One Democrat's Health Plan Will Save the Government Money

One Democrat's Health Plan Will Save the Government Money

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Plus, Warren defends her student debt plan
Friday, January 24, 2020

One Democrat's Health Plan Will Save the Government Money: Report

What would the health care proposals of the Democratic presidential contenders mean for the federal budget?

The Committee for a Responsible Federal Budget is out with an in-depth analysis of the plans from four leading candidates: Joe Biden, Pete Buttigieg, Bernie Sanders and Elizabeth Warren.

The analysis provides a reminder that health care is the single largest part of the federal budget and a key driver of the national debt. As such, the budget watchdog group focuses on the potential fiscal impacts of the candidates’ plans more than on the coverage gains they might provide or their effects on total national health care spending — and it finds that the plans from three of the four could balloon the federal deficit by hundreds of billions or even trillions of dollars.

“To the extent that any of these plans are deficit-financed or the offsets are not fully specified, they impose a hidden burden that would not be captured in a traditional distributional analysis,” the report notes.

But, as you’ll see, the analysis also provides a reminder that health care is complicated — who knew? — and the range of possible outcomes for the federal budget is extremely broad.

The Cost Projections

Sanders’ "Medicare for All" proposal carries the highest cost to the federal budget, while Buttigieg’s "Medicare for All Who Want It" proposal might save $450 billion over 10 years, based on CRFB’s midpoint estimates.

But the potential budgetary effects vary considerably depending on the assumptions made. Sanders’ plan, for example, could add anywhere from $8.8 trillion to $19.5 trillion to federal deficits over 10 years, CRFB estimates. Warren’s plan, meanwhile, might decrease deficits by $1.2 trillion — or increase them by $11.2 trillion.

“Overall, we expect some households in every income group to be better off and some to be worse off under each of the plans we analyzed,” the analysis says. “On net, however, each plan would significantly increase the progressivity of federal fiscal policy. This is especially true of the two Medicare for All plans, since they will nearly eliminate premiums and out-of-pocket health spending in favor of a much more progressive tax regime.”

Other Plan Effects

The new analysis doesn’t ignore the other implications of the candidates plans, including how many more people would be covered. Sanders’ and Warren’s Medicare-for-All proposals would deliver the greatest increases in coverage:

And on the critical question of total national health expenditures — the total amount spent by individuals, groups, governments and private and public organizations — CRFB notes that the potential effects of all of the plans are rather uncertain, especially for the Biden and Buttigieg proposals. Again, the results very widely depending on the assumptions made. Warren’s plan, for example, might cut total spending by 4% or raise it by 11%.

“For Medicare for All plans especially, higher federal costs would be largely offset by lower household costs, leading total health costs to rise much less than federal spending,” the report notes. “Even so, scholars at the Urban Institute has estimated that the version of Medicare for All they analyzed would increase national health expenditures by about 13 percent.”

Read the full CRFB report for more details on each plan.

Quote of the Day: Warren Defends Her Student Debt Plan

“Look, we build a future going forward by making it better. By that same logic what would we have done? Not started Social Security because we didn’t start it last week for you or last month for you? … We don’t build an America by saddling our kids with debt.”

– Democratic presidential candidate Elizabeth Warren, responding on “CBS This Morning” to a video, posted to a pro-Trump Twitter account and amplified by conservative media, in which a man challenges her on her student debt cancellation plan and asks if he’ll get back the money he saved for his daughter’s student loans. “So you’re going to pay for people who didn’t save any money, and those of us who did the right thing get screwed?” the father asked.

The Trouble Ahead for Federal Trust Funds

The aggregate balance of the hundreds of federal trust funds and other dedicated funds will start declining in two years, according to a new report from the Government Accountability Office.

Republican Senators Mike Enzi (WY) and Mike Braun (IN) asked the GAO to review the status of the funds that support Social Security, Medicare, flood insurance and many other programs. The results were published this week.

Overall, the balances in the trust funds increased between 2014 and 2018, the GAO found, but the aggregate balance will begin to fall in 2022, with decreases in the Social Security and the Medicare Hospital Insurance funds leading the way (see the chart below). The overall balance is particularly sensitive to Social Security, which has the largest trust funds by far, totaling $2.9 trillion in fiscal year 2018.

The report listed calculated depletion dates for some trust funds, including:

  • By 2022, the Highway Trust Fund will be depleted. Projected revenues will fall short of obligations.
  • By 2025, the Pension Benefit Guarantee Corporation multiemployer trust fund will be depleted. Projected revenues will fall short of obligations.
  • By 2026, the Medicare Hospital Insurance Trust Fund will be depleted. Projected revenues will cover 89% of scheduled benefits.
  • By 2034, the Social Security Old-Age and Survivors Insurance Trust Fund will be depleted. Projected revenues will cover 77% of scheduled benefits.
  • By 2052, the Social Security Disability Insurance Trust Fund will be depleted. Projected revenues will cover 91% of scheduled benefits.

Lawmakers have several options available when trust funds run out, though each may have different legal requirements to enact. In general, they can use general revenues to cover any shortfalls, though this may involve additional borrowing; they can reduce outlays; they can transfer dedicated funds from other programs; or they can generate new revenues through taxes and levies.

“Program sustainability is ultimately determined by whether the government as a whole has the economic capacity to finance the claims on the trust funds at the cost of other competing priorities,” GAO said.

In a statement accompanying the release of the report, Enzi called on lawmakers to address the issue: “Congress will need to work in a bipartisan manner to safeguard these programs to ensure they are able to provide for those who need them now, and in the future.”

Read the full GAO report here.

Number of the Week: Major Drugmakers Spent $120 Million on Lobbying in 2019

The 34 member companies of PhRMA, the pharmaceutical industry trade group, spent more than $120 million lobbying Congress in 2019, according to STAT, which cited the companies recently released federal disclosures.

Those millions helped pay for more than 450 lobbyists, “who helped the drug makers and their trade group vehemently oppose the sweeping proposals lawmakers and the Trump administration put forth in their efforts to lower prescription drug prices,” STAT’s Nicholas Florko reports.

PhRMA spent $28.9 million on lobbying in 2019, surpassing the record it set last year of $27.5 million.

“Drug makers are also likely spending far more than the amounts listed in the public disclosures,” Florko writes. “Organizations are only required to report the money they spend directly lobbying Congress. They do not have to report how much they spend on advertising campaigns or the consultants and lawyers they employ to influence legislation but who do not directly try to influence lawmakers.”

Patient Groups Often Fail to Disclose Industry Funding: Study

Non-profit patient groups often aren’t transparent about the funding they receive from the pharmaceutical and health care industries, raising concerns about conflicts of interest, according to a new study in The BMJ, formerly known as the British Medical Journal.

The systematic review of patient groups looked at data from a limited set of 26 studies. It found that anywhere from 20% to more than 80% of patient groups had some industry funding. The analysis also found that only a fraction of patient groups disclose their funding on their websites.

“These findings reveal the breadth and depth of relationships between patient groups and pharmaceutical and medical device companies. The issue is likely even more widespread than portrayed, as included studies only examined relationships with pharmaceutical and medical device companies, excluding connections with the food industry, health insurers, and other companies in the wellness sphere,” say the authors of an editorial accompanying the new study.

“More importantly, these results suggest that financial relationships pose real, not potential, conflicts of interest—with alignment between organizational positions and industry interests even when contrary to patient welfare. This is of particular concern given the power of patient groups internationally. When pharmaceutical and medical device companies lobby political leaders, the financial motivation is readily apparent, but when patient groups or individual patients engage in similar efforts, government and society assume they are acting independently in the interests of patients.”

Your Prize for Making It Through the Week

If by chance you haven’t had enough political drama this week, The Washington Post offers up a ranking of the 34 best political movies ever made — which, like any such list, includes some questionable titles. We’ve got no problem with “Mean Girls” at No. 8, though.

If you’re ready for some lighter fare, check out this roundup of top moments from “Monty Python's Flying Circus” in remembrance of Terry Jones, the Monty Python great who died this week at age 77.

Have a great weekend, and please encourage your friends to sign up here for their own copy of this newsletter.


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