By Kate Randall
5 November 2019
5 November 2019
Democratic presidential
candidate Elizabeth Warren released details of her “Medicare for All” plan on
Friday. The senator from Massachusetts has been pressed by her rivals for the
Democratic Party nomination to show how her plan would be financed without
increasing taxes on the middle class. Warren posted a lengthy explanation on
her campaign website, headlined “Ending the Stranglehold of Health Care Costs on
American Families.”
The plan is her version of the
Medicare for All Act, which she co-sponsored with Senator Bernie Sanders of
Vermont. The act would gradually do away with private insurance and end
employer-sponsored coverage. It would make the federal government the sole
insurer, creating what is called a “single payer” system.
Warren bases her plan’s cost
estimate on an analysis by the Urban Institute, which calculated that a plan
similar to Medicare for All would cost $59 trillion over a decade and require
$34 trillion in new federal spending. She says total costs could be held to $52
trillion and that $20.5 trillion in new funding would be necessary after other
savings are taken into account.
Warren’s plan has nothing in
common with socialism. It would not provide high-quality, universal health
care. The government would take on the role of insurer, but it would not do
away with private health care providers or the giant pharmaceutical industry.
It would not build or run new and upgraded facilities.
Medicare itself is a poorly
funded program that provides substandard care to seniors, who must purchase
supplemental coverage to subsidize office visits, prescriptions and other basic
medical needs. Medicare for All could be expected to be of even poorer quality.
Building on provisions of the
Affordable Care Act (ACA) implemented under the Obama administration, Warren’s
plan would seek to cut costs and ration care for the vast majority of
Americans. While the ACA, commonly known as Obamacare, forced individuals to
obtain insurance from a private insurer or pay a penalty, the insurer would now
be the government, which, at the behest of the ruling establishment and its
political representatives, would be under pressure to slash costs on the backs
of the working families Warren claims to champion.
Warren’s Medicare for All
would be financed through a combination of tax increases and “savings” obtained
by means of cutbacks to health care provision.
The cost estimate for Warren’s
plan was carried out by Don Berwick, a former director of the Centers for
Medicare and Medicaid Services under Obama, and Simon Johnson, the former chief
economist at the World Bank. Berwick was an advocate for the Independent
Payment Advisory Board, which was envisioned as a body to cut Medicare costs
and ration care under the ACA.
In the course of a decade,
Warren’s Medicare for All would achieve savings on the following basis:
• Private insurers currently
consume about 12.2 percent for “administrative costs” and profits. Warren
assumes this would fall to 2.3 percent, saving $1.8 trillion.
• Warren proposes cutting
payment rates for brand-name drugs by 70 percent, saving $1.5 trillion.
• All physicians would be paid
at current Medicare rates, and hospitals would be paid at 110 percent of that
rate, saving an estimated $600 billion.
• ACA-era payment “reforms”
would be implemented across the single-payer system, moving away from
fee-for-service. This would save an estimated $2 trillion.
• $1.1 trillion could be saved
by holding health spending growth to 3.9 percent over the next decade.
Additional funding would be
generated by raising taxes, including:
• A financial transactions tax
of 0.1 percent of the value of every stock, bond or derivatives transaction,
raising $800 billion.
• A 35 percent minimum tax on
foreign earnings, bringing in $2.9 trillion.
• A 6 percent wealth tax on
assets over $1 billion, generating $1 trillion.
• Taxing capital gains for the
top 1 percent at the same rate as normal income, and doing so annually, would
raise $2 trillion.
Another major source of
revenue would result from private employers paying to the government the $9
trillion they would have spent on private health insurance for their employees.
There are many other
convoluted details, but it is the proposals to raise taxes on the wealthy that
have generated outrage on Wall Street and in corporate boardrooms. The ruling
elite is hostile to any infringement, however minimal, on its ability to
accumulate wealth at the expense of the working class. It will not willingly
relinquish any portion of its wealth. Nor will private insurance companies
voluntarily close up shop, or the pharmaceutical companies accept a cut in their
profits.
An editorial in the Wall
Street Journal, after bemoaning Warren’s plan to “raise the corporate tax rate
back to 35 percent from 2 percent and extend it to income earned worldwide with
no deferrals for foreign taxes,” claims that the scheme “doubles down on her
plans to soak the rich, assuming there are any left after her other tax
proposals.”
Similarly, the New York
Times notes in an article on Warren’s gains in the Democratic race for the
presidential nomination, “From corporate boardrooms to breakfast meetings,
investor conferences to charity galas, Ms. Warren’s rise in the Democratic
primary rolls is rattling bankers, investors and their affluent clients, who
see in the Massachusetts senator a formidable opponent who could damage not
only their industry but their way of life ” [emphasis added].
Warren’s Medicare for All plan
and railing against the corporate elite have also generated opposition from her
fellow candidates and other Democratic Party figures. House Speaker Nancy
Pelosi told Bloomberg Friday, “I’m not a big fan of Medicare for All,” adding,
“It’s expensive.” She said, “There is a comfort level that some people have
with their current private insurance.”
Pelosi is well aware that the
private insurance industry is reviled by the majority of the American
population, and that medical bills are a leading cause of personal bankruptcy.
Skyrocketing premiums, deductibles and co-pays are causing people to forgo
medical care, posing grave risks to health and premature death. It is this growing
opposition in the working class to social inequality and the bloated profits of
the rich that strikes fear in the hearts of Pelosi, Warren’s fellow candidates,
and Warren herself.
Elizabeth Warren and her
various plans to supposedly cut taxes, improve health care, and tackle student
debt do not pose a challenge to the ruling elite. She is a highly conscious and
self-declared advocate of the capitalist market economy—“a capitalist to the
bone,” as she told one interviewer—and an opponent of socialism.
She is a solid member of the
top 1 percent, with an adjusted gross combined income with her Harvard Law
School professor husband of $846,394. She espouses economic nationalism and
embraces the national security doctrine outlined by the Pentagon, in which great
power competition with China and Russia has displaced terrorism as the
principal concern of US imperialism.
Warren’s claim that she will
impose tax increases to improve health care for ordinary Americans is a fraud.
She and her fellow Democrats are well aware that her Medicare for All plan has
no chance of being passed by either big business party or signed into law by
any president.
Her hope is that such
proposals will appeal to working class voters and hoodwink them into believing
that she and the Democratic Party represent a genuine alternative to the Trump
administration’s policies.
The reality is that a
genuinely progressive and democratic overhaul of the health care system in
America requires a revolutionary socialist policy, which expropriates the
private health care industry—the insurers, drug companies and giant health care
chains—along with the banks and the parasitic financial industry, and places
health care under the control of a democratically elected workers government as
a social right. Anything short of a revolutionary solution is an empty promise
and deception.
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