CRFB.org Types of Medicare Expansion Medicare Buy-In/Eligibility - - PowerPoint PPT Presentation

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CRFB.org

Types of Medicare Expansion

• Medicare Buy-In/Eligibility Change
• A Public Option (Medicare for Some)
• Medicare for All (Comprehensive Single-Payer)

CRFB.org

How Much Would Medicare for All Cost?

• Eliminating premiums and out-of-pocket costs would transfer significant new costs to the federal

government

• Expanding coverage to more people and for more services would further increase costs
• Lower provider payments, drug prices, and administrative costs would partially offset increase

Depends on what you mean by “cost”

Medicare for All would increase federal costs dramatically

• Expanding coverage and reducing cost sharing would increase utilization and thus cost of care
• Paying less for medical providers, prescription drugs, and administrative spending would reduce

costs

Medicare for All could increase or reduce national health expenditures The effect on federal costs and national health expenditures are BOTH important

• Higher NHE means a larger share of the economy’s resources going to health care
• Higher federal costs requires great levels of taxes, spending cuts, or borrowing – different

financing choices have different economic, distributional, and policy consequences

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Medicare for All Would Cost About $30 Trillion

Trillions of Dollars Over Ten Years (Windows Vary)

$14T $25T $28T $32T $34T $36T $29T $27T $0 $10 $20 $30 $40

PERI Thorpe Blahous (Low) Blahous (High) Urban Institute (2019) Center for Health & Economy Sanders (CRFB) Warren (CRFB)

Sources: PERI, Kenneth Thorpe, Charles Blahous, Urban Institute, and Center for Health and

• Economy. Note: ten-year costs are estimated on different budget windows, some include revenue

feedback while others do not, and some include long-term care while others do not.

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Many Options for Financing Medicare for All

Source: Committee for a Responsible Federal Budget.

• A 32 percent payroll tax on all wages;
• A 25 percent income surtax on income above $24,800;
• A 42 percent value added tax (VAT);
• A mandatory public premium of $7,500 per capita or $12,000 per

individual without public insurance;

• More than doubling all individual and corporate tax rates;
• An 80 percent reduction in non-health federal spending;
• A 105 percent of GDP increase in the national debt; OR
• Impossibly high taxes on high earners, corporations, and the financial

sector

Generating $30 trillion would require the equivalent of:

Policymakers would likely consider a combination of approaches

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Options Have Different Distributional Implications

Source: CRFB calculations based on Urban Institute methodology. Note: analysis is preliminary.

Nominal Dollars

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Bottom 2nd Middle 4th Top Medicare for All Benefits Impose Public Premium Impose New Payroll Tax Impose VAT Impose Income Surtax Double Income Tax Rates

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Options Have Different Economic Implications

• 7.3%

$6,500 per person

• 5.9%

$5,300 per person

• 2.3%

$2,100 per person

• 12.2%

17 million FTEs

• 9.9%

14 million FTEs

• 7%

10 million FTEs

• 14%
• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% Financed with Payroll Tax Financed with Deficit Financed with Premiums GDP Hours Worked GDP Hours Worked

Percent Change in 2030 Source: CRFB calculations based on Penn Wharton Budget Model and CBO data.

GDP Hours Worked

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Options Have Different Tax Capacity Implications

Source: CRFB estimates. Note: includes interaction effects. *Revenue-maximizing rates have been estimated at 63 percent by Trabrandt and Uhlig and 73 percent by Diamond and Saez.

Top Marginal Tax Rate Income Taxes Income Taxes Income Taxes Income Taxes Payroll Taxes Payroll Taxes Payroll Taxes Payroll Taxes State/Local Taxes State/Local Taxes State/Local Taxes State/Local Taxes

0% 20% 40% 60% 80% 100% Current Law 32% Payroll Tax 25% Income Surtax Double Income Tax Rates Tax High Earners Only

IMPOSSIBLE

48.1% 68.8% 72.7% 84.6%

Estimated Revenue- Maximizing Rates*

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$25.65 $31.75 $17.65 $30.6 $3.3 $2.85 $1.45 $2.25 $0 $5 $10 $15 $20 $25 $30 $35 Warren Sanders Buttigieg Biden

Gross Cost Cost Reduction Direct Offsets Additional Offsets

2020 Candidates All Propose Different Pay-Fors

$3.3 $2.85 $1.45 $2.25 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5

Buttigieg Biden Biden Buttigieg Sanders Warren Trillions of Dollars in New Spending and Offsets, Central Estimate, 2021-2030 Biden Buttigieg

Source: Committee for a Responsible Federal Budget.

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What Else Could You Do With The Money?

• Things you could do with $800 billion:
• Free Public College & Universal Pre-K
• Double the Earned Income Tax Credit
• Paid Family Leave & Debt-Free College
• Double the NIH Research Budget & Fund the Highway Trust Fund
• More Than Double SNAP Spending
• Things you could do with $30 trillion:
• Triple All Social Security Spending
• Quintuple Defense Spending
• Launch the Apollo Program 200 Times
• Abolish the Individual & Corporate Income Tax
• Enact a Universal Basic Income of $1,000 per month