Warren Left $30 Trillion Short of Paying for Her Health Plan

Laura Davison and Misyrlena Egkolfopoulou
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Warren Left $30 Trillion Short of Paying for Her Health Plan

(Bloomberg) -- Elizabeth Warren took a lot of flak at this week’s Democratic presidential debate for being evasive about the taxes needed to pay for the $30 trillion Medicare for All plan she champions. There’s a reason for being vague: Her team hasn’t yet figured out how to pay for it.

“Her taxes as they currently exist are not enough yet to cover fully replacing health insurance,” University of California, Berkeley economics professor Emmanuel Saez, who advised the Warren campaign when developing the wealth tax, told Bloomberg News on Wednesday.

Warren -- who campaigns on the theme that she has a plan for everything -- is relying on the wealthy and big corporations to pay for her vision of restructuring American society, including funding student debt, free college, universal childcare, green energy and affordable housing plans.

She has promised to fully cover those costs with her big ideas -- a wealth tax, corporate surtax, an increase in the estate tax and the elimination of President Donald Trump’s tax cuts.

But she has made the strategic decision to adopt Bernie Sanders’ government-run health care plan rather than develop one of her own. Sanders acknowledged in Tuesday’s debate that “taxes will go up,” but neither of them have detailed how much or who those taxes would hit, prompting the toughest criticism she has faced from her Democratic primary rivals, including Joe Biden, with whom she is tied for the lead in most polls.

The Warren campaign said they are continuing to review revenue options to fund Medicare for All and would support pay-fors that prioritize reducing costs for the middle class.

Warren has made it a hallmark of her campaign to demonstrate how she’d pay for her dozens of policy proposals. Her 2% wealth tax on America’s richest would be one of the biggest sources of revenue, bringing in about $2.75 trillion over a decade.

That would finance some of her most ambitious plans: $1.07 trillion for universal childcare, $610 billion for free college, $640 billion for eliminating student debt, and among others, $100 billion to combat the opioid crisis. All told, Warren’s wealth tax would pay for her plans with some room -- $303 billion -- to spare.

That’s true for the rest of her plans. In total, she’s proposed an agenda that she estimates would cost nearly $6 trillion, according to her campaign. She’s offset those costs with more than $7.3 trillion in tax increases, according to Warren’s estimates and projections from the non-partisan congressional Joint Committee on Taxation.

“She is offering a Medicare for All plan and not offering even close to enough to pay for it,” said Kyle Pomerleau, the chief economist at the conservative Tax Foundation. “One place she hasn’t gone yet is raising the existing individual income tax for top earners.”

However, he added, even that would only garner a fraction of what she’d need to fully fund a health care plan.

Warren has been reluctant to make Sanders’ point about taxes going up. Instead, she argues that overall costs for middle class families will go down, but big corporations and the wealthy will pay more. When asked to answer “yes or no” during Tuesday’s debate whether taxes would go up, Warren again focused on the overall costs.

“Costs will go up for the wealthy, they will go up for big corporations and for middle-class families, they will go down,” Warren said on stage in Ohio Tuesday. “I will not sign a bill into law that does not lower costs for middle-class families.”

She added later, “We know that they are a lot of different cost estimates for Medicare for All and they vary by trillions and trillions of dollars. We know there a lot of different revenue streams.”

Even a conservative economist agreed with her costs argument.

“I think the statement of costs going down is quite likely be true, said Alan Viard, a resident scholar at the right-leaning American Enterprise Institute. “But it would nevertheless be true that most people would be paying more in taxes.”

Warren argues her taxes correct a system in which the wealthy and corporations weren’t paying their fair share. Even with what remains after raising those taxes, there wouldn’t be enough revenue from top earners and corporations to fund the estimated $30 trillion 10-year cost for Medicare for All. She’d have to find more revenue streams and that would have to include increasing taxes on the middle class, according to public finance experts across the political spectrum.

Saez said that eliminating health care premiums for individuals who are covered through their employers could be transformed into higher wages that would more than cover any tax increase. “It’s true that we might have to pay an extra tax but it can be structured in a way that we gain in extra wages, bigger than whatever extra tax will be there,” he said.

Warren rivals Pete Buttigieg, Amy Klobuchar and Biden chided her Tuesday for not being straightforward about funding health care.

“I don’t want to pick on Elizabeth Warren but this is ridiculous, absolutely ridiculous,” Biden told reporters in Ohio on Wednesday. “It’s fascinating that the person who has a plan for everything has no plan for the single most consequential issue in this election in the minds of the American people across the board. And you know, credibility matters.”

--With assistance from Jennifer Epstein.

To contact the reporters on this story: Laura Davison in Washington at ldavison4@bloomberg.net;Misyrlena Egkolfopoulou in Washington at megkolfopoul@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, John Harney

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