When Democrats last controlled the House, they proposed “fixing” the nation’s health-care system through dramatic expansion of government. Their solution was ObamaCare – an expansion of government-controlled health care characterized by tax increases of $1 trillion over a decade, higher spending and more regulations.
Now that they again control the House, Democrats are proposing to “fix” health care. Their solution is the same – dramatic expansion of government through the creation of single-payer health care. While Democrats are calling the proposal “Medicare for All,” the plan is a full takeover of the health-care system.
If implemented, Medicare for All will result in significant tax increases on all Americans and will remove any incentive for ingenuity, innovation or competition within the health-care system.
“Medicare for All” will mean tax hikes for everyone
This transformation of government would come with extensive costs to taxpayers – the Mercatus Center estimates the plan would cost $32 trillion over the next decade. Federal spending is projected to reach $57 trillion over the next decade, so this plan would require a 60 percent increase in the federal budget.
Of course, this means substantial tax hikes on everyone.
Rep. Pramila Jayapal, D-Wash., and the 100 House Democrats that released their plan last week refused to say what taxes they will impose on Americans. Sen. Bernie Sanders, I-Vt., has been more honest. He has released a number of tax-hike proposals that would raise taxes by $16 trillion – just half of the total cost of Medicare for All.
Even so, these tax hikes would hit American families, workers and small businesses. The proposal contains a 4 percent surtax on all individuals and a 7.5 percent employer payroll tax paid by businesses. Sanders also proposed a new, top rate of 52 percent on individual and capital gains income, an increase in the death tax, a wealth tax and a tax on financial transactions.
And again, these taxes would pay for just half of the estimated cost of the program.
Single payer will end health care as we know it
Medicare for All will increase taxes on Americans in other ways. For example, the proposal would ban employer-provided insurance and repeal the deduction for health care, increasing taxes on businesses by over $3 trillion over a decade.
Medicare for All would also repeal Health Savings Accounts, which are utilized by an estimated 25 million American families. These tax advantaged savings accounts largely benefit the middle class – roughly half of all HSAs are owned by families earning between $60,000 and $200,000. Research shows that families and individuals that utilize HSAs spend less on health care and use fewer medical services without forgoing necessary primary and preventative care.
However, under Medicare for All, HSAs become irrelevant because consumers will not have freedom and individual choice over their health-care spending.
Health-care system needs more competition, not less
Rather than impose big government controls, free market solutions should be expanded. Proposals like HSAs and Medicare Part D should serve as the model.
In fact, since it was first created roughly 15 years ago, Part D spending and monthly premiums have come in at 50 percent below projected levels and 9 in 10 seniors have said they are satisfied with their level of coverage. The key to success here is no secret. Medicare Part D contains non-interference clause, which prevents government interference. Instead, private stakeholders such as insurers, pharmacy benefit managers (PBMs), manufacturers and pharmacies compete to lower costs and maximize patient access.
Medicare for All would do the exact opposite – it would utilize the heavy hand of the government to control all health-care decisions and suppress competition and innovation. Not only would this constrain choice and access for American families and businesses, it would come with trillions of dollars in new or higher taxes.
Alex Hendrie is director of tax policy at Americans for Tax Reform, a free market advocacy organization dedicated to lower taxes and limited government.