Warren’s Healthcare Plan Dead on Arrival

The likely Democratic front-runner, Sen. Elizabeth Warren, has at long last lifted the proverbial kimono to reveal the wizardry by which she proposes to fund the so-called “Medicare for All.” She has long insisted her plan would require no new taxes for the middle class while deftly sidestepping questions seeking details on the funding scheme. Those details have now been revealed and it is apparent that the veracity of her prior assertions depends on her definition of “tax”, “middle class”, and “total costs.” In Warren’s world a payment that the government requires you to make is not a tax but rather a “contribution.” Ok. Although Democrats are not shy about wanting to drain your wallet via taxation, they assiduously avoid associating themselves with that particular term, instead opting to use feel-good Orwellian phrases such as the “Affordable” Care Act’s “shared responsibility payment.” Other common taxation weasel words include “revenue,” or board/department of “equalization” when referring to the entity responsible for taking the money. The Department of Theft would be more honest, but I digress. 

The crux of the financial underpinnings for her plan rely on a new employer mandate, that is, a “contribution” paid by every “large” (whatever that means) employer to the federal government in place of the amount they used to pay in health insurance premiums. But I’m sure that amount will never go up, just like the original income tax rate of 6% was promised to never increase. New government programs always cost exactly what they are estimated to and efficiently achieve their stated goals. 

But wait, there’s more. The remaining funding for her plan relies on what George Bush senior would have charitably called “voodoo economics.” It makes broad assumptions about economic growth and how much can be saved by consolidating services under the federal umbrella as well as laughable estimates of how much more tax revenue can be brought in by increasing IRS enforcements efforts. How tone-deaf does a candidate have to be to propose increasing IRS audits? Truly, Americans love nothing more than the prospect of an IRS audit. It’s right up there with Root Canals for All. 

But don’t take my word for it. Just listen to what her fellow Democrats have to say about this plan. Vice President Joe Biden’s campaign went on the record stating that,

For months, Elizabeth Warren has refused to say if her health care plan would raise taxes on the middle class, and now we know why: because it does. Senator Warren would place a new tax of nearly $9 trillion that will fall on American workers.”

Additionally, the Urban Institute (a highly regarded liberal think tank) projects a Warren/Sanders style single payer plan would raise health care spending by $7 trillion over a decade, while healthcare economics Kenneth Thorpe finds such a plan would increase costs to more than 70% of people who currently have private insurance. And these are people on the left!

To briefly touch on the economics of her new “contribution” it should be obvious this would have the side effect of suppressing future earnings of the very middle class she is pandering to. Economics is (partly) the study of the seen and the unseen (Bastiat). The seen benefit here is the “free” healthcare. The unseen result is that future wages and hires will necessarily be lower in comparison to a world where this new “contribution” does not exist. Companies do not have an infinite supply of money; if resources are mandated toward an MFA payment scheme, then that much less will be available for raises, new hires, and expansion of operations. In short this new tax would be a million ton anchor on the American economy. To suggest one can add $20 trillion in new spending without harmful economic consequences is either deranged or willfully dishonest. Neither is a good option from a presidential candidate.