Editor’s Note: Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. The opinions expressed in this commentary are those of the author; view more opinion articles on CNN.
The American political debate over health care is absurd. Americans pay twice as much as any other nation for health care, and then are told daily that they “can’t afford” to switch to a lower-cost system very similar to those of Canada and Europe. If President Donald Trump and the plutocratic Republican party were the only ones carrying this ridiculous message, it would be understandable. Yet this message is also coming from media pundits aligned with the Democratic Party and the most conservative wing of the party.
Let’s be clear on the central point. Medicare for All, as first proposed by Bernie Sanders and endorsed by Elizabeth Warren, is affordable precisely because it is cheaper, much cheaper, than the current system.
America’s health care system relies on local monopolies (such as a health care provider centered at the sole major hospital in a city) and national monopolies, notably pharmaceutical companies holding exclusive patents.
In other countries, the government sets delivery prices and typically pays the health bills through the budget. In the US, the monopolists set the prices.
The sky-high revenues end up as huge corporate profits, wasteful administrative costs, useless and even harmful advertising and lavish salaries. Health care CEOs are making gargantuan salaries, many exceeding $10 million per year.
Who loses? Almost all Americans, whose insurance costs and out-of-pocket outlays inevitably lead to lower income because of unaffordable health care costs, untreated chronic illnesses, premature mortality and personal bankruptcies. Single-payer systems such as in Canada and Europe are cheaper, fairer and have better outcomes.
A recent international comparison of the performance of 11 national health systems on five main dimensions (care process, access, efficiency, equity and health care outcomes) ranked the US health system dead last.
Despite all of this, the US pundits profess to be alarmed about the prospect of Medicare for All. There has been a wave of op-eds and columns published (for example, here and here and here) declaring that Medicare for All would lead to massive tax increases, and that Sanders’ and Warren’s support for Medicare for All threatens to reelect Trump. It’s ridiculous.
Both Sanders and Warren poll well against Trump, ahead in the overall popular vote (though like all Democrats, facing headwinds of the Electoral College).
And at this stage of a national campaign, the goal should be to explain to voters the vast benefits of a single-payer system rather than to prejudge the politics based on self-fulfilling fearmongering.
Yes, one way or another, taxes would rise with Medicare for All, but private health outlays would go down by much more. Total health costs would fall.
That idea is not so hard to understand.
One influential pundit, economist Paul Krugman, has come around. In the 2016 election cycle, Krugman railed against Medicare for All. Yet after Warren laid out her proposal, Krugman supported Medicare for All. In truth, he was simply returning to the economically sound observations that he had long made before 2016.
The pundits seem to believe that Americans will rebel at “higher taxes.” Actually, Americans are much smarter than that. They know that their current private health care payments, whether insurance premiums or out-of-pocket, are nothing other than “taxes” they pay to stay alive. They’ll agree to pay higher taxes to the government if those new taxes eliminate larger private health care bills – again, there are “taxes” by any other name – that they now pay.
Some mainstream pundits are simply repeating what they hear from Democratic Party conservatives and centrists, the wing that has been dominant since Clinton’s election in 1992. They are following the lead of Nancy Pelosi, Pete Buttigieg and others who are trashing Medicare for All.
What in the world are these leading Democratic Party politicians doing in opposing the transition to a fairer, more efficient and lower cost health care system? I would suggest it’s not a lack of understanding. It’s the power of campaign financing. These Democrats are funded by the status quo. The health sector contributed $265 million to federal campaigns in 2018, of which 56% went to Democrats. The sector spends nearly $500 million per year on lobbying. Money talks. Meanwhile, Americans go bankrupt or die early.
There remains the issue of the best way to raise budget revenues for Medicare for All. The basic answer is to use progressive taxation to fund the program. In this way, the nation as a whole will pay much less for health care and the vast majority of households will as well. The highest income households will end up paying a bit more because their funds will not only finance their own health care but will help to pay the health care costs of the poorest households as well.
Sanders rightly proposed a menu of options to pay for Medicare for All, including payroll and income taxation. Warren has proposed one specific approach: progressive taxes on the super-rich and the corporate sector but also a surprisingly regressive “head tax” on companies. She took great pride in not charging a penny of new income or payroll taxes on middle class households. But the proposed head tax on companies would hit wages indirectly and regressively.
Still, both Sanders’ and Warrens’ approaches would result in a more equitable and less expensive system. For most households, overall health care costs will decline.
The most worrisome thing about Warren’s statement as she introduced her Medicare for All plan, is her emphasis on “not one penny” of new middle-class taxes. Here we go again. The Democrats have, for far too long, copied the Republican mantra about “no new taxes,” even as our public debt soars, our infrastructure and public services collapse and inequality reaches stratospheric dimensions.
To honor the silly stricture of “no new taxes” directly paid by middle-class households, Warren ended up endorsing a regressive head tax paid by the employer, which would end up hitting lower-wage workers even though its paid by their employers.
Let’s hope this blunder is a one-time stumble for Warren. Most importantly, both Sanders and Warren are pointing the correct way to reform America’s costly, unfair and inefficient health care system. And this is a goal that most Americans support.