TheEconomistNovember 9th 2019 291T
o her credit, Elizabeth Warren is the
kind of politician who likes to show her
maths. The Massachusetts senator has
climbed near the summit of the Democrat-
ic presidential primary carrying amply
footnoted and thoroughly costed plans on
matters both prominent and obscure. She
has plans for a wealth tax on the rich, for
universal child care and cancelling student
debt, yes, but also plans to promote compe-
tition among farmers, improve the funding
of Native American reservations and re-
lieve Puerto Rico’s debt. Yet on health care,
perhaps the most consequential policy
area, Ms Warren was hazy for months.
The senator had yoked herself to Medi-
care for All—a single-payer system free at
the point of service proposed by her com-
petitor, Bernie Sanders. Unlike Mr Sanders,
though, she dodged questions on whether
taxes on the middle class would rise to pay
the $3.4trn in added annual costs. On No-
vember 1st she released a detailed financ-
ing plan “without increasing middle-class
taxes one penny.” Other candidates, she de-
clared, should put forward similarly de-
tailed plans or “concede that they think it’s
more important to protect the eye-popping
profits of private insurers and drug compa-
nies and the immense fortunes of the top
1% and giant corporations.”
The details explain both the initial reti-
cence and the subsequent defensiveness.
The underlying sums strain credulity, re-
quiring heroic assumptions on cost reduc-
tions and budgetary gymnastics on rev-
enue-raising. This mars Ms Warren’s
wonkish reputation. It may placate voters
for the primary, but would surely damage
her in a general election against President
Donald Trump, if she gets that far.
Start with the spending. Over the next
ten years Americans are expected to spend
$52trn on health care. Under a generous
single-payer system, spending would in-
crease by $7trn, according to a recent study
by the Urban Institute, a left-leaning think-
tank, which serves as the starting point of
the campaign’s calculations. Through a
number of steps, Ms Warren whittles this
difference down to zero. She argues that
national health spending would remainconstant, even though more people would
be covered (eg, the 28m citizens and un-
documented migrants without insurance)
and the use of medical services would in-
crease were they free.
Among her modifications of the Urban
Institute’s numbers are lower administra-
tive costs (2.3% of overall spending, com-
pared with Urban’s 6%). Ms Warren’s plan
assumes a slower rate of growth in health
costs (3.9% versus Urban’s 4.5%) and less
generous payments to hospitals for ser-
vices (110% of current Medicare reimburse-
ment rates versus Urban’s 115%). Added to
this are targets for reducing spending on
drugs—by 30% on generics and 70% on
branded medicines—enforced by the
threat of large excise taxes, the possibility
of overriding patents and the option of hav-
ing the government produce drugs itself.
Given the resistance to such a plan from
doctors, insurers, drug companies and
hospitals, this would be hard to pull off.
Even with these steps, and the redirec-
tion of all existing public spending on
health care, Ms Warren has a $20.5trn bud-
getary hole. Filling it is made harder by her
insistence that taxes on the middle class
will not increase. Currently employers
shoulder a significant portion of health-
care costs. Under Ms Warren’s plan, the
same cheques would be redirected to the
federal government. In practice this would
be a tax on employment, which seems like-
ly to hurt middle-class Americans. It would
also increase the relative cost of hiring low-The policy primary
Warrencare
WASHINGTON, DC
The release of the senator’s Medicare for All plan marks a point of no return
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