Elizabeth Warren's plan for Medicare for all would finance health care in a much more progressive way than today, resulting in low and middle income paying much less and the wealthy paying much more.
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The key to Warren's plan for financing Medicare for all is aggressively constraining prices paid to hospitals, physicians, and drug companies. We'd still have the most expensive health system in the world, but it would be less expensive than it is now.
One way in which Warren avoids a broad-based tax increase that hits the middle-class is by requiring employers and states to continue paying approximately what they are today for health care.
Warren assumes substantial savings in administrative costs from Medicare for all. Some of that comes from simplifying the system for doctors and hospitals. A lot of it comes from eliminating the entire commercial health insurance industry.
Elizabeth Warren has now gotten much more specific than Bernie Sanders not only about how to pay for Medicare for all, but also about the level of payments to doctors and hospitals.
In laying out the specifics of her Medicare for all plan, Warren's challenge is more about politics than arithmetic. She is taking on the wealthy, corporations, and pretty much every part of the health care and insurance industries. Those are some powerful enemies.
On the one hand, Warren's plan to aggressively constrain health care prices under Medicare for all would be quite disruptive. On the other hand, every other developed country has managed to figure it out, so we know it's possible.
With physician and hospital prices reduced significantly under Warren's Medicare for all plan, the important question (which no one knows the answer to with any certainty) is whether they will continuing delivering care to a growing number of insured patients.
Warren projects her proposal would cover everyone while leaving total national health spending roughly unchanged. This means the U.S. would still be spending about double what other high-income countries spend on health care, which would mean higher taxes than in other countries.
The ACA requires larger companies to offer health benefits or pay a penalty. Virtually all larger employers offer health benefits. Requiring them to continuing paying what they do now, as Warren proposes, wouldn't have any material effect on workers, including the middle-class.
One thing Elizabeth Warren's proposal has done is shift the discussion somewhat away from the role of private insurance and towards how to contain health care costs and how to increase taxes to pay for the elimination of premiums and deductibles.
