Bernie Sanders Introduces New Medicare for All Plan

Plus, the deficit soars to $691 billion in just six months

What’s New in Bernie Sanders’ New Medicare for All Plan

Saying he wants to end the “international embarrassment” of the U.S. being the only wealthy country that doesn’t provide universal health coverage, Sen. Bernie Sanders (I-VT) released a new version of his Medicare for All plan Wednesday. The bill’s 14 co-sponsors include Sanders’ fellow Democratic presidential candidates Elizabeth Warren (MA), Cory Booker (NJ), Kamala Harris (CA) and Kirsten Gillibrand (NY).

The revamped health care proposal is similar to the plan Sanders released in 2017, though it adds a long-term care benefit for Americans with disabilities. Overall, the bill would transform the $3.5 trillion health U.S. care system by replacing private health insurance with a single-payer system that covers primary and preventive care, hospital stays, mental health, dental and vision services, and prescription drugs for all Americans.

“It is not a radical idea to say that in the United States, every American who goes to a doctor should be able to afford the prescription drug he or she needs,” Sanders said. “If every major country on earth can guarantee health care to all and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States of America cannot do the same.”

Vox’s Sarah Kliff said Sanders’ plan “includes an exceptionally generous benefit package” compared the country’s peers, including Canada, which does not cover vision, dental or prescription drugs.

Here are some key features of Sanders’ plan:

  • Medicare for All would be phased in over four years, with the qualifying age falling by a decade each year. In the interim, Americans would be given the option to buy into a publicly run health care program. The Indian Health Service and the Department of Veterans Affairs would remain independent for at least 10 years.
  • There would be no premiums, deductibles or co-pays for health services, excluding prescriptions drugs.
  • Enrollees would face a $200 maximum co-pay for prescription drugs annually.
  • Medicare would be required to negotiate drug prices and create a drug formulary listing the medications that may be prescribed.
  • Providers would be paid under the existing Medicare fee schedule.
  • The program would be part of a new Universal Medicare Agency within the Health and Human Services Department.
  • Private insurers could provide only benefits not covered by the government, such as selective surgery.

Sanders left the big question — how to pay for his proposal — largely unanswered, although he did provide a list of suggestions, including a 4% tax on employees (exempting the first $29,000 in income for a family of four), a 7.5% tax on employers (exempting the first $2 million in payroll) and a new tax on “extreme wealth.”

The Trump campaign criticized the plan as a “government takeover of health care” and said that “free market policies” would be a better alternative. “So-called ‘Medicare for All’ means private insurance for none, kicking 180 million Americans off of their current plans,” said Kayleigh McEnany, spokeswoman for Trump’s re-election campaign. “‘Medicare for all’ is a euphemism for government takeover of healthcare, and it would increase wait times, eliminate choice, and raise taxes.”

The bottom line: The 2020 presidential election could turn on the question of health care, and with another iteration of his Medicare for All plan, Sanders has underscored his position as the leading progressive in the race for the Democratic nomination. The details of the plan may matter less right now than the simple fact that the two main U.S. political parties will likely offer voters a clear alternative on this defining issue.

Would Medicare for All Cost More Than the Current System?

Medicare for All plans like the one proposed by Bernie Sanders would raise the government’s costs dramatically, but would they save money overall?

Larry Levitt of the Kaiser Family Foundation said Wednesday that it’s important to keep an eye on the different components within the health care system when considering costs: “When you talk about the cost of Medicare-for-all, it’s important to be clear about whose cost you’re talking about -- the overall health care system, consumers and patients, or the federal government,” Levitt tweeted Wednesday.

Levitt went on to say, “Medicare-for-all would somewhat increase or decrease overall U.S. health spending, depending on the details of how it’s implemented and what assumptions you make. When you hear numbers in the trillions, remember we already spend trillions on health care.”

Supporters of single-payer plans argue that they would simply redirect funds that are already being spent, potentially with little change to overall costs. In that vein, Sanders said that “Medicare for All does not represent any new spending at all. Instead, it represents a rebalance of how our current dollars are spent.”

Critics argue that providing generous health care benefits to millions of additional people would have to cost more, especially if money-saving proposals don’t pan out, and Republicans are quick to attack universal health care plans as overly complex and unaffordable.

Whatever the final cost, a universal health care system would necessarily involve a substantial increase in taxes as the government-run system turns to individuals and companies to cover the entire bill for health care, which currently comes in at $3.7 trillion a year overall, with private insurers picking up much of the tab. While Sanders provided some options for raising more tax revenues, he said there still needs to be a “vigorous debate” over how to finance his plan.

Josh Katz, Kevin Quealy and Margot Sanger-Katz of The New York Times rounded up some of the leading Medicare for All cost estimates Wednesday, and found that the variation between them was enormous — larger than the cost of many government agencies. While the estimates aren’t exactly apples-to-apples, they do give a sense of the scale involved. Of the five Medicare-for-All estimates they reviewed, two showed net savings while three showed net increases in health care expenditures in the economy.

The chart below from the Times shows health care spending as a percentage of GDP under the five estimates, compared to the current level of roughly 18%. In the best-case scenario, overall health care spending falls to less than 14% of the economy. In the worst, it rises to roughly 22%.

Read the full Times analysis, which includes a dynamic graph that breaks down the various cost estimates for Medicare for All.

Deficit Soars to $691 Billion in First Six Months, Expected to Top $1 Trillion This Year

The federal deficit rose to $691 billion in the first six months of the 2019 fiscal year, up from nearly $600 billion in the same period last year, according to the latest monthly report from the U.S. Treasury Department.

The Treasury said it expects the annual deficit to exceed $1 trillion when the fiscal year ends in September. By contrast, the Congressional Budget Office last estimated that the deficit will remain below $1 trillion until 2022, at which point it is projected to remain above that level for years to come.

The monthly Treasury data told a different story, though the March deficit came in at $147 billion, smaller than the $209 billion recorded in March of 2018. The smaller gap was driven by a 10 percent drop in spending on programs including defense, education and veterans affairs, and a 9% increase in revenue compared to a year ago. Revenue for the first six months is still down slightly compared to a year ago, however, due to the continuing effects of the GOP tax cuts.

Charts of the Day: GAO Warns U.S. Is on Unsustainable Fiscal Path

The Government Accountability Office on Wednesday issued its third annual report to Congress on the nation’s fiscal health, again warning that the federal government’s current path is unsustainable.

“Congress and the administration face serious economic, security, and social challenges that will require difficult policy choices in the near term about economic growth and national needs,” the GAO says. “These near-term policy decisions should be accompanied by a long-term fiscal plan to put the government on a sustainable path. The longer action is delayed, the greater and more drastic the changes will have to be.”

The GAO report also said that, while it will take more than executive action to put the country on a more sustainable fiscal path, there are steps that executive branch agencies can take to contribute, including reining in improper payments (about $150 billion in 2018); improving collection of owed taxes (a gap of about $400 billion a year); streamlining government to eliminate fragmentation, overlap and duplication; and improving the government’s financial statements and keeping closer tabs on tax expenditures.

Some key details and charts from the new report (there’s also a short podcast with Susan Irving, GAO’s expert on debt and fiscal issues!):

The ratio of debt held by the public to GDP is set to surpass its 1946 high of 106 percent within 13 to 20 years, compared to a 14-to-22-year timeframe last year.

Health care and net interest costs remain the primary spending-side drivers of the debt, with health care spending projected to continue growing faster than GDP and interest payments on pace to exceed defense spending in less than a decade.

Why the Rising Deficit May Not Be Such a Problem – for Now

The Urban-Brookings Tax Policy Center held a symposium Wednesday to discuss the new book titled “Fiscal Therapy: Curing America's Debt Addiction and Investing in the Future” by the Tax Policy Center’s William Gale.

At the event, Doug Elmendorf, former director of the Congressional Budget Office, argued that we should not be trying to reduce near-term budget deficits, given that interest rates are low and can be expected to stay low for some time.

“I think it is appropriate at this point to conclude that the United States should have substantially more federal debt than most economists would have argued for several years ago,” Elmendorf said, “and that conclusion further implies that there is less urgency to putting federal debt on a sustainable path than most economists would have argued several years ago.”

Still, Elmendorf argued that debt can’t rise indefinitely relative to total output and reducing federal budget deficits will be necessary at some point — just not right now.

Gale agreed that the national debt is not a crisis, but he argued that the long-term debt is still a problem, even if it never causes a crisis. “The reason we are concerned is that even though it will not cause a crisis, it will cause gradual concerns,” he said. And he laid out his proposed solutions to those long-term problems of rising debt and lagging investment: control Social Security and Medicare while preserving their anti-poverty and social insurance features; invest more in children’s programs, human capital, infrastructure, and research; raise and reform taxes.

You can watch a replay of the event or see Gale’s PowerPoint deck here.

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