Medicare for All, but this time it gets fully funded

MediEveryone is going to be expensive. According to the Committee for a Responsible Federal Budget, Medicare For All will cost somewhere around $28 Trillion, without any offsets. Worry not, we can save some money before we need to raise some revenue.

Medicare for All: How We'll Pay For It

For liberals: Healthcare is a human right. Governments exist to guarantee human rights. The US government must therefore act as a guarantor of healthcare to all its citizens.

For conservatives: Healthcare is complicated. The complication businesses find when they try to provide healthcare for their workers (as an incentive to work there) slows down their job creation. Taking the burden off job creators' shoulders will allow them to create more jobs more efficiently.

Cost Savings

From a review of Elizabeth Warren's Medicare for All implementation, we can save by:
  1. Pay international rates for prescription drugs: Saves $1.7 Trillion
  2. Administrative efficiencies: Saves $1.8 Trillion (realistically, closer to $0.8 Trillion if we include $1 Trillion for cracking down on waste, fraud, and abuse)
  3. Pay hospitals at current Medicare rates: Saves $1.8 Trillion
  4. Limiting cost growth to 3.9%: $1.1 Trillion
In total, we can save $5.4 Trillion, lowering the total to $22.6 Trillion. We can save an additional $3.1 Trillion by having "maintenance of effort payments" (in reality: having a similar cost-sharing between states and the Federal government by adapting Medicaid's FMAP to Medicare for All, designed to keep states' shares of spending the same), which would save around $3.1 Trillion. This lowers the total to $19.5 Trillion.

Other Revenues

The Tax Foundation estimates that uncapping Social Security payroll taxes would bring in $129 Billion in one year. Inflation adjusting that over a decade brings us to $1.42 Trillion that could be used to pay for Medicare for All. (My own basic calculations point to higher revenues than this, but we'll be conservative here.)

The current Medicare Part A trust fund is going to be short around 1% of taxable income in the long-run, so to stabilize it, we need to raise the Medicare Part A payroll tax to 2% (from the 1.45% it's currently sitting at), raising $1.02 Trillion over the next decade.

Raising the Net Investment Income Tax from 3.8% to 10% (and have it be funneled directly into the Medicare Hospital Insurance Trust Fund, as opposed to the General Fund [like it is now]) would bring in $750 Billion in new revenue from wealthier investors.

Establishing Medicare for All will allow the spending that individuals and businesses currently undertake to provide healthcare to themselves and their families (individuals) or their employees (businesses) to be put into the economy at large, which will allow more jobs to be created and employees to be paid more, bringing in $3 Trillion over the next decade.

If we get rid of the tax loopholes that higher earners use to avoid paying taxes, that could bring in as much as $2.15 Trillion over the next decade.

These incidental revenue sources lower the cost total to $11.16 Trillion.

New Taxes, Directly

If we take the CRFB's projections at their face value, a 1% payroll tax increase will bring in $925 Billion over the next decade. Dividing the $11,160 Billion still needed to pay for the Medicare for All program by $925 Billion gives us 12% needed in new taxes.

Businesses normally share the cost of health insurance with employees on a 70/30 basis. We could have something similar here, with a 66/34 basis (employers would pay 66% of the new taxes, employees would pay the remaining 1/3). Of our fully new 12% of payroll taxes, employers would need to pay 8% and employees would need to pay 4%.

That's how we pay for it.