Primary Care: Estimating Democratic Candidates’ Health Plans

Senator Bernie Sanders released a new set of proposals to offset the cost of his health care plan this week. Based on these new proposals, we have updated our paper – Primary Care: Estimating Democratic Candidates’ Health Plans – which estimates the fiscal impact of plans put forward by candidates Sanders, Biden, Buttigieg, and Warren. Whereas our previous estimates found Senator Sanders’s plan would fall $13.4 trillion short of being paid for, our newest estimates find his plan would fall just under $13 trillion short. The full analysis is available below. We have also updated our Primary Care infographics.

Health care is the single largest part of the federal budget and a key driver of our unsustainably rising national debt.¹ Rising health care costs also place growing burdens on households and businesses and – along with a significant uninsured rate – have prompted those seeking higher office to propose bold solutions with significant fiscal implications.

As part of our US Budget Watch 2020 project, the Committee for a Responsible Federal Budget has analyzed the health care plans of four presidential candidates: Senator Bernie Sanders, Vice President Joe Biden, Mayor Pete Buttigieg, and Senator Elizabeth Warren.

On February 24, 2020, Senator Sanders released an updated set of options to offset his Medicare for All plan. This updated analysis incorporates those proposals.

For each plan, we score the fiscal impact of coverage and other spending provisions, reductions in current and proposed health care costs, direct offsets proposed as part of their plans to expand coverage, and further offsets meant to finance remaining costs. We focus on federal fiscal impact rather than the effect on total national health expenditures – though we estimate both.

Our estimates are rough and rounded, based on our best understanding of how campaign-level detail translates into specific policies, and subject to change as more details are made available.² This report is for educational purposes and does not represent an endorsement of any candidate or any policy. It will be followed by further analysis of the candidates’ tax and spending proposals in the coming months.

This updated paper is part of US Budget Watch 2020, which analyzes policies put forward by the presidential candidates. Recent analyses we have released include the $4.7 trillion of new debt President Trump has signed into law and policy explainers of Joe Biden’s K-12 Plan, Elizabeth Warren's Higher Education Plan, and Bernie Sanders’s Social Security Expansion Act and Universal Child Care and Pre-K Plan. Our major papers from past election cycles include a comparison of the Trump and Clinton proposals and an analysis of Trump’s health plan in 2016, a comparison of the top four GOP primary candidates in 2012, and a series of papers comparing the candidates in the 2008 election. US Budget Watch 2020 is designed to inform the public and is not intended to express a view for or against any candidate or any specific policy proposal. Candidates’ proposals should be evaluated on a broad array of policy perspectives, including but certainly not limited to their approaches on deficits and debt.

Read the full PDF version.

What Are the Candidates Proposing?

The Democratic presidential candidates we analyzed have all put forward plans that to differing degrees expand coverage, further subsidize premiums and cost sharing, lower drug prices, increase support for long-term care, expand the government’s role as an insurer, and raise taxes. Details of the plans can be found on pages 10 to 38 of our paper and on the candidates’ websites.³

Senator Bernie Sanders proposes to replace most current public and private health insurance with a universal, publicly-funded “Medicare for All” program⁴ that would provide health and long-term care benefits to all U.S. residents with virtually no out-of-pocket costs or provider networks. He would also eliminate medical debt and enact other targeted spending increases. Provider payments under his plan would be based on Medicare rates, and drug prices would be set at the average of an international index. To finance his plan, Sanders put forward a number of revenue options on February 24, 2020, which include broad increases in tax rates for workers and employers as well as a series of targeted tax increases focused mainly on higher earners, wealthy households, and businesses. We assume all of these options would be enacted.

Vice President Joe Biden proposes to expand the Affordable Care Act by increasing marketplace subsidies, adopting auto-enrollment, and offering a new public option available to those in the individual market or with employer coverage. Biden would also offer a new long-term care tax credit and increase funding for rural health and mental health services. To finance the costs of this plan, Biden would enact reforms to reduce prescription drug prices, lower other health care costs, and raise taxes on capital gains and ordinary income for high earners and heirs.

Mayor Pete Buttigieg proposes to expand the Affordable Care Act by increasing marketplace subsidies, expanding auto-enrollment, establishing a retroactive enrollment process to essentially mandate coverage, and offering a new “Medicare for All Who Want It” public option available to those in the individual market or with employer coverage. Buttigieg would also establish a federal long-term care program, cap out-of-pocket costs in Medicare and for prescription drugs, and increase funding for rural health and mental health services. To finance the costs of this plan, he would enact reforms to reduce prescription drug prices, lower other health care costs – including capping out-of-network prices at 200 percent of Medicare rates and reducing Medicare payments – and raise corporate tax rates.

Senator Elizabeth Warren proposes to replace most current public and private health insurance with a universal, publicly-funded “Medicare for All” program that would provide health and long-term care benefits to all U.S. residents with virtually no out-of-pocket costs or provider networks; she would also enact several targeted spending increases. Her plan would pay most providers at or somewhat above Medicare rates and enact a number of targeted reforms to reduce provider payments. Her plan would also negotiate prescription drug prices substantially below current levels. Warren would finance her plan through direct employer contributions to replace current premium payments; through a series of tax increases focused on wealthy households, businesses, and the financial sector; and through immigration reform and defense cuts.

What is the Fiscal Impact of Each Candidate’s Plan?

Proposals to reform health care policy, if enacted, could have a substantial impact on the federal budget. However, the size and direction of that impact will depend on the specific tax and spending proposals put forward. The fiscal impact of any health care plan can be determined by summing net changes in federal spending and federal tax revenue.

While the candidates have proposed significant new tax and spending policies, the detail and specificity on their campaign websites is less than what would appear in legislation. Furthermore, few of the specific policies have been scored by the Congressional Budget Office (CBO), and many have not been estimated in their current forms by impartial sources.

We generated low-cost, central, and high-cost estimates for each candidate’s plan to best capture the likely cost range. These estimates are detailed on pages 10 through 38, with our methodology discussed mainly in the endnotes (especially endnote 2). Each scenario relies on different policy and estimating assumptions to present estimates that are rough, rounded, subject to change, and reflect our best understanding and estimates of the candidates’ policies given the information currently available and shared with us by the campaigns. The low- and high-cost estimates are not absolute bounds, as actual net costs could be below or above them. To allow for comparison across proposals, our estimates generally assume the candidates’ plans are fully phased in by the beginning of Fiscal Year (FY) 2021 and show the net fiscal impact between FY 2021 and FY 2030.

Under our central estimate, we find that Senator Sanders’s plan would increase deficits by $12.95 trillion over a decade, down from $13.4 trillion in our prior estimate. We find Vice President Biden’s health plan would increase deficits by $800 billion, Mayor Buttigieg’s plan would reduce deficits by $450 billion, and Senator Warren’s plan would increase deficits by $6.1 trillion.⁶ In our low-cost estimate, Sanders would increase deficits by $8.5 trillion, Biden would decrease deficits by $300 billion, Buttigieg would decrease deficits by $1.4 trillion,  and Warren would decrease deficits by $1.2 trillion. Under our high-cost estimate, Sanders would increase them by $17.75 trillion, Biden would increase deficits by $1.3 trillion, Buttigieg would increase deficits by $350 billion, and Warren would increase deficits by $11.2 trillion. These figures represent the federal fiscal impact; greater federal costs are generally accompanied by lower household costs.

Our estimates represent the net effect of increases in spending, reductions to existing or proposed health spending, direct offsets that raise revenue as part of the candidates’ coverage plans, and additional offsets outlined by the campaigns to finance their plans.

Under our central estimate, we find that Sanders would increase gross spending by $30.6 trillion, reduce costs by $1.7 trillion, raise $12.2 trillion in revenue through direct offsets, and raise another $3.75 trillion through additional offsets. Biden would increase gross spending by $2.25 trillion, reduce costs by $450 billion, and raise $1.0 trillion through direct and additional offsets. Buttigieg would increase gross spending by $2.85 trillion, reduce costs by $1.2 trillion, and raise $2.1 trillion through direct and additional offsets. Warren would increase gross spending by $31.75 trillion, reduce costs by $4.7 trillion, raise $14.2 trillion in revenue through direct offsets, and raise another $6.75 trillion through additional offsets.

What Are the Other Implications of the Candidates’ Plans?

While our analysis is focused on the fiscal impact of the presidential candidates’ health care plans, it is critical to also consider other implications of their proposals. These include, but are not limited to, their impact on health insurance coverage, national health expenditures, distribution of spending, and economic performance, as well as the effect on quality of care, access to care, provider viability, medical and pharmaceutical innovation, federal tax capacity, and other factors.

Our analysis provides some insight into how each plan might affect coverage, total costs, distribution, and economic growth – though estimates in these areas are rough and meant to show order of magnitude. Others have written on these and many other potential implications.⁷

Coverage

Over the next decade, an estimated 30 to 35 million people will lack comprehensive health insurance at some point in a given year, depending on the year, estimator, and definition of coverage. All four plans we analyzed would reduce the number of uninsured individuals substantially. We estimate Biden would reduce the number of uninsured by 15 to 20 million, mainly by improving the affordability of health coverage and auto-enrolling low-income Americans. We estimate Buttigieg would reduce the number of uninsured by 20 to 30 million by improving affordability and implementing auto-enrollment as well as retroactively enrolling and charging premiums to those who lack coverage – essentially establishing a stronger version of an individual mandate. Finally, both Warren and Sanders would reduce the number of uninsured by 30 to 35 million by offering universal Medicare for All coverage to virtually every U.S. resident.

National Health Expenditures

While all the candidates would increase federal health spending, the effects of each plan on total health spending – including spending from households and businesses – are more uncertain. National health expenditures would grow as a result of expanding coverage to more individuals, covering more services, and reducing or eliminating cost sharing and provider networks. Conversely, they would shrink due to lower drug costs, reduced reimbursements to providers, and administrative savings and efficiencies. The net effect for each of the candidates on total expenditures is likely small, and in most cases directionally ambiguous.

For Medicare for All plans especially, higher federal costs would be largely offset by lower household costs, leading total health costs to rise much less than federal spending. Even so, scholars at the Urban Institute has estimated that the version of Medicare for All they analyzed would increase national health expenditures by about 13 percent.⁸

We estimate Sanders’s plan as currently outlined would increase 2021-2030 national health expenditures by between 2 and 14 percent, with a central estimate of 6 percent – meaning that federal health expenditures would increase somewhat more than non-federal health spending would fall. Warren’s plan could reduce national health expenditures by as much as 4 percent or increase them by as much as 11 percent, with a central estimate that it would increase costs by about 3 percent.⁹ The magnitude of these increases would decline over time.

The effects of the Biden and Buttigieg plans on national health expenditures are far more uncertain. Under our central estimate, Biden’s plan would reduce national health expenditures by 1 percent and Buttigieg’s plan would reduce them by 2 percent.¹⁰ These estimates are very uncertain, and costs might rise or fall relative to current law under their plans.

Distribution of Health Spending

The four plans analyzed in this paper would all redistribute net income from high earners to low earners, on average, relative to current law.

All four plans reduce (or eliminate) premiums and cost sharing paid directly by households, on average, while also increasing average taxes. In each plan, taxes would increase significantly more for wealthy households than for low- and moderate-income households. New spending would be distributed across the income spectrum, particularly under Medicare for All plans. Overall, we expect some households in every income group to be better off and some to be worse off under each of the plans we analyzed. On net, however, each plan would significantly increase the progressivity of federal fiscal policy. This is especially true of the two Medicare for All plans, since they will nearly eliminate premiums and out-of-pocket health spending in favor of a much more progressive tax regime.

To the extent that any of these plans are deficit-financed or the offsets are not fully specified, they impose a hidden burden that would not be captured in a traditional distributional analysis. It is impossible to know the distribution of this burden between income groups, but it is likely to fall more heavily on younger and future generations than on older ones.

Macroeconomic Impact

The four plans analyzed in this paper are all likely to affect the economy in numerous ways. In addition to any possible near-term transitional effects, changes to the availability of health insurance could positively or negatively influence incentives to hire and work, the ability to move between jobs and ventures, incentives to save and invest, and other factors influencing the economy. As we’ve explained in prior work, the policies (or lack thereof) to finance the candidates’ health care proposals would also have significant impacts.¹¹

While we have not estimated the effect of these four plans on economic growth, we believe standard economic models like those used by CBO would conclude that each plan has a statistically significant impact. Under these models, policies that substantially increase tax rates or expand deficits would tend to reduce the size of the economy over the long term, while policies that reduce deficits or more efficiently allocate taxes and spending would tend to increase the size of the economy. Further analysis is needed to determine the net impact of these particular plans on incomes, wages, and Gross Domestic Product (GDP).

Read the full PDF version.

Bernie Sanders’s Plan to Provide Health Care as a Human Right – Medicare for All

Note: The following analysis was updated on February 26, 2020, based on new revenue options released by Senator Sanders on February 24, 2020.

Senator Sanders has proposed to offer universal, publicly-funded “Medicare for All” health and long-term care benefits to all U.S. residents with virtually no out-of-pocket costs while also increasing other health-related spending and eliminating medical debt. Sanders also calls for reducing prescription drug spending and has proposed options to raise revenue through  broad-based employee and employer taxes and tax increases focused on higher earners and the wealthy.

On net, we estimate his plan would add an additional $12.95 trillion to deficits over a decade under our central estimate. We estimate it would add $8.5 trillion to deficits in our low-cost estimate and $17.75 trillion in our high-cost estimate. Our estimates assume policies are fully phased in by 2021 for comparison purposes, though Sanders has proposed a four-year phase-in.

Sanders Coverage & Spending Proposals

Senator Sanders has proposed replacing the current mix of public and private financing of health care with a Medicare for All single-payer system where the federal government finances virtually the full cost of health care and offers a new long-term care program. On top of these programs, he would require states to contribute to the program in place of their current Medicaid spending, increase investments in rural health care, and eliminate all medical debt. We estimate these policies would have a gross cost of between $27.8 trillion and $34.1 trillion over a decade, with our central estimate being $30.6 trillion.

Methodological note: Though Sanders would phase in the program over four years, our analysis assumes his proposal is fully phased in by 2021. Our estimates are largely based on estimates of a plan similar to Sanders’s Medicare for All Act published by Blumberg, Holahan, Buettgens, Gangopadhyaya, Garrett, Shartzer, Simpson, Wang, Favreault, and Arnos of the Urban Institute (Urban).¹² Our low-, central, and high-cost estimates reflect a variety of different assumptions. Our high-cost estimates match Urban most closely, whereas our low-cost figures incorporate insights from estimates of a similar proposal from the Warren campaign produced by Donald Berwick and Simon Johnson (Berwick & Johnson).¹³ Our low-cost estimates are also consistent with the $17.5 trillion estimate put forward by the campaign, adjusted to appropriately account for the cost of expanding long-term care and the federal cost of reduced state and local spending not covered under the maintenance of effort (roughly $10 trillion in total). It is possible the cost of Medicare for All might fall outside of our range, as a number of analysts have estimated.¹⁴

Enroll All U.S. Residents in “Medicare for All”

-$27.0 trillion/-$29.0 trillion/-$32.0 trillion

Sanders would replace the current system of public and private health insurance with a new government-run insurance program that would cover virtually all health care services without significant premiums, deductibles, copayments, coinsurance, or provider networks. All U.S. residents would be automatically enrolled in Medicare for All, which would cover all traditional medical care as well as dental, vision, hearing, and mental health services with provider payments based on Medicare rates. The Sanders campaign estimates this proposal would cost $17 trillion over a decade – $47 trillion of gross costs netted against $30 trillion of federal, state, and local spending that would occur under current law.¹⁵ Setting aside the methodological flaws of the underlying $47 trillion,¹⁶ a more appropriate estimate would subtract only the federal savings – which are closer to $20 trillion. Some state payments would continue under Maintenance of Effort provisions (estimated below). However, maintaining all of them would mean requiring local governments to continue paying the cost of health benefits for teachers, police, and other employees and compelling workers’ compensation insurers to charge current premiums and remit funds to the federal government. The Sanders campaign has made no such proposals.

Our low-cost estimate of $27 trillion is thus consistent with the campaign’s figures, properly estimated. We find Medicare for All would cost $29 trillion in our central estimate, which is similar to other credible estimates.¹⁷ Our high-cost estimate finds a cost of $32 trillion. These estimates differ in assumed administrative costs, utilization effects, and other assumptions; all assume drug payments remain at current levels and providers are paid based on Medicare rates.¹⁸

Offer Universal Long-Term Care

-$4.0 trillion/-$4.5 trillion/-$5.0 trillion

Under current law, many Americans lack access to long-term services and supports, and those who do use long-term care facilities often pay out of pocket until they exhaust their assets, at which point Medicaid covers the cost. Sanders’s plan would institute universal coverage for long-term services and supports. Consistent with the spirit of the Medicare for All Act (of which Sanders is the lead sponsor), Urban assumes this would be achieved through the creation of a new home- and community-based long-term care system that pays up to $150 per day, while maintaining Medicaid support of institutional care. Based on discussions with its authors, we understand Urban’s estimates show a cost of roughly $4.5 trillion over a decade.¹⁹ To account for possible differences in administrative costs, eligibility criteria, scope, reimbursement rates, and utilization assumptions, we assume $4 trillion in our low-cost estimate and $5 trillion in our high-cost estimate. This cost is on top of the Medicare for All costs estimated by the Sanders campaign.

Require Medicaid “Maintenance of Effort” Payments

$3.4 trillion/$3.1 trillion/$3.1 trillion

Because states pay for a substantial share of national health expenditures through Medicaid and the Children’s Health Insurance Program (CHIP), enacting Medicare for All on its own would effectively represent a significant cost transfer to the federal government from the states. To reduce the federal costs associated with Medicare for All, it is our understanding that Sanders would require states to pay the federal government what they otherwise would have paid for Medicaid and CHIP through a “Maintenance of Effort” payment. Based on the Urban study, we estimate this would reduce federal costs by $3.1 trillion over a decade in our central and high-cost estimates. Our low-cost estimate of $3.4 trillion in savings is based on Berwick & Johnson. Importantly, there is some uncertainty about the constitutionality of such a requirement.²⁰ Since this policy would simply maintain current state spending and in order to maximize the comparability of our estimates, we count these savings as part of the gross cost of coverage.

Increase Rural Health-Related Investments

-$100 billion

Sanders would increase investments in rural communities and the health workforce serving them. Specifically, he would reauthorize and boost funding for Community Health Centers and increase the size of the rural health workforce through the National Health Services Corps. We estimate these proposals would cost roughly $100 billion over a decade.²¹

Eliminate Medical Debt

-$100 billion

In addition to making virtually all future health services free, Sanders would reduce the burden associated with past medical expenses by eliminating existing medical debt. Specifically, the government would pay off $81 billion of reported past-due medical debt. Sanders would also limit many existing debt-collection practices, reform bankruptcy laws to make it easier to discharge medical debt, and exclude medical debt from credit reports and various disclosure requirements. We assume these proposals would cost roughly $100 billion over a decade, based on what the Sanders campaign aims to pay for, though actual costs could be even lower if debt can be purchased at a discount.

Subtotal, Sanders Coverage & Spending Proposals

-$27.8 trillion/-$30.6 trillion/-$34.1 trillion

Sanders Cost Reduction

To limit the federal cost of Medicare for All, Senator Sanders would enact reforms to reduce prescription drug costs below current Medicare levels through price negotiation, re-importation, and international price indexing. We estimate these measures would achieve $800 billion to $1.7 trillion of savings over a decade, with our central estimate finding $1.7 trillion of savings. 

Reduce Prescription Drug Costs

$1.7 trillion/$1.7 trillion/$800 billion

Sanders would work to reduce the costs of prescription drugs, with the goal of reducing prices of name-brand drugs by half. To achieve this, Sanders proposes to allow Medicare to negotiate drug prices directly, to allow re-importation of drugs from Canada and other industrialized countries, and – most significantly – to set name-brand drug prices at the median price across Canada, France, Germany, Japan, and the U.K.²² In our assessment, these policies could reduce the cost of name-brand drugs by roughly half as claimed.²³ Under our low-cost and central estimates, we assume generic drug prices would also be cut by 25 to 30 percent. Taken together, these policies would result in $1.7 trillion of savings over a decade. Our high-cost estimate assumes all drug prices would be cut by an average of 25 to 30 percent, consistent with Urban’s assumption, resulting in $800 billion of savings.

Subtotal, Sanders Cost Reduction

$1.7 trillion/$1.7 trillion/$800 billion

Sanders Direct Offsets

Senator Sanders has proposed a number of options to finance Medicare for All.²⁴ On February 26, 2020, we updated this analysis to incorporate these options, including three policies we view as direct offsets: an employer payroll tax, an income surtax (both are described as income-based premiums), and the elimination of health-related tax breaks. The Sanders campaign estimates these policies would raise $12.2 trillion – and we concur with these estimates.

Establish a 4% Income Surtax

$4.0 trillion

Sanders has suggested what he describes as a 4 percent income-based premium for Medicare for All. The tax would exempt the first $29,000 of income for a family of four, which is equivalent to the standard deduction and personal and dependent exemptions a four-person family would receive under the pre-2018 tax code. Effectively, this contribution is the equivalent of a 4 percent income surtax or an increase in every income tax rate by 4 percentage points. This would raise roughly $4 trillion over a decade.

Impose a 7.5% Employer Payroll Tax

$5.2 trillion

In addition to the individual contribution, Sanders proposes a 7.5 percent employer-paid income-based premium for Medicare for All. Essentially, employers would pay a 7.5 percent payroll tax on the wages they offer their employees, with the first $2 million of payroll exempt. Though technically paid by the employer, the tax – like current health premiums – would ultimately be borne by the employee. The Sanders campaign estimates this will raise $5.2 trillion. While we previously estimated it would raise $4 trillion, the difference is due to choices over how to distribute interactions – we concur with the $5.2 trillion estimate using the campaign’s method.

Medicare for All Revenue Feedback

$3.0 trillion

Because Americans would no longer pay premiums or face out-of-pocket costs, health-related tax breaks would become irrelevant. Specifically, the income and payroll tax deductions for employer-paid premiums, Health Savings Accounts, Flexible Spending Accounts, and itemized medical deductions would no longer be used, and employers would pay their employees more in the form of taxable wages as opposed to tax-free health care benefits. Partially offsetting these effects, the penalty for employers who do not provide health insurance coverage would no longer generate revenue. The Sanders campaign estimates this policy would raise $3 trillion over a decade. Assuming this figure estimates only the net reduction in employer spending – accounting for higher wages due to lack of premiums, partially offset by increased payroll tax contributions – we concur with this estimate.

Subtotal, Sanders Direct Offsets

$12.2 trillion

Sanders Additional Offsets

In addition to the direct offsets for Medicare for All, Senator Sanders has proposed a number of options for tax increases to offset the remaining costs. These options include increasing income taxes for high earners, taxing capital gains as ordinary income, increasing taxes on wealth, and raising taxes on businesses. Assuming all of these options are adopted, no additional policies are put forward, and that – where detail is missing – their structure is broadly similar to what Sanders proposed in 2017, we estimate these proposals would likely generate between $3.35 trillion and $5.4 trillion, with a central estimate of $3.75 trillion.

Methodological note: We assume the details not specified on the Sanders campaign’s website are generally based on Sanders’s 2017 options document. Our low-cost estimates are identical to those provided by the Sanders campaign. Our central and high-cost estimates match the campaign’s estimates in most cases but largely reflect our own estimates using the Open Source Policy Center’s Tax-Brain and a variety of credible sources. Future estimates may change if the policies are modeled by other independent estimators.

Raise & Reform Individual Income Taxes

$1.1 trillion

The current income tax imposes tax rates ranging from 10 percent up to 37 percent (39.6 percent after 2025) and allows for a number of deductions – including up to $10,000 in deductions for state and local taxes (SALT). Sanders proposes to increase income taxes on higher earners, including by raising the top rate to 52 percent on income above $10 million and replacing the current $10,000 cap on the SALT deduction with an overall cap on itemized deductions at a $50,000 fixed value for married couples (and presumably $25,000 for individuals). Based on Sanders’s revenue target and past proposals, we believe he would also increase the tax rate to 40 percent on income above $250,000, 45 percent above $500,000, and 50 percent above $2 million. We assume other individual income tax provisions currently in effect as a result of the Tax Cuts and Jobs Act are extended. The Sanders campaign estimates this would raise a combined $1.1 trillion over the next decade. Our own estimates are very similar.

Increase Taxes on Capital Gains

$2.5 trillion/$1.0 trillion/$700 billion

Under current law, long-term capital gains and qualified dividends are taxed at preferential rates that peak at 20 percent (23.8 percent including surtaxes). Sanders proposes to tax capital gains as ordinary income, equalizing the tax treatment of capital and wage income. This would result in a top ordinary capital gains rate of 52 percent, or 66 percent including various surtaxes. In addition, Sanders would tighten enforcement of capital gains taxation by “cracking down on gaming through derivatives, like-kind exchanges, and the zero tax rate on capital gains passed on through bequests.” In other words, Sanders would eliminate stepped-up basis of inherited assets and tax capital gains at death, count like-kind exchanges as an asset sale, and (in our understanding) tax derivatives on a mark-to-market basis. The Sanders campaign estimates this would raise $2.5 trillion over a decade, which we assume in our low-cost estimate. We believe this figure is likely too high, however, as higher capital gains rates tend to discourage realization of gains on assets.²⁵ Under our central estimate, we find this policy will raise roughly $1 trillion over a decade.²⁶ Under our high-cost estimate, which assumes stronger behavioral responses, these provisions would generate $700 billion.

Increase the Estate Tax

$350 billion/$300 billion/$250 billion

Under current law, very large estates face a one-time tax of 40 percent after a wealthy individual dies, with the first $11.6 million of wealth ($23.2 million for a couple) exempt from taxation. Sanders would increase the estate tax by enacting a version of the For the 99.8% Act. The proposal would lower the estate tax exemption to $3.5 million and tax estates at 45 percent up to $10 million, 50 percent up to $50 million, 55 percent up to $500 million, and 77 percent above that – doubling those amounts for couples. He would also close numerous estate tax loopholes. The Sanders campaign estimates this would raise almost $350 billion over a decade, which is our low-cost estimate. Our high-cost estimate is derived from Penn Wharton Budget Model’s estimate of just over $250 billion.²⁷ Our central estimate assumes $300 billion in revenue – a midpoint between these estimates.

Raise Taxes on Corporations

$1.0 trillion

As part of his Corporate Accountability and Democracy plan, Sanders proposes numerous tax increases on businesses.²⁸ Specifically, Sanders would raise the corporate tax rate from today’s 21 percent to 35 percent, eliminate almost all corporate tax breaks, transition to economic depreciation of assets, and limit interest deductibility to 20 percent of adjusted taxable income. He would also tax foreign and domestic corporate income at the same rates, limit the credit for foreign taxes paid on a per-country basis, strengthen rules against tax-advantaged inversions, and raise the minimum worldwide tax rate to 17.5 percent with various base broadeners. Finally, Sanders would eliminate the 20 percent pass-through business deduction entirely and tax all large pass-throughs at the corporate tax rate. The Sanders campaign estimates this plan would raise $3 trillion, $1 trillion of which Sanders would dedicate to paying for his health plan. We find this estimate to be credible and thus assume the full $1 trillion would be raised.²⁹

Dedicate a Portion of a Wealth Tax to Medicare for All

$350 billion/$250 billion/$200 billion

Sanders has proposed “establishing a tax on extreme wealth.” Specifically, his proposed wealth tax would be imposed annually on households with over $32 million of net worth. The tax would be 1 percent of wealth up to $50 million, 2 percent up to $250 million, and would continue to rise on a graduated schedule until reaching 8 percent for household wealth over $10 billion.³⁰ The Sanders campaign has said this wealth tax would raise $4.35 trillion over a decade, based on estimates from Emmanuel Saez and Gabriel Zucman (Saez & Zucman),³¹ and Sanders says $350 billion of this revenue would be used to fund Medicare for All. The other $4 trillion would be used to fund his Housing for All plan ($2.5 trillion) and his universal child care and pre-k plan ($1.5 trillion).

The Saez & Zucman estimates do not account for the fact that wealth tax avoidance will rise as tax rates do, nor the fact that a high tax on wealth will have the effect of reducing assets held by the wealthy and thus lead the tax base to shrink over time.³² Independent estimates that incorporate these effects have found the Sanders wealth tax will raise between $3 trillion and $3.3 trillion over a decade.³³ Allocating the amount for Medicare for All proportionally with the total wealth tax revenue, we estimate this would be about $250 billion over a decade under our central estimate. Our low-cost estimate assumes it would raise $350 billion, and our high-cost estimate assumes it would raise $200 billion.

Tax Corporations with High CEO Pay

$100 billion

To finance his plan to eliminate medical debt, Sanders would increase the corporate income tax rate on companies who pay their CEOs substantially more than their workers.³⁴ The policy would increase the tax rate by 0.5 percent for companies with CEO pay over 50 times that of the median worker, 1 percent for companies with CEOs paid over 100 times more, and by increasing amounts from there – with a 5 percent increase for companies with CEO pay of more than 500 times that of the median worker. The Sanders campaign estimates this would raise $150 billion over a decade assuming current trends continue. Since the policy would likely lead many companies to reduce (or stem increases in) CEO pay and/or engage in avoidance strategies, we estimate the policy would raise $100 billion.

Subtotal, Sanders Additional Offsets

$5.4 trillion/$3.75 trillion/$3.35 trillion

Net Fiscal Impact, Sanders Health Plan

-$8.5 trillion/-$12.95 trillion/-$17.75 trillion

Read the full PDF version.

Joe Biden’s Plan to Protect and Build on the Affordable Care Act

Vice President Biden has proposed to expand the Affordable Care Act (ACA), establish a new public insurance option, increase the affordability of long-term care, and increase other health care spending.  He would offset the costs of these proposals by containing and reducing spending on prescription drugs and ending surprise billing, through the revenue feedback from his coverage expansion, and by increasing taxes on high-income households and heirs.

On net, we estimate these policies would add $800 billion to deficits over ten years under our central estimate. We estimate they would save $300 billion in our low-cost estimate and add $1.3 trillion to deficits in our high-cost estimate.

Biden Coverage & Spending Proposals

Vice President Biden has proposed expanding health care coverage by increasing the size of ACA subsidies, implementing a public option to compete with private insurance, increasing access to and affordability of long-term care and insurance, and expanding health funding for rural communities and mental health care. We estimate these policies would have a gross cost of between $2.0 trillion and $2.5 trillion, with our central estimate of $2.25 trillion.

Expand the ACA & Introduce a Public Option

-$1.5 trillion/-$1.7 trillion/-$1.9 trillion

Biden’s plan would build on the Affordable Care Act (ACA) by expanding current subsides, establishing a new public insurance option, and automatically enrolling low-income individuals into premium-free coverage.

His plan would increase the generosity of ACA premium subsidies in several ways. Currently, subsidies are determined based on the cost of a “silver” plan with a 70 percent actuarial value.³⁵ Biden proposes basing subsidies on the cost of a “gold” plan with an 80 percent actuarial value. He would further increase subsidies by reducing the share of income that subsidized households would be expected to pay for their insurance and capping that share at 8.5 percent of income for all Americans (currently, those below 400 percent of the federal poverty level are capped at 9.8 percent, and those above that threshold have no cap).³⁶

Biden would also establish a new Medicare-like public option that could be purchased with ACA subsidies. Because Medicare rates are generally lower than private insurance, the public option would be cheaper than alternatives in many cases – though competition from the public option could reduce the cost of private insurance as well. The public option would be available to those who lack insurance, those who purchase insurance through the exchanges, and low-income people in states that have not expanded Medicaid under the ACA (these individuals would receive premium-free coverage).³⁷ The public option and subsidized coverage in the exchanges would also be made available to those with employer coverage (which implies a repeal of the ACA’s employer mandate). Biden would automatically enroll low-income beneficiaries into the public option when they interact with public institutions and programs such as public schools or the Supplemental Nutrition Assistance Program (SNAP, or food stamps).

Though not all details of Biden’s plan have been made public, the plan appears to be very similar to Variation #2 of the Healthy America Program proposed by Blumberg, Holahan, Buettgens, and Zuckerman of the Urban Institute (Healthy America) – which is cited on Biden’s campaign website.³⁸ The most significant difference is that Biden would maintain the existing Medicaid program in roughly its current form, unlike Healthy America. Accounting for those and other differences, we estimate the proposal would cost about $1.7 trillion over a decade under our central estimate.³⁹ Given uncertainty about both the estimates and plan details, we assume a cost of $1.5 trillion and $1.9 trillion under our low- and high-cost estimates, respectively.⁴⁰

Improve Affordability of Long-Term Care

-$300 billion/-$350 billion/-$400 billion

Under current law, many Americans lack access to long-term services and supports and instead rely on family caretakers. Those who do use long-term care facilities often pay out of pocket until they exhaust their assets, at which point Medicaid covers the cost. Biden would expand access to and defray the cost of long-term care in two primary ways. First, he would establish a $5,000 tax credit for informal or family caregivers to cover out-of-pocket expenses based on the Credit for Caring Act.⁴¹ Second, he would increase the generosity of current tax benefits for purchasing long-term care insurance (including insurance paid for out of retirement savings). Based largely on estimates from Favreault and Spillman of the Urban Institute,⁴² we find this would cost $350 billion over a decade under our central estimate. It would cost $300 billion and $400 billion under our low- and high-cost estimates, respectively.⁴³

Expand Rural Health & Mental Health Funding

-$200 billion

Biden would increase federal health care spending in several other areas – most significantly in relation to rural health care and mental health funding. For instance, he would double federal funding for Community Health Centers – more than half of which are located in rural communities.⁴⁴ He would also increase funding for the USDA Community Facilities Direct Loan and Grant Program to build new health clinics and deploy telehealth services, reverse scheduled cuts to Disproportionate Share Hospital (DSH) payments for hospitals serving those without insurance, and adopt several other provisions included in the Save Rural Hospitals Act to support rural hospitals and expand care in rural communities. Separately, Biden would improve enforcement of mental health parity laws and expand funding for mental health services. We estimate these provisions would cost approximately $200 billion over a decade.

Subtotal, Biden Coverage & Spending Proposals

-$2.0 trillion/-$2.25 trillion/-$2.5 trillion

Biden Cost Reduction

While Vice President Biden would increase overall health care spending, he also proposes several measures to reduce both private and public health care costs. He would reduce prescription drug prices in a number of ways – most directly by restricting the launch price of new drugs based on an international average – and reduce other costs as well. We estimate these proposals would save between $350 billion and $600 billion over a decade, with a central estimate of $450 billion.

Allow Drug Negotiations & Restrict Launch Prices

$400 billion/$300 billion/$200 billion

To reduce prescription drug spending for both individuals and the federal government, Biden would use the federal government’s market and regulatory power to limit prices. Specifically, he would repeal the law that bans Medicare from negotiating drug prices directly.⁴⁵ For new drugs and biologics sold without competition, Biden would establish an independent board to set reasonable prices based on the average price in other countries (when available). This price would be used in Medicare and the public option and would also be available for private plans on the individual market. Assuming the board relies on a proxy price when there is no international average (as many drugs are introduced first in the U.S.),⁴⁶ we estimate these proposals would save about $300 billion over a decade under our central estimate, with savings of $400 billion in our low-cost estimate and $200 billion in our high-cost estimate.⁴⁷

Cap Drug Price Growth & Further Lower Drug Costs

$150 billion/$100 billion/$100 billion

Biden would also reduce prescription drug prices in several other ways. Most significantly, he would limit price increases for name-brand drugs, biotech drugs, and “abusively priced” generic drugs to the rate of inflation. In order to participate in Medicare or the new public option, drug manufacturers would be required to adhere to this limit, which would be enforced with a tax penalty. In addition, Biden would allow the purchase of safe prescription drugs from other countries. Finally, the plan supports “numerous proposals” to encourage the accelerated development and introduction of generic drugs to increase competition. We estimate these proposals would save about $100 billion under our central and high-cost estimates. Our low-cost estimate of $150 billion assumes additional unspecified policies to encourage generics.⁴⁸

End Surprise Billing & Reduce Health Care Costs

$50 billion

Biden would also enact several other provisions designed to reduce non-drug health care costs. He would end the practice of “surprise medical billing” – which occurs when a person goes to an in-network facility but receives care from an out-of-network clinician at an additional out-of-network cost – by requiring that providers at an in-network facility be paid in-network rates when the patient has little control over which provider they see. Biden would also address the issue of increasing market concentration among hospitals and health care providers by using existing antitrust authority to block health care industry mergers and acquisitions that would result in more expensive, lower quality, or less accessible care. Finally, he would partner with the health care workforce to deploy innovations designed to improve outcomes and lower costs. We estimate these provisions would save approximately $50 billion over ten years.⁴⁹

Subtotal, Biden Cost Reduction

$0.6 trillion/$0.45 trillion/$0.35 trillion

Biden Direct Offsets

Vice President Biden’s health spending proposals would be partially offset by changes in health-related revenue. Expanding subsidized coverage would reduce employer-provided health coverage and thus reduce the cost of tax breaks associated with that coverage. Biden would also limit the deductibility of drug advertising. We estimate these proposals would save about $350 billion over a decade.

Coverage Expansion Revenue Feedback

$300 billion

By expanding coverage in the exchanges and creating a public option, Biden would reduce the number of Americans who receive health insurance benefits through their employer’s plan, might also reduce the per-person cost of employer-provided health insurance, and would lower out-of-pocket costs for many Americans. As a result, wages would be higher, and existing income and payroll tax breaks related to health care – especially the tax exclusion for employer-provided health insurance – would become less valuable. We estimate this would lead to roughly $300 billion in additional income and payroll tax revenue over a decade.⁵⁰

End Deductibility of Prescription Drug Advertising

$50 billion

Under current law, pharmaceutical companies can deduct the cost of Direct-To-Consumer (DTC) advertising for tax purposes as a normal business expense. In order to discourage DTC advertising – which many argue leads to higher prescription drug demand and prices – Biden would eliminate this deduction, as proposed by the End Taxpayer Subsidies for Drug Ads Act.⁵¹ Assuming a 28 percent corporate tax rate (which Biden has proposed outside of his health plan⁵²), we find this provision would raise less than $50 billion over a decade.⁵³

Subtotal, Biden Direct Offsets

$0.35 trillion/$0.35 trillion/$0.35 trillion

Biden Additional Offsets

Vice President Biden proposes financing his health care plan by increasing taxes on high earners. Specifically, he would increase the top individual income tax rate, tax capital gains as ordinary income for high earners, and eliminate stepped-up basis of capital gains at death. We estimate these proposals would likely generate between $500 billion and $1.35 trillion in new revenue for the federal government over a decade, with a central estimate of $650 billion.

Methodological Note: Our low-cost estimates are based on numbers provided by the Biden campaign and reported by Jennifer Epstein of Bloomberg News.⁵⁴ Our central and high-cost estimates are our own, largely calculated using the Open Source Policy Center’s Tax-Brain model.⁵⁵ Future estimates may change as Biden’s tax policies are modeled by other independent estimators.

Raise the Top Individual Income Tax Rate to 39.6%

$100 billion

Currently, the top individual income tax rate is 37 percent on income above roughly $518,000 ($622,000 for married filers) through 2025. Prior to passage of the Tax Cuts and Jobs Act (TCJA), the top rate was 39.6 percent, and that rate will be restored in 2026 under current law. To help pay for his health care plan, Biden has proposed an immediate increase in the top rate to 39.6 percent. This would generate roughly $100 billion in new revenue over ten years (all by 2026).⁵⁶

Increase Capital Gains Taxes & Tax Them at Death

$1.25 trillion/$550 billion/$400 billion

Under current law, long-term capital gains are taxed at a preferential rate (excluding surtaxes, the top rate is 20 percent, compared to 37 percent on earned income) and are assessed only after the gain has been realized. In addition, when an asset is passed on to heirs through inheritance, the cost basis of that asset gets “stepped up” to the market price at the time the asset was transferred – meaning all capital gains accrued over the deceased individual’s lifetime escape taxation. For those making over $1 million per year, Biden would tax capital gains at the ordinary income tax rate of 39.6 percent, nearly double the current rate.⁵⁷ In addition, Biden would eliminate stepped-up basis so capital gains would generally be taxed at death as if they had been sold. Not only would taxing capital gains at death generate direct revenue, it would also magnify the revenue effect of raising the capital gains rate by reducing the incentive for taxpayers to hold stock until death.⁵⁸ We find these provisions would raise about $550 billion over the next decade under our central estimate.⁵⁹ Our low-cost scenario assumes $1.25 trillion of revenue, based on figures from the Biden campaign.⁶⁰ Under our high-cost estimate, which assumes stronger behavioral responses, these provisions would generate $400 billion in revenue.

Subtotal, Biden Additional Offsets

$1.35 trillion/$0.65 trillion/$0.5 trillion

Net Fiscal Impact, Biden Health Plan

$300 billion/-$800 billion/-$1.3 trillion

Read the full PDF version.

Pete Buttigieg’s Plan for a New Era for Health in America

Mayor Buttigieg has proposed to expand the Affordable Care Act (ACA), establish a new “Medicare for All Who Want It” public insurance option with retroactive enrollment, increase the affordability of long-term care, and increase other health care spending. He would offset the cost of these proposals by reducing prescription drug prices, reducing and reforming Medicare provider payments, reducing private health costs (including by ending surprise billing and capping out-of-network care prices), generating feedback revenue through his coverage expansion proposals, and raising the corporate income tax rate.

On net, we estimate these proposals would likely save the federal government $450 billion over a decade under our central estimate. We estimate they would save $1.4 trillion under our low-cost estimate and increase deficits by $350 billion under our high-cost estimate.

Buttigieg Coverage & Spending Proposals

Mayor Buttigieg has proposed to expand health care coverage by increasing ACA subsidies, implementing a public option to compete with private insurance, establishing a new long-term care program, expanding health funding for rural communities and mental illnesses, and reducing out-of-pockets costs for those in Medicare and the new public option. We estimate these policies would have a gross cost of between $2.45 trillion and $3.35 trillion over a decade, with our central estimate of $2.85 trillion.

Expand ACA Subsidies & Introduce a Public Option

-$1.4 trillion/-$1.6 trillion/-$1.8 trillion

Buttigieg would expand the Affordable Care Act (ACA), establish a “Medicare for All Who Want It” public option, automatically enroll eligible Americans into affordable coverage, retroactively enroll those who don’t sign up for insurance, and establish a new fund to reimburse providers for uncompensated care.

Buttigieg would increase the generosity of ACA premium subsidies in several ways. Currently, subsidies are based on the cost of a “silver” plan with a 70 percent actuarial value.⁶¹ Under Buttigieg’s proposal, subsidies would be determined based on the cost of a “gold” plan with an 80 percent actuarial value. He would further increase subsidies by reducing the share of income that subsidized households would be expected to pay for their insurance, capping it at 8.5 percent of income for all Americans (currently, those below 400 percent of the federal poverty level are capped at 9.8 percent; there is no cap for those above that threshold).⁶² In addition, he would restore funding for and expand cost-sharing reductions.⁶³ Finally, he would overturn multiple Trump Administration rules supporting the sale of less generous insurance plans.⁶⁴

Buttigieg would also establish a new “Medicare for All Who Want It” public option that would be available to those purchasing insurance on the insurance exchanges, low-income households in states that have not expanded Medicaid under the ACA, and those who currently lack insurance. In addition, those with employer coverage could opt to instead use their employer’s contribution to buy into the public plan, and employers themselves could buy the plan on behalf of their workers (this implies a repeal of the ACA’s employer mandate – though the campaign has said some employer contribution would remain). Buttigieg would automatically enroll individuals eligible for free coverage into the public option. Finally, he would establish a process to retroactively enroll Americans without insurance in the public option and charge them a premium after the fact (presumably as part of tax filing).⁶⁵ Medical providers would be reimbursed for care given prior to enrollment through a new uncompensated care fund.

Buttigieg’s proposal resembles Option #5 in From Incremental to Comprehensive Health Reform by Blumberg, Holahan, Beuttgens, Gangopadhyaya, Garrett, Shartzer, Simpson, Wang, Favreault, and Arnos of the Urban Institute (Urban) in many ways.⁶⁶ Based on Urban’s estimates, we believe these policies would cost $1.6 trillion over a decade under our central estimate and between $1.4 trillion and $1.8 trillion in our low- and high-cost scenarios. This is consistent with the campaign’s estimate of $1.5 trillion.⁶⁷

Expand Long-Term Care Coverage

-$400 billion/-$500 billion/-$600 billion

Buttigieg would expand coverage for long-term care by establishing a federal Long-Term Care America program to provide coverage to people over age 65. The program would pay up to $90 per day, adjusted for geographic area and for inflation in future years. Buttigieg would also increase Medicaid income and asset limits for long-term care benefit eligibility, make permanent spousal impoverishment rules to protect a person’s assets when their spouse goes into long-term care, and eliminate Medicaid estate recovery of long-term care benefits.⁶⁸ Based largely on work from Favreault and Johnson of the Urban Institute,⁶⁹ we find this would cost about $500 billion over a decade under our central estimate. We assume $400 billion in our low-cost estimate, which is consistent with the campaign’s own estimates, and $600 billion under our high-cost estimate.⁷⁰

Increase Rural Health Spending & Mental Health Funding

-$250 billion

Buttigieg would increase funding for rural health care in a variety of ways, including by increasing Medicare reimbursements in underserved areas, increasing and expanding reimbursements for telehealth, increasing funding for rural veterans’ health care, and expanding Public Service Loan Forgiveness to rural providers. For mental health care, he would increase reimbursements for mental health providers, expand current mental health parity rules (which require mental health coverage to be equivalent to physical health coverage), repeal the Medicaid prohibition on funding large mental health treatment facilities (known as the IMD exclusion), and eliminate the 190-day lifetime limit on Medicare inpatient psychiatric admissions. Based on campaign estimates, discussions with the campaign, and our own estimates, we believe these policies combined would cost roughly $250 billion over a decade.⁷¹

Reduce Out-of-Pocket Costs in Medicare & Public Option

-$400 billion/-$500 billion/-$700 billion

Buttigieg would enact several changes to reduce total cost sharing, especially among seniors. Most significantly, he would establish a new out-of-pocket cap for Medicare Parts A and B (currently, costs are only capped for those enrolled in Medicare Advantage), with a lower cap for low-income seniors. Further, he would cap out-of-pocket drug costs at $200 per month or $2,400 per year under Medicare Part D (currently, seniors are liable for 5 percent of costs after spending about $2,650 in a year and $250 per month⁷²) or $3,000 per year under the public option. Finally, he would eliminate copays for generic drugs purchased by low-income beneficiaries in Medicare, the public option, and Medicaid.⁷³ The campaign has told us that Buttigieg intends to fully offset the Medicare Parts A and B cap with health savings and would set the cap at an affordable level using these offsets. We currently do not have the details of these offsets; however, we will update our estimates as the campaign releases more details. Ignoring potential offsets, the total cost of these policies depends on the exact specifications, especially the magnitude of the Medicare cap. Under our central estimate, we assume a cap of $6,700 to match Medicare Advantage’s mandated cap (and budget-neutral adjustments to further reduce low-income cost sharing) based on the campaign’s argument that “seniors enrolled in Medicare Advantage are protected from high out-of-pocket costs” and “seniors in traditional Medicare deserve the same financial protection.” We find all of these proposals would cost roughly $500 billion over a decade. Under our low-cost estimate, they would cost $400 billion and $700 billion under our high-cost estimate.⁷⁴

Subtotal, Buttigieg Coverage & Spending Proposals

-$2.45 trillion/-$2.85 trillion/-$3.35 trillion

Buttigieg Cost Reduction

To help offset the cost of his coverage and spending proposals while reducing health costs generally, Mayor Buttigieg would enact several changes to lower the cost of prescription drugs, reduce Medicare provider payments, lower spending on surprise billing, reduce administrative costs, and cap out-of-network care charges. We estimate these proposals would save between $1.1 trillion and $1.55 trillion over a decade, with a central estimate of $1.2 trillion.

Negotiate Prescription Drug Prices

$700 billion

Buttigieg proposes requiring the Secretary of Health and Human Services to negotiate the price of at least 25 prescription drugs per year on behalf of Medicare and the new public option and make these prices available to other payers. The Secretary would begin by negotiating down the price of the most expensive or overpriced drugs compared to international prices and based on the value and production cost of the drug, cost of alternative treatments, and the international cost of the drug. Negotiations would be enforced through a prohibitively high penalty (up to 95 percent of gross sales) and threat of patent confiscation for those companies who refuse to negotiate a “fair” price. In our assessment and based on conversations with the campaign, we believe this proposal closely matches provisions in the Elijah E. Cummings Lower Drug Costs Now Act, which would cap negotiated prices at 120 percent of an international average (or 85 percent of the average manufacturers price).⁷⁵ We estimate the proposal would save about $700 billion if implemented immediately and enacted in concert with Buttigieg’s other proposals.

Cap Drug Price Growth & Further Lower Drug Costs

$50 billion

In addition to negotiating lower drug prices, Buttigieg would also reduce prescription drug prices by preventing drug price growth in excess of inflation for Medicare and the public option. In addition, he would prohibit certain practices used by drug manufacturers to delay generic drug competition. These include prohibiting “pay-for-delay” agreements, closing the “REMS loophole,” prohibiting meritless citizen petitions, and prohibiting “product hopping.”⁷⁶ Buttigieg would also increase the fee on prescription drug manufacturers by an unspecified amount and use the revenue to further increase access to prescription drugs. In total, we estimate these policies would save about $50 billion over a decade.⁷⁷

Reduce & Reform Medicare Provider Payments

$350 billion/$200 billion/$200 billion

Buttigieg would further reduce the cost of the Medicare program by reducing and reforming provider payments. Though it has not been made available on Buttigieg’s website, the campaign has shared with us and several press outlets a set of recommendations that it estimates would save Medicare nearly $300 billion through 2029.⁷⁸ Specifically, Buttigieg would enact site-neutral payments so hospitals are paid the same as physician clinics for similar services, reduce payments for post-acute care, lower payments to hospitals that employ medical residents and interns (graduate medical education), and work to reduce adverse hospital events such as hospital-acquired infections.⁷⁹ Most of these policies have been proposed on a bipartisan basis to reduce the costs of traditional Medicare. We estimate these policies would save about $200 billion over a decade under our central and high-cost estimates.⁸⁰ Our low-cost estimate of $350 billion relies on the campaign’s estimates – some from the Office of Management and Budget – extrapolated through 2030.

End Surprise Billing & Reduce Health Care Costs

$150 billion/$50 billion/$50 billion

Buttigieg has a number of proposals to reduce other non-drug costs outside of Medicare. First, he would ban the practice of surprise billing – which occurs when a person goes to an in-network facility but receives care from an out-of-network clinician at an additional out-of-network cost – by requiring that all providers at an in-network facility be treated as in-network. Second, he would work to reduce administrative costs by standardizing health care transactions and billing, establishing an All-Payer Claims Database, and fully integrating electronic health records. Third, he would work to improve price and quality transparency throughout the health care system. Finally, he would work to limit hospital mergers and other anti-competitive behavior, including by non-profit hospitals. We expect these policies would reduce overall health care costs, reduce subsidized and tax-preferred insurance premiums, and save the federal government about $50 billion over a decade under our central and high-cost estimates.⁸¹ Our low-cost estimate finds $150 billion of savings, assuming significantly larger administrative savings based on an analysis by Elizabeth Wikler, Peter Basch, and David Cutler of the Center for American Progress.⁸²

Cap Out-of-Network Charges at 200% of Medicare

$300 billion/$200 billion/$100 billion

On average, health care providers charge significantly more to private insurance companies than they do to Medicare, particularly for out-of-network services where insurance companies have little leverage. In order to reduce that price differential and increase the leverage of insurance companies trying to bring providers into their networks, Buttigieg would prohibit providers from charging more than twice Medicare rates for out-of-network services. This cap could significantly reduce private insurance premiums, as nearly half of hospital admissions and a smaller but still significant share of physician services currently cost at least twice as much under commercial plans than under Medicare.⁸³ While we unfortunately do not have a strong basis for estimating the savings and revenue feedback from this policy, our present assumption is that it will save about $200 billion over the next decade.⁸⁴ Our low-cost estimate assumes $300 billion of savings and our high-cost estimate assumes $100 billion. These figures are especially uncertain.

Subtotal, Buttigieg Cost Reduction

$1.55 trillion/$1.2 trillion/$1.1 trillion

Buttigieg Direct Offsets

Partially offsetting Mayor Buttigieg’s coverage expansions and spending increases would be the revenue feedback from those policies.

Coverage Expansion Revenue Feedback

$400 billion

By expanding coverage in the exchanges and through the public option, Buttigieg would reduce the number of Americans who get health insurance through their employer. In addition, the plan might reduce the cost of employer-provided insurance and would reduce out-of-pocket costs for many Americans. As a result, wages would be higher and existing income and payroll tax breaks related to health care – especially the tax exclusion for employer-provided health insurance – would become less valuable. Based on conversations with the campaign, we also understand employers would be responsible to contribute if their workers buy on the exchange – and so as a proxy we assume current revenue from the ACA’s employer mandate remains. We estimate this would lead to roughly $400 billion of additional revenue over a decade.⁸⁵

Subtotal, Buttigieg Direct Offsets

$400 billion

Buttigieg Additional Offsets

Mayor Buttigieg proposes raising the corporate tax rate to raise additional revenues.

Raise the Corporate Income Tax Rate From 21% to 35%

$1.9 trillion/$1.7 trillion/$1.5 trillion

Buttigieg has said he would pay for his coverage expansions mainly by “rolling back the Trump corporate tax cuts,” which the campaign estimates would raise $1.4 trillion over ten years. Based on press reports and discussions with the campaign, we understand this policy to mean increasing the corporate tax rate from 21 percent to 35 percent while retaining other changes to the corporate code, including the base broadening enacted under the Tax Cuts and Jobs Act of 2017 (TCJA). This would not only restore the statutory tax rate to pre-TCJA levels, but also set overall corporate taxes higher than they were in 2017. As a result, we estimate the policy would raise $1.7 trillion over a decade under our central estimate. We estimate revenue of $1.9 trillion under our low-cost estimate and $1.5 trillion under our high-cost estimate using different sources for the estimate.⁸⁶

Subtotal, Buttigieg Additional Offsets

$1.9 trillion/$1.7 trillion/$1.5 trillion

Net Fiscal Impact, Buttigieg Health Plan

$1.4 trillion/$450 billion/-$350 billion

Read the full PDF version.

Elizabeth Warren’s Plan to End the Stranglehold of Health Costs on U.S. Families

Senator Warren has proposed to offer universal, publicly-funded “Medicare for All” health and long-term care benefits to all U.S. residents with virtually no out-of-pocket costs while also increasing other spending. She would contain and offset the costs of adopting Medicare for All by reducing provider, drug, and administrative costs; requiring contributions from states and employers; and enacting a variety of tax increases and spending cuts.

On net, we estimate this plan would add an additional $6.1 trillion to deficits over a decade under our central estimate. It would reduce deficits by $1.2 trillion in our low-cost estimate and add $11.2 trillion to deficits in our high-cost estimate. Warren’s transition plan is not reflected in these estimates. Due to baseline and budget window differences, our estimates of specific policies are not directly comparable to the Warren campaign’s estimates – Appendix I offers a comparison.

Warren Coverage & Spending Proposals

Senator Warren has proposed replacing the current mix of public and private financing of health care with a Medicare for All single-payer system where the federal government finances virtually the full cost of health care and offers a new long-term care program. On top of these programs, she would ensure that all hospitals are paid at an average of 110 percent of Medicare rates, require states to contribute to the program in place of their current Medicaid spending, and increase rural health-related investments. We estimate these policies would have a gross cost of between $28.95 trillion and $33.25 trillion over a decade, with a central estimate of $31.75 trillion.

Methodological note: Though Warren has proposed a detailed transition plan, our analysis assumes her proposal is fully phased in by 2021. Our estimates largely based on (and adjusted from) estimates by Blumberg, Holahan, Buettgens, Gangopadhyaya, Garrett, Shartzer, Simpson, Wang, Favreault, and Arnos of the Urban Institute (Urban).⁸⁷ Our low-, central, and high-cost estimates reflect a variety of different assumptions. Our high-cost estimates match Urban most closely, whereas our low-cost figures largely reflect estimated adjustments by Donald Berwick and Simon Johnson (Berwick & Johnson) provided by the campaign – though with some further downward adjustments and other differences.⁸⁸ It is possible the cost of Medicare for All might fall outside of our range, as a number of analysts have estimated.⁸⁹

Enroll All U.S. Residents in “Medicare for All”

-$27.0 trillion/-$29.0 trillion/-$30.0 trillion

Warren would replace the current system of public and private health insurance with a new government-run insurance program that would cover virtually all health care services without significant premiums, deductibles, copayments, coinsurance, or provider networks. All U.S. residents would be automatically enrolled in Medicare for All, which would cover ordinary medical care as well as dental, vision, hearing, and mental health services. We estimate this change in isolation would cost the federal government about $29 trillion over ten years under our central estimate. Most of this cost comes from eliminating premiums and cost sharing, meaning households will pay less as the government pays more. Our estimate represents a starting point, before proposed adjustments (analyzed in the following section). It assumes drug costs remain at current levels, provider payments are set to Medicare levels (significantly below payment rates offered by private insurance), and administrative costs total 4.5 percent.⁹⁰ Our low-cost estimate of $27 trillion assumes administrative costs of 2.3 percent as Warren says she would set, whereas our high-cost estimate of $30 trillion relies on Urban’s assumption of 6.0 percent administrative costs. Our estimates also differ in their assumptions of increased utilization, which Berwick & Johnson argue are too high in Urban’s study.⁹¹

Offer Universal Long-Term Care

-$4.0 trillion/-$4.5 trillion/-$5.0 trillion

Under current law, many Americans lack access to long-term services and supports; those who do use long-term care facilities often pay out of pocket until they exhaust their assets, at which point Medicaid covers the cost. Warren’s Medicare for All plan would institute universal coverage for long-term services and supports. Consistent with the spirit of the Medicare for All Act (cosponsored by Warren), Urban assumes this would be achieved through the creation of a new home- and community-based long-term care system that pays up to $150 per day, while maintaining Medicaid support of institutional care. Based on discussions with authors of the Urban study, we find this would cost roughly $4.5 trillion over a decade. To account for possible differences in administrative costs, eligibility criteria, scope, reimbursement rates, and utilization, we assume $4 trillion in our low-cost estimate and $5 trillion in our high-cost estimate.⁹²

Increase Average Hospital Payments to 110% of Medicare

-$1.2 trillion

Though our base cost estimate assumes that all provider payments would be set at Medicare levels, doing so would represent a steep reduction from current law and could leave many hospitals unable to remain in business. Warren proposes to alleviate this concern by paying hospitals at an average of 110 percent of current Medicare rates, with higher payments for primary care as well as rural and teaching hospitals and lower payments for hospitals with higher margins and “overpaid specialists.” Relative to the base estimate, this proposal would cost about $1.2 trillion over a decade.⁹³ Importantly, it is possible hospitals would be unable to remain solvent at payments of only 110 percent of Medicare rates, which are significantly below what they currently charge in the private sector. Urban assumes payments at 115 percent of Medicare rates to keep hospitals solvent, which if implemented would cost an additional $600 billion above our estimate (Urban’s alternative scenario at 140 percent of Medicare would cost an additional $3.6 trillion).

Require Medicaid “Maintenance of Effort” Payments

$3.4 trillion/$3.1 trillion/$3.1 trillion

Because states pay for a substantial share of national health expenditures through Medicaid and the Children’s Health Insurance Program, enacting Medicare for All on its own would effectively represent a significant cost transfer to the federal government from the states. To reduce the federal costs associated with Medicare for All, Warren would require states to pay the federal government the same amount they otherwise would have paid for Medicaid and CHIP through a “Maintenance of Effort” payment. Based on the Urban study, we estimate this would reduce federal costs by $3.1 trillion over a decade in our central- and high-cost estimates. Our low-cost estimate of $3.4 trillion in savings is based on Berwick & Johnson. Importantly, there is some uncertainty about the constitutionality of such a requirement.⁹⁴ Since this policy would simply maintain current state spending, and to maximize the comparability of our different estimates, we count these savings as part of the gross cost of coverage.

Increase Rural Health-Related Investments

-$150 billion

In addition to her plans for expanded coverage, Warren would increase investments in rural communities and the health workforce serving them. Specifically, she would reauthorize and boost funding for Community Health Centers (CHCs) by 15 percent per year over five years, implement a $25 billion capital fund for areas with health worker shortages, increase residencies for rural and underserved communities, and expand educational loan repayment plans for health workers. We estimate these proposals would cost roughly $150 billion over a decade – including roughly $40 billion to simply extend current funding for CHCs beyond May 2020.

Subtotal, Warren Coverage & Spending Proposals

-$28.95 trillion/-$31.75 trillion/-$33.25 trillion

Warren Cost Reduction

To limit the federal cost of Medicare for All and help contain economy-wide health care costs, Senator Warren would implement a series of reforms to reduce provider payments and prescription drug costs below Medicare levels. The campaign argues these and other policies would also reduce spending growth to the growth rate of the economy and proposes capping spending at that reduced growth rate. We estimate these measures would achieve $2 trillion to $6.1 trillion of savings over a decade, with our central estimate finding $4.7 trillion of savings.

Methodological note: Our low-cost estimate is based on the Berwick & Johnson estimates cited by the campaign, though reported figures differ due to different budget windows and measurement baselines used.⁹⁵ Our central estimate represents our best projections of the proposals, and our high-cost estimate adjusts the costs based on the potential viability of the proposals.

Reduce & Reform Provider Payments

$2.5 trillion/$2.5 trillion/$1.2 trillion

Warren would adopt site-neutral payment reform so that medical services are reimbursed at the same rate whether offered in a hospital or physician’s office, reduce payment rates to post-acute care facilities, and expand the use of bundled payments that reimburse for an episode of care rather than per service provided.⁹⁶ Most of these policies have been proposed on a bipartisan basis to reduce the cost of traditional Medicare. Warren would also increase antitrust enforcement for all providers, specifically hospital groups. These proposals would save a combined $2.5 trillion over a decade if implemented as proposed. However, the proposals may prove unachievable or unsustainable on top of the substantial cuts medical providers would already experience under Medicare for All. Our high-cost estimate assumes just over half the savings would be used to help meet those provider payment targets while the remaining $1.2 trillion would be used to further reduce the cost of the plan.

Reduce Prescription Drug Costs

$2.5 trillion/$1.7 trillion/$800 billion

Warren sets a goal of reducing name-brand prescription drug costs by 70 percent and generic drug costs by 30 percent below Medicare prices. She proposes achieving this goal primarily by allowing the government to negotiate lower drug prices in a manner similar to the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3). Warren’s proposal would be more aggressive because it would allow the government to negotiate prices for all drugs (H.R. 3 focuses on a finite set of drugs that don’t face competition), would cap prices at 110 percent of an international average price index (H.R. 3 caps them at 120 percent), and sets no floor on prices (H.R. 3 sets a floor at the lowest price in the index). She would enforce this negotiation and improve the government’s leverage through a large tax penalty for non-compliance and a process for compulsory licensing and/or public manufacturing as a backstop. She would also effectively cap drug price growth in excess of inflation. We estimate these specific policies – if used aggressively and implemented fully in year one – could reduce the price of name-brand drugs roughly by half.⁹⁷ Assuming generic drug prices are reduced 30 percent, we find these proposals would shrink the cost of Medicare for All by $1.7 trillion over a decade in our central estimate.⁹⁸ Our low-cost estimate, which assumes the full 70 percent price reduction target is met, finds $2.5 trillion of savings. Our high-cost estimate finds $800 billion of savings from the 25 to 30 percent reduction in Medicare drug prices assumed in the Urban study.

Limit Health Care Cost Growth to Economic Growth

$1.1 trillion/$500 billion/$0

National health expenditures typically grow faster than the economy and have roughly doubled as a share of GDP over the past four decades. Warren argues that her plan would slow health care cost growth to the nominal rate of economic growth – reducing annual health care cost growth from above 5 percent under current law and 4.4 percent under our central estimate of her plan to about 3.9 percent per year. The campaign states that “if growth rates exceed this rate, [Warren] will use available policy tools, which include global budgets, population-based budgets, and automatic rate reductions, to bring it back into line.” We interpret this policy to mean that if health care spending growth exceeds 3.9 percent in a given year (adjusted for timing shifts), payments to providers would be cut for future years. In our central estimate, we find this enforcement mechanism would go into effect most years and save about $500 billion over a decade. Under our low-cost estimate, we assume growth would be successfully capped at 3.9 percent per year, resulting in $1.1 trillion of savings.⁹⁹ Our high-cost estimate does not credit any savings from this cap due to both a lack of specificity and questions over its viability.

Subtotal, Warren Cost Reduction

$6.1 trillion/$4.7 trillion/$2.0 trillion

Warren Direct Offsets

A significant portion of the cost of Medicare for All would be financed by diverting and adjusting funds currently used to pay for private health insurance. Specifically, Senator Warren’s plan would effectively eliminate all tax breaks associated with private health insurance and would require private and public employers to make contributions to Medicare for All that resemble their current premium payments to insurers. We estimate these proposals would likely generate between $13.1 trillion and $15.3 trillion over a decade, with a central estimate of $14.2 trillion.

Methodological note: Estimates are based on Simon Johnson, Betsey Stevenson, and Mark Zandi (Johnson, Stevenson, & Zandi) and Berwick & Johnson, provided by the campaign, with which we largely concur.¹⁰⁰

Medicare for All Revenue Feedback

$1.5 trillion

Because Americans would no longer pay premiums or face out-of-pocket costs, health-related tax breaks would become irrelevant. Income and payroll tax deductions for employee-paid premiums, Health Savings Accounts, and Flexible Spending Accounts would no longer reduce federal revenue; money previously used to pay for these items would be treated instead as taxable income. Income and payroll tax revenue raised from this change would generate about $1.5 trillion over a decade. Importantly, employer-paid premiums would be replaced with new contributions and would thus have little effect on taxable income.

Require Private Employer Medicare Contributions

$8.9 trillion/$9.7 trillion/$10.6 trillion

Though employers would no longer buy health insurance on behalf of their employees, Warren’s plan would assess an Employer Medicare Contribution on private-sector employers to ensure they continue contributing to health care financing. At first, these contributions would be set at 98 percent of average employer payments for health care over the past three years; over time, they would transition to a fixed per-employee cost that would grow with the cost of Medicare for All. Adjustments and exemptions would exist for small employers, part-time employees, merging firms, and firms that currently offer high-quality benefits. Ultimately, this contribution would serve as a “head tax,” or a fixed-dollar amount paid per employee. Though technically paid by employers, the tax – like current health insurance premiums – would ultimately be borne by employees in the form of reduced wages. This would raise $9.7 trillion, $8.9 trillion, and $10.6 trillion over a decade in our central, low-cost, and high-cost estimates, respectively.¹⁰¹

Require State & Local Government Medicare Contributions

$2.7 trillion/$3.0 trillion/$3.2 trillion

Currently, state and local governments generally compensate their employees with health benefits, just as private employers do. Under Warren’s plan, state and local governments would instead redirect these funds to the federal government. Functionally, this contribution would be very similar to the Employer Medicare Contribution, but Warren would administer this contribution like the Medicaid Maintenance of Effort requirement. This policy would raise about $3 trillion in revenue over a decade under our central estimate. It would raise $2.7 trillion under our low-cost estimate and $3.2 trillion under our high-cost estimate.¹⁰²

Subtotal, Warren Direct Offsets

$13.1 trillion/$14.2 trillion/$15.3 trillion

Warren Additional Offsets

In addition to the direct offsets for Medicare for All, Senator Warren proposes a number of tax increases and spending cuts to offset the remaining costs. Specifically, her plan would increase taxes on financial institutions, wealthy investors and asset owners, and corporations. She would also improve tax compliance, reform immigration laws, and reduce defense spending on conflicts abroad. We estimate these proposals would likely save between $4.75 trillion and $10.95 trillion over a decade, with a central estimate of $6.75 trillion.

Methodological note: In general, our low-cost estimates are based on the Johnson, Stevenson, & Zandi estimates provided by the campaign.¹⁰³ Our central and high-cost estimates come from a variety of credible sources and also reflect our own estimates – accounting as best we can for various interactions. Future estimates may change as Warren’s tax policies are modeled by other independent estimators.

Establish New Financial Taxes

$1.0 trillion

Warren proposes two new taxes on the financial sector. First, she would impose a 0.1 percent financial transactions tax on the sale of securities and any payments made under derivatives contracts in order to limit the influence and market distortion of high-frequency trading. Second, Warren would institute a fee on large financial institutions with assets greater than $50 billion in order to reduce risks associated with “too big to fail” banks. These policies would raise about $900 billion and $100 billion over a decade, respectively, or $1 trillion total.¹⁰⁴

Reduce the Tax Gap

$2.4 trillion/$300 billion/$100 billion

More than 15 percent of owed taxes are never collected due to under-reporting of income, over-reporting of tax-preferred activity, underpayment of taxes, or nonfiling. Warren would aggressively boost enforcement of tax laws in order to reduce this tax gap. Specifically, she would increase funding for the Internal Revenue Service (IRS) for enforcement and auditing activities, require greater withholding and reporting from third parties, match foreign tax compliance reports to tax returns, simplify filing, redirect enforcement resources from lower earners to higher earners, give the IRS the resources it needs to audit nonfilers, strengthen international income reporting requirements, enforce cash income compliance with currency transaction reports, strengthen virtual- and crypto-currency reporting, and allow whistleblower protections for employees who disclose tax evasion. While there is not enough detail for us to estimate all of these policies, we assume they would generate $300 billion in revenue over a decade in our central estimate – which is the most we think could credibly be scored from measures to reduce the tax gap without fundamentally restructuring the tax system.¹⁰⁵ In our high-cost estimate, we assume savings of $100 billion – in line with what could be assumed from available scores alone.¹⁰⁶ Our low-cost estimate of $2.4 trillion reflects the campaign’s stated goal of a one-third reduction in the tax gap, as estimated by Johnson, Stevenson, & Zandi. In our view, there is little basis to support this $2.4 trillion estimate – though Natasha Sarin and Larry Summers recently put forward a proposal that they estimated could raise roughly $1 trillion over a decade.¹⁰⁷

Repeal Accelerated Depreciation

$1.3 trillion

Under a proper income tax, companies would deduct the cost of investments over the course of their useful life (i.e. if a computer lasts for five years, a company would deduct one-fifth of its cost each year for five years) through a process known as depreciation.¹⁰⁸ The current tax code allows most investments to be deducted faster through a process called accelerated depreciation. This provides a significant tax benefit to corporations and other businesses, allowing them to accelerate tax savings associated with investment and thus reducing the present value of taxes paid. Warren would instead move to economic depreciation, adopting a reform to pool and depreciate assets put forward by former Senate Finance Committee Chairman Max Baucus (D-MT) in 2013.¹⁰⁹ Assuming all parts of the 2017 Tax Cuts and Jobs Act are first repealed, this proposal would raise about $1.3 trillion over a decade (relative to current law, it would likely raise about half of that). Importantly, much of this revenue represents a one-time shift in tax payments – in a steady state, this proposal would raise $850 billion to $950 billion over a decade.¹¹⁰

Enact a 35% Global Minimum Tax

$1.7 trillion/$1.3 trillion/$800 billion

Under current law, American multinational corporations generally pay taxes only in the country where they earn that money – though a variety of base erosion provisions create an effective minimum tax of 10 percent to 13 percent of global income (compared to the 21 percent domestic corporate rate). Warren would establish a country-by-country minimum tax of 35 percent. This would be on top of her proposal to reinstate the 35 percent corporate tax rate for U.S. corporations (up from 21 percent under current law).¹¹¹ Under this tax, if a company paid a 25 percent tax to a specific foreign country, they would pay an additional 10 percent to the U.S. government. Warren would also impose an additional tax on foreign companies that sell a fraction of their goods in the U.S. Under our central estimate, these proposals would raise $1.3 trillion over a decade – the average of our low- and high-cost estimates. Our low-cost estimate of $1.7 trillion is based on figures provided by the campaign from economists Emmanuel Saez and Gabriel Zucman (Saez & Zucman).¹¹² Our high-cost estimate of $800 billion is derived from Tax Policy Center’s estimates of a similar proposal put forward by the Economic Policy Institute.¹¹³

Increase Taxes on Wealth & Accrued Capital Gains

$3.2 trillion/$1.5 trillion/$1.0 trillion

Currently, capital gains and dividends are taxed at a preferential rate and only when gains are realized. For the top 1 percent of households, Warren would tax dividends and capital gains as ordinary income – increasing the top rate from 20 percent to 39.6 percent¹¹⁴ – and on a “mark-to-market” basis where increases in asset value are taxed annually even if gains are not realized.¹¹⁵ Additionally, Warren would impose an annual 3 percent wealth surtax on household assets over $1 billion. This would be on top of her previously proposed tax of 2 percent on wealth above $50 million and 3 percent above $1 billion, bringing the total top wealth tax rate to 6 percent. Combined with the mark-to-market system, most wealth above $1 billion would be taxed at an effective rate of between 7 and 10 percent per year.¹¹⁶ Under our central estimate, these proposals would raise about $1.5 trillion over a decade.¹¹⁷ Under our low-cost estimate, based on Johnson, Stevenson, & Zandi as well as Saez & Zucman, they would raise $3.2 trillion. Under our high-cost estimate, they would raise $1 trillion. The primary reason our central estimate is so much lower than the low-cost estimate is related to interactions between the wealth surtax, the initial wealth tax, mark-to-market taxation, and other taxes on capital income. In combination, these taxes would lead to high rates of avoidance while also eroding the wealth base they are taxing – leading to reduced revenue over time.¹¹⁸

Modify Taxation of Acquisitions & Mergers

$150 billion

Warren has said she would pay for her rural agenda, including her rural health investments, “by changing the tax laws that encourage companies to merge and reduce competition.”¹¹⁹ Through conversations with the campaign, we understand this would involve a package of recommendations that include repealing tax-free all-stock mergers, limiting the deductibility of interest on debt used for corporate reorganizations, making it more difficult for firms to spin off and re-merge for tax purposes, and taxing monopoly profits from industry consolidation.¹²⁰ Although we are unable to score these specific provisions or determine how they might interact with other proposals, we believe they could be scaled to raise sufficient revenue to cover the health portion of Warren’s rural plan and thus assume $150 billion of revenue over a decade.

Enact Comprehensive Immigration Reform

$400 billion

As an additional offset for Medicare for All, Warren has proposed passing comprehensive immigration reform in a manner similar to the 2013 Senate-passed immigration bill. This includes providing a pathway to citizenship for many undocumented immigrants and expanding legal immigration as a whole. Doing so would increase the number of taxpayers and thus tax revenue collected. Johnson, Stevenson, & Zandi estimate this proposal would save about $400 billion over a decade on net; we find this estimate credible and assume it in our estimates.

End Spending on Overseas Contingency Operations

$800 billion/$800 billion/$0

Warren would reduce military spending by ending all funding designated as Overseas Contingency Operations, which is mostly used to fund ongoing military operations in Afghanistan and Iraq. Warren would instead fund any necessary overseas military operations within the context of the base defense budget. We estimate this would save about $800 billion over a decade, which is similar to estimates from Johnson, Stevenson, & Zandi. Due to lack of specificity over how defense savings would be generated, we assume no savings in our high-cost estimate.

Subtotal, Warren Additional Offsets

$10.95 trillion/$6.75 trillion/$4.75 trillion

Net Fiscal Impact, Warren Health Plan

$1.2 trillion/-$6.1 trillion/-$11.2 trillion

Conclusion

Each of the four candidates we analyze here takes a different approach to health care reform, and their spending and financing choices would have significant implications for our fiscal future. Health care reform – depending on its exact details – could greatly improve or worsen the federal government’s unsustainable debt situation. It is important for the public to understand the fiscal implications of the proposals each candidate puts forward and to weigh those implications against other important factors.

 

 

---

Endnotes