Bernie Sanders' Plan to Cancel $81 Billion in Medical Debt

Bernie Sanders' Plan to Cancel $81 Billion in Medical Debt

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Plus - Why the U.S. savings rate is rising
Monday, September 23, 2019

The Spending Battle That Never Ends

We told you last week that lawmakers on Capitol Hill, seeking to avert a fight over President Trump’s border wall, were considering an option to extend funding for the Department of Homeland Security at current levels for the next year, so to avoid the contentious issue – and a possible government shutdown – altogether. Now, it looks like Congress could take that approach on several funding bills for the 2020 fiscal year, says Niv Elis of The Hill.

The Senate is expected to pass this week a short-term spending bill to avoid a government shutdown at the end of the month, matching the 7-week funding bill already passed by the House. But as Elis reports, that short-term bill, known as a continuing resolution (CR), could be the first of many.

Trump’s declaration of a national emergency at the border and repurposing of military funds for barrier construction has complicated the passage of multiple funding bills, pushing the issue beyond the homeland security bill that typically deals with the border. Now appropriators are set to battle over multiple funding bills that may be involved with Trump’s effort to build his wall, including defense, labor, health and education.

"I don't know if we'll end up in a shutdown, but we could end up with continuous CRs," Sen. Richard Shelby said, according to The Hill. "That could be the endgame."

Neither party is likely to be pleased with multiple short-term bills, since they freeze funding at current levels and limit the ability to make changes and start new projects. And the longer the funding battles go on, the more political they become, increasing the odds of another government shutdown.   

“I think the longer you delay, the more political things become, obviously, if we move into the election year itself,” said Sen. Tom Cole. “So my hope is we can get this all done, if not by Thanksgiving, then certainly by the end of the calendar year.”

Sanders’ Plan to Eliminate Medical Debt

Sen. Bernie Sanders released a proposal Saturday to wipe out the roughly $81 billion in past-due medical debt currently appearing on Americans’ credit reports, while making significant changes to the rules governing debt collection, bankruptcy and credit reporting.

Sanders proposes to:

  • Empower the federal government to negotiate and pay off past-due medical bills, which Sanders said affect 79 million Americans.
  • Limit “abusive and harassing debt collection practices” through a variety of restrictions on debt collectors.  
  • Reform the bankruptcy system to make it easier to discharge medical debt.
  • Create a new public credit registry to replace the current for-profit credit reporting agencies.

Skimpy on the details: The mechanics of Sanders’ proposed debt elimination is summed up in just one broad sentence: “Under this plan, the federal government will negotiate and pay off past-due medical bills in collections that have been reported to credit agencies.” No cost estimates were provided.

But it could be cheaper than you think: While critics are sure to dismiss Sanders’ proposal as yet another big government giveaway, wiping out $81 billion in medical debt could cost far less than the headline number suggests, since most past-due medical debt never gets paid off and therefore has little value to investors. Craig Antico, who founded a charity that helps people get rid of their medical debts, told The New York Times that the market value of all the outstanding past-due medical debt in the U.S. could be as little as $500 million.

And the proposal is about a lot more than medical debt: Beyond the medical billing system, Sanders’ proposal takes aim at the private credit reporting agencies, which he criticizes for their treatment of   indebted consumers. Sanders proposes to exclude medical debt from credit reports while replacing the current reporting system with a public registry – a huge challenge to a highly profitable, multi-billion-dollar industry.

For more details, see Sanders’ proposal and analyses at The New York Times and Vox.

Mapping Tax Havens

Multinational corporations routinely shift billions of dollars around the world to reduce their tax bills. In 2016, according to researchers from the University of California at Berkeley and the University of Copenhagen, nearly 40% of all profits at multinational firms was shifted to tax havens – or roughly $650 billion. The shifting of profits reduced tax revenues by nearly $200 billion, equivalent to 10% of global corporate tax receipts.

The researchers – economists Gabriel Zucman and Ludvig Wier at Berkeley and Thomas Tørsløv at Copenhagen – have launched a new interactive map that allows users to track the countries that lose and gain profits. According to their analysis, U.S. firms shift about $150 billion in corporate profits each year into tax havens, reducing corporate tax revenues by roughly $60 billion, or 17%.

“The shareholders of U.S. multinationals thus appear to be the main winners from global profit shifting,” the economists say.

Click here to review the dynamic map.
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Voters Back Medicare Expansion: Poll

A majority of voters support the idea of allowing citizens under the age of 65 to buy into Medicare, according to an NBC News/Wall Street Journal poll released Sunday. About two-thirds of voters surveyed – and 78% of Democrats – said they back such an option.

However, a more ambitious single-payer Medicare-for-All style system that would eliminate private insurers is not backed by a majority of voters, though it does get support from a majority of Democrats. Overall, 41% of voters said they support a Medicare-for-All system, while 63% of Democrats expressed support.

In other policy areas, a majority of voters indicated that they support making tuition free at state colleges and universities, allowing young immigrants brought to the U.S. as children to remain in the country, and forgiving student debt after 15 years. At the same time, a majority of voters opposed providing government health care to undocumented immigrants. And a record proportion of voters – 69% – said they disliked President Trump personally.

Why it matters: The poll suggests that voters are interested in many of the ideas being discussed by Democratic presidential candidates but have doubts about the most progressive ones, such as eliminating private health insurance.

The poll of 900 registered voters was conducted between September 13 and 16, with a margin of error of 3.27%.

Wealthy Americans Saving More, Thanks to the GOP Tax Cuts

Americans are saving more money, but that could be because the 2017 GOP tax cuts were skewed toward the rich, says Paul Kiernan of The Wall Street Journal.

The personal savings rate has been rising since the recession, hitting 8.2% in 2019, well above the 6.5% recorded in 2010. And the saving rate rose 17% in 2018, the first year the tax cuts took effect, much more than the boost in consumer spending (5.2%) and business investment (7.8%).  

“The timing is no coincidence,” said Paul Ashworth of Capital Economics. “The tax cuts seem to have been saved.”

The wealthiest 10% of taxpayers account for more than 75% of the increased savings rate, Kiernan says, citing Mark Zandi of Moody’s Analytics. And that suggests the wealthy households that gained thousands of dollars of income thorough the tax cuts simply saved their windfalls.

Offering a bit of anecdotal evidence, one retired investment banker told Kiernan, "The tax cut didn’t impact in any way, shape, or form my spending habits."

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