Bernie Sanders Plans to Raise Taxes by A Lot!

I would like to see someone like the CBO crunch the numbers so there could be an informed debate. If  they show Bernie is in the ballpark he has a strong selling point to those who will listen.

If he isn't, it will show what needs to be amended to bring it there.

This isn't the CBO, but this is from a study done' by someone hired by Vermont to outline their proposal for single payer.  Again from Vox.com, "Study: Bernie Sanders's single-payer plan is almost twice as expensive as he says"

Sanders assumes $438 billion more per year in administrative savings than Thorpe; Thorpe assumes that total health spending will fall by 4.7 percent because single-payer is simpler to administer, while the campaign has anticipated a reduction of 16 percent (changed in a later email to 13 percent).
Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible. "In 2014 private health plans paid a TOTAL of 32 billion on prescription drugs and nationally we spent $305 billion," he writes in an email. "With their savings drug spending nationally would be negative." (Emphasis mine.) The Sanders camp revised the number down to $241 billion when I pointed this out.

Sanders assumes $216 billion more per year in savings because Thorpe thinks eliminating copayments and deductibles will lead to people using a lot more health care (10 percent more, to be exact), and Sanders's camp is more skeptical (they assume 6 percent more).

Sanders assumes 60 billion per year in savings relative to Thorpe because, they argue, he includes elective procedures like plastic surgery, which single-payer wouldn't cover. Thorpe disputes this: "Cosmetic surgery, really? That's 2 billion a year and in the second decimal of rounding." In other words: There's no way excluding plastic surgery can give you 60 billion of savings.

Sanders assumes that states will pay $100 billion more per year in Medicaid and SCHIP spending than Thorpe does, because they think states will keep paying in the exact same amount they currently pay into those programs. Thorpe is skeptical, noting that in the Supreme Court's 2012 Obamacare ruling, it "said in essence you cannot force states to make spending on a expansion of Medicaid —how is the world can you expect states to contribute toward the costs of programs that are eliminated?"

Color me unsurprised that a election year proposal is much more expensive than meets the eye.  

If we underestimate the cost of the proposal, what are the effects on the taxes?

Thorpe, similarly, estimates that you'd need a 14.3 percent payroll tax on employers for a national single-payer plan, and a 5.7 percent income-based premium, for a combined 20 percent tax — about what Vermont estimated.

That's much higher than Sanders's campaign is suggesting; they want a 6.2 percent payroll tax and a 2.2 percent income-based premium, along with a large number of other tax increases on the wealthy.

Gunnels disputes the 20 percent tax increase figure in fiery terms. "That is absolutely absurd, it's absurd, it's outrageous," he said in a phone call. "It's coming from a gentleman that worked for Blue Cross Blue Shield. It's exactly what you would expect somebody who worked for BCBS to come up with. It's not even worthy of any type of serious reporting, because it would not happen."

Side note: It's true, Thorpe did once do a consulting assignment for BCBS, conducting "a study a decade or so ago looking at the racial and income characteristics of who enrolls in Medicare + Choice [now called Medicare Advantage] plans," per his recollection. But he's an academic who's broadly respected across the spectrum, and who's been sympathetic to single-payer in the past. The Sanders campaign's characterization here seems unfair, even ad hominem.

Like every government redistribution scheme, there will be winners and losers. Of course, we are always told that these things will be paid off by greedy capitalists, and lazy trust fund kids, but will benefit the vast middle and poor.  What does the study say?

There would be substantial distributional impacts (large number of households and businesses that pay substantially more and less) of any plan that has to raise a total of 20 percent of total compensation relative to current law," Thorpe writes.

He's not kidding. Thorpe estimates, taking into account taxes he thinks that plan needs to finance itself, that many groups would pay more:

71 percent of total working households with private insurance would pay more.

57 percent of households of workers in businesses with fewer than 50 employees would pay more.

65 percent of working young adult (18 to 26) households would pay more.

85 percent of working households on Medicaid would pay more.

66 percent of working households on Medicare (a minority of Medicare recipients, most of whom are retired) would pay more.

That is to say, those shares of those groups would pay more when you take into account both the taxes and the fact that they wouldn't have to pay for health expenditures like premiums, deductibles, copays, etc. anymore. In each case, though, a substantial minority, including many with large health bills and/or hugely private expensive health care plans, comes out ahead.

The Sanders campaign disputes these numbers, as they're based on the tax numbers Thorpe derived, which Sanders's staff thinks are much too high. So Thorpe also analyzes the impact assuming the 6.2 percent and 2.2 percent taxes included in Sanders's official plan, noting that they would leave the program underfunded.

He concludes, just as UMass Amherst economist Gerald Friedman did in his analysis of Sanders's plan, that most households would benefit. Only 27 percent of total working households with private insurance would pay more according to Thorpe, with 72 percent paying less; young adult workers, workers in small businesses, and workers on Medicare would gain too.

The big exception is Medicaid. Thorpe finds that 72 percent of Medicaid workers would pay more under single-payer even under Sanders's lower tax rates. Medicaid currently has very limited cost sharing for families in poverty, mostly limited to prescription drug copays, and so single-payer would offer such families little in the way of health savings while making them pay an additional 6.2 percent in payroll taxes, even if most don't have taxable income that'd be hit by the 2.2 percent income-based premium.

Again, this ignores the unintended consequences of the plan.  These are the intended or at least easily predicted consequences. 

It's rather simple, really. If the multitude of hospital personnel, doctors' staffs, and insurance companies whose sole task it is to process premiums and claims  don't need to do the processing, millions of dollars are saved.

Here's Friedman:

https://www.youtube.com/watch?feature=youtu.be&v=oTvPRF6XaHE&app=desktop

Wow.  So paperwork is going to be eliminated?  You just show up at the doctor and he patches you up?  Whatever you need, no questions asked?  It'll be just like getting a mortgage was a few years ago!

It'll be simple, like paying your taxes!  Sanders FTW!

terp said:

Wow.  So paperwork is going to be eliminated?  You just show up at the doctor and he patches you up?  Whatever you need, no questions asked?  It'll be just like getting a mortgage was a few years ago!

It'll be simple, like paying your taxes!  Sanders FTW!

No. Paperwork is handled by the government. Only overhead is the government's. That's where the taxes go. Cost of government is lower than all these others, insurance companies and doctors offices duplicating, triplicating and quadruplicating effort and paper. It's not low, but lower than multiple corporations.

Would you provide other examples where the government services provided more value at cheaper prices than private options?  I'm sure there must be tons of examples.  I must be suffering a terrible brain fart. 

Public schools. Not perfect, but could be if resources were centered there.

Roads, bridges, highways. Not perfect, but would be if resources were centered there.

Lots of private agencies and schools have government subsidies.

Medicare.

terp said:

Wow.  So paperwork is going to be eliminated?  You just show up at the doctor and he patches you up?  Whatever you need, no questions asked?  It'll be just like getting a mortgage was a few years ago!

It'll be simple, like paying your taxes!  Sanders FTW!

This is how it works in Hong Kong.   You have an ID card, you have the nominal $5 fee.   See doc, get meds, out the door. 

springgreen2 said:

Lots of private agencies and schools have government subsidies.

Medicare.

Our Government. Not perfect, but would be better if more resources were centered there.

Everything I listed is expensive. Once it's in the private sector, it's unregulated, and private interests are involved, and make it more expensive.

social security

terp said:

Would you provide other examples where the government services provided more value at cheaper prices than private options?  I'm sure there must be tons of examples.  I must be suffering a terrible brain fart. 

Maybe Canada, UK, Germany, Singapore?  Or maybe Hong Kong as Dave suggested?  Likely for half the cost with better outcomes.

I keep hearing how ACA is bad - from the right.  But it should be Democrats who should be calling for change.  There is no solution from the Right that doesn't take us further into a mess.

Here is what drives our costs...

http://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp

I cannot foresee any combination of payroll tax and health care tax that could possibly cost any more than my current employer contribution, my insurance premium, and the out of pocket and deductibles.  My salary in my first job 25 years ago was roughly equal to all of my current health care costs.

Its a given that taxes will have to be raised a lot if Sanders succeeds in his plans.

Its estimated the cost of Sanders health care reform plan alone will be 2.5 trillion a year, 25 trillion over 10 years assuming health care costs don't rise. That cost will primarily be carried by the well-employed, who will have to carry the under-employed, the low earners and the unemployed. So, if you're "well-employed" will that cost be greater than your current healthcare "contributions?"

http://www.vox.com/2016/1/28/10858644/bernie-sanders-kenneth-thorpe-single-payer

And we're not counting other cost such as free college.

Just learned a new phrase "well-employed" Problem is that I do not know what it means.

I had a surgery recently and the costs between the "insurance negotiated costs" and the hospital charges are staggering. Maybe that's a place to start!

TarheelsInNj said:

I had a surgery recently and the costs between the "insurance negotiated costs" and the hospital charges are staggering. Maybe that's a place to start!

That's one reason Obamacare is helpful.

My friend, the insurance actuary told me that in her insurance company, 96% of approved claims are not paid because the deductibles are not met. This is excepting claims where deductibles do not apply, such as a wellness visit. 

Some get upset, seeing how they pay monthly, the government often pays monthly and they feel they get diddly when a real medical issue manifests. That's their problem. Maybe they should learn to read and understand what a deductible is.

Obamacare does help though. The claim is not paid by the insurer, but the individual. The help is that the amount charged and to be paid is the much lower negotiated rate.

terp said:

Wow.  So paperwork is going to be eliminated?  You just show up at the doctor and he patches you up?  Whatever you need, no questions asked?  It'll be just like getting a mortgage was a few years ago!

It'll be simple, like paying your taxes!  Sanders FTW!

Have you seen the movie Sicko? I recommend it.

terp said:

Would you provide other examples where the government services provided more value at cheaper prices than private options?  I'm sure there must be tons of examples.  I must be suffering a terrible brain fart. 

1. Medicare.

2. State owned utilities.

It isn't being talked about that much, but I think for single payer to work (and I am for single payer), malpractice insurance and claims will need to be capped. That's a major change.

Also people will wait. If you have breast cancer, the cancer is removed immediately but reconstruction may wait. Another major change.

Med school will not cost as much, and students will not have to be brilliant, just very smart. (This is a guess.) Another change.

students will not have to be brilliant, just very smart.

Curious why, lisat?

And why assume that med students are brilliant?

lisat, we spend more per person on medical care than other countries. Suppose we went to single payer but kept the spending level where it is. We could have shorter waits than they do. Single payer doesn't necessarily mean waits. It is a function of spending, not number of payers.

Tom_Reingold said:

lisat, we spend more per person on medical care than other countries. Suppose we went to single payer but kept the spending level where it is. We could have shorter waits than they do. Single payer doesn't necessarily mean waits. It is a function of spending, not number of payers.

'Waits" are also a function of not enough MDs. Statistics show we lack them and the future doesn't indicate that will change.

krugle1 said:

students will not have to be brilliant, just very smart.

Curious why, lisat?

Under a single payer system, (just my opinion) the number of doctors able to make $500K+ per year will decrease. When it does, students who are motivated to be in fields making top dollar will move to other fields. Students becoming doctors will be smart but they won't be the top 2% of their classes. 

wedjet said:

And why assume that med students are brilliant?

You may be right that med students aren't brilliant. I use the terms loosely when someone is much smarter than I am in certain subjects. Plus I always hope they're brilliant since they have life/death responsibility.

BCC said:

Tom_Reingold said:

lisat, we spend more per person on medical care than other countries. Suppose we went to single payer but kept the spending level where it is. We could have shorter waits than they do. Single payer doesn't necessarily mean waits. It is a function of spending, not number of payers.

'Waits" are also a function of not enough MDs. Statistics show we lack them and the future doesn't indicate that will change.

I thought we were top heavy with too many specialists and not enough GPs. Under a single payer system, I think students could be encouraged to become GPs if med school costs are picked up in part or entirely by the government, and if they can be assigned where needed.

Today Trump was talking about removing state line restrictions, and allowing any health insurance company to offer plans anywhere in the U.S. It sounded good on the surface, but then I wonder what companies would offer plans in Flint, for instance?

I'm pretty sure the reason a plan in Mississippi may cost less than a health insurance plan in NY or NJ is that it only covers people in Mississippi.  If it covers people in NY or NJ, we might get a bit of a break on premiums, but I have to think the folks in Mississippi would end up paying a lot more to subsidize us.  The GOP insistence on allowing cross-state policies seems to assume that cost of living is the same everywhere in the U.S.

ml1 said:

I'm pretty sure the reason a plan in Mississippi may cost less than a health insurance plan in NY or NJ is that it only covers people in Mississippi.  If it covers people in NY or NJ, we might get a bit of a break on premiums, but I have to think the folks in Mississippi would end up paying a lot more to subsidize us.  The GOP insistence on allowing cross-state policies seems to assume that cost of living is the same everywhere in the U.S.

In the past, my health insurance brokers always said the plans in New Jersey were more expensive because NJ had better protections for the consumer. If state lines are removed, how would that work? Or has Obamacare leveled the playing field in terms of all consumer protections.