Warren Won’t Soak the Middle Class After All
Her Medicare for All plan avoids raising its taxes. But that shouldn’t overshadow how costly and potentially disruptive her plan is.
Updated on November 1 at 1:58 p.m. ET
Senator Elizabeth Warren is giving the middle class a surprising reprieve.
For the past few months, it seemed like the Massachusetts Democrat was slowly preparing the nation for a fiscal truth bomb: If progressive voters wanted a universal, Medicare for All health-care system, middle-class voters would have to fork over more in taxes.
That was virtually the only conclusion to draw from Warren’s steadfast refusal to vow not to hike taxes on the middle class. As my colleagues and I have documented, Warren has dodged this crucial policy question over and over again. In each Democratic debate, she has pivoted to the safer territory of costs, pledging that regardless of their tax bill, middle-class Americans would pay less overall under a government-run insurance program.
The prevailing assumption was that Warren would finally break an unspoken but durable taboo for top-tier Democratic presidential candidates, who for decades have pledged to shield middle-income voters from the tax increases they invariably try to levy on the rich.
That assumption, it turns out, was wrong. This morning, Warren released her plan detailing how she’d pay for Medicare for All. The proposal is lengthy—a 37-minute read, according to the estimate on her campaign’s Medium page. But the upshot is that Warren is proposing to put the bulk of the burden for the $20.5 trillion estimated cost of Medicare for All on businesses and the wealthy. Middle-class families would not see their taxes go up “one penny,” she says. Warren has already proposed a 2 percent wealth tax on assets above $50 million, but the money she’d raise from that is going entirely toward new education spending.
To pay for Medicare for All, Warren would impose an additional 6 percent tax on assets above $1 billion, plus she’d add a tax on financial transactions and raise capital-gains taxes for investors. About half of the money needed would come from a tax on employers: Under Warren’s plan, businesses would pay the government roughly the same amount they now pay for private insurance for their employees. To assuage concerns from unions, she’d offer a reduction to companies that agree to pass along savings to workers through collectively bargained agreements. Warren would achieve additional savings through cuts to military spending and revenue generated by comprehensive immigration reform.
In releasing such a detailed plan, Warren solves a couple of problems for herself. Her Democratic rivals can no longer criticize her for dodging the tax question, and as she looks ahead to a possible general election, she is denying Republicans an easy attack line by vowing not to soak the middle class.
But the fiscal assumptions in Warren’s plan may prove to be a target for Democrats and Republicans alike. The $20.5 trillion estimated cost is an eye-popping number, but it’s far less than the $32 trillion that think tanks pegged to Senator Bernie Sanders’s Medicare for All plan, which Warren had previously backed. That’s $11.5 trillion in fewer taxes she’d have to raise or spending she’d have to cut, and it immediately drew scrutiny from her fellow Democratic candidates.
“Voters are sick and tired of politicians promising them things that they know they can’t deliver,” Senator Michael Bennet of Colorado said in a statement. “Warren’s new numbers are simply not believable, and have been contradicted by experts.”
Former Vice President Joe Biden’s campaign argued that Warren’s plan to tax employers would amount to a tax on their middle-class employees. “The mathematical gymnastics in this plan are all geared towards hiding a simple truth from voters: It's impossible to pay for Medicare for All without middle class tax increases,” deputy campaign manager Kate Bedingfield said in a statement. “To accomplish this sleight of hand, her proposal dramatically understates its cost, overstates its savings, inflates the revenue, and pretends that an employer payroll tax increase is something else.”
And while Warren may be shielding middle-class voters from an income tax hike, she is sticking with a plan that, if enacted, would force them to give up their private insurance in the years to come—a clear contrast with other Democrats who have said that a government plan would be optional. In outlining her plan, Warren countered that instead of protecting the choice of insurance, she’d protect the choice of doctors that too many private plans currently restrict. “Every candidate who opposes my long-term goal of Medicare for All,” she wrote, “should explain why the ‘choice’ of private insurance plans is more important than being able to choose the doctor that’s best for you without worrying about whether they are in-network or not.” Warren said that in the next several weeks, she’d release a follow-up proposal that details how she plans to transition the nation to a fully public insurance system over a period of years.
Warren is a front-runner now, and she’s acting the part. An insurgent candidate might be able to get away with eliding the details, and even Sanders hasn’t fully outlined how he’d pay for his Medicare for All plan, although he’s acknowledged that taxes on the middle class would go up. Similarly, a long-shot Democrat might be willing to gamble with a proposal that requires financial sacrifice from more than merely the rich. As a plausible nominee, Warren is playing it safe in that regard.
A reprieve for the middle class, however, shouldn’t overshadow how costly and potentially disruptive her health-care plan is. Warren may have neutralized a pair of emerging critiques from her rivals for now, but her full and ever more detailed embrace of Medicare for All remains an ambitious yet risky political bet.