When it comes to the shell game, the best advice is not to play. Elizabeth Warren claims her new “Medicare for All” proposal presents the nation with a winning health care system without raising middle-class taxes. It’s a sleight-of-hand plan that would shuffle costs around while worsening them in the process.
The up-and-coming candidate for the Democratic presidential nomination debuted on Friday her version of socialized medicine, a blueprint for scrapping the nation’s private health insurance system, which she says is the No. 1 reason U.S. families go broke. The plan that Ms. Warren is hinging her candidacy on adds up to “just under $52 trillion over ten years,” and includes $20.5 trillion in new federal spending. That’s a lot of wampum, but the Native American wannabe contends her plan will cost slightly less than the current combination of public and private health care spending.
The Massachusetts senator says her solution would funnel all 330 million Americans into a new government-run operation modeled after the current Medicare program for seniors with “not one penny in middle class tax increases.” If that promise tastes like pie-in-the-sky, she’s banking on another: “$11 trillion in household expenses back in the pockets of American families. That’s substantially larger than the largest tax cut in American history.” It’s also an impossible dream.
Ms. Warren wants to save Americans those trillions over the course of a decade by ending health care premiums and out-of-pocket medical expenses. Instead, she proposes transferring those costs to corporate taxpayers to the tune of $8.8 trillion.
Families may cheer but they should remember the shell game: shuffling the hidden pea doesn’t make it disappear. Dollars don’t grow on trees, so businesses will be forced to pay the new taxes from the same pool of money from which they fund employees’ salaries. The inevitable effect: A rise in layoffs and a decline in wage growth. It’s a recipe for a reprise of the Great Recession, when employees were forced to do more work for less pay, or else.
To raise the additional revenue, Ms. Warren proposes a collecting an additional $2.3 trillion by cracking down on tax evaders and wheedling an extra $3 trillion in federal taxes on the top 1 percent of earners. Taxing transactions made by investors (many of whom are middle-class families) and large banks would generate an additional $3.8 trillion, and eliminating military funds for Overseas Contingency Operations would save about $800 billion.
She nonchalantly counts on Congress easily solving one of the most intractable issues of the age and granting legal status to the millions of immigrants residing in the United States illegally. Taxing their earnings would raise another $400 billion, she reckons. A variety of other levies would provide the remaining trillions, according to her plan.
If Ms. Warren has her way, an estimated 2 million jobs in the private health insurance field would be eliminated, forcing employees into the unemployment line. There, they would learn the patience needed to join the slow-moving “Medicare for All” line, the typical result of experiments with socialism.
With fellow Democratic candidates pondering “Medicare for All” at a $30 trillion level, the Committee for a Responsible Federal Budget has written that a program theoretically could be financed using a number of onerous methods, including a 32 percent payroll tax, a 25 percent income surtax, or a doubling of individual and corporate income tax rates. Such ideas would require roping in the middle class, raising doubts about the Warren not “one penny” more promise to average Americans.
Ms. Warren’s expensive proposal makes her a fat target for competitors in the race for the Democratic presidential nomination. Bernie Sanders has leveled with voters on the campaign trail, admitting that government-run health care will hike taxes for most Americans but won’t say how much. Joe Biden’s campaign was quick to label the Warren cost calculations “mathematical gymnastics.” Her proposal “is totally unrealistic and can’t be done,” Mr. Biden says.
The nation’s decade-long experiment with Obamacare failed because it forced millions of citizens to choose from a government-approved list of health care plans that cost more than they were worth. Doubling down with a shell game that dupes Americans by shuffling around the costs is foolish when the only proven method of providing more for less is to allow the free market to unleash the power of innovation.