, the wealthy would end up paying for a much greater portion of the nation's health care system than they currently do.
  • A 4% "income-based premium" for workers who make more than $29,000 and a 7.5% "income-based premium" on employers (exempting the first $2 million in payroll) are two of the financing options. Most economists assume that the employer tax would get passed onto employees through lost wages.
  • Other options include increasing the individual tax rate on high earners, taxing "unearned" income at the same rate as earned, and establishing a wealth tax.

What they're saying: Even if all of these payment options were implemented, they still wouldn't cover the total cost of Sanders' plan, said the Committee for a Responsible Federal Budget's Marc Goldwein.

  • There could also be unintended consequences of such high taxes on the wealthy, he said: “For some people, it would literally cost them money to make investments.”

The bottom line: "More progressive tax-based financing of health care is a feature, not a bug, of Medicare-for-all," the Kaiser Family Foundation's Larry Levitt said.

  • "The idea of financing health care through taxes rather than premiums and out-of-pocket costs would be fairer in some people’s minds, but also disruptive," he said.

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