Warren came out with another plan today. This time it was about Medicare for All, and brought to us via this Medium post. I have a few issues with how she plans to pay for things.
Firstly, let’s get this out of the way: it’s a much better system than what we currently have and I’d be thrilled if it was implemented. This critique is coming from a place of wanting to see the best possible option, not tearing down things for not being perfect. So with that out of the way, let’s dive in.
To calculate their new Employer Medicare Contribution, employers would determine what they spent on health care over the last few years and divide that by the number of employees of the company in those years to arrive at an average health care cost per employee at the company. (Companies would count part-time employees towards the total based on the number of hours they worked during a year.) Under the first year of Medicare for All, employers would then take that average cost, adjust it upwards to account for the overall increase in national health care spending, and multiply it by their total number of employees that year. Their Employer Medicare Contribution would be 98% of that amount — ensuring that every company paying for health care today will pay less than they would have if they were still offering their employees comparable private insurance.
Small businesses — companies with under 50 employees — would be exempt from this requirement too if they aren’t paying for employee health care today. When either new or existing firms exceed this employee threshold, we would phase in a requirement that companies make Employer Medicare Contributions equal to the national average cost of health care per employee for every employee at that company. Merging firms would pay the weighted average cost of health care per employee of the two firms that are merging.
So the first issue I have with this is about a phrase that’s missing: independent contractors. Maybe I missed where she addressed it, but my ctrl-f search only found one use of “contractor” and that was about mercenaries. Which is kind of a big deal, since excluding them from the calculations encourages companies to classify more and more employees as IC instead. At the end of the day, without breaking this classification system anything that lets employers profit from calling people IC is a serious problem. It’s possible this is an oversight but in between those two paragraphs is a section about pass through businesses, and I have a hard time believing she considered them and not ICs.
Secondly, there don’t seem to be any protections to stop companies from spinning off units of 49 people as another way to avoid the tax. Given that in another section she talked about dealing with mergers, I don’t think that’s an oversight.
Aside from these two technical problems (which are easily fixable), there’s a more fundamental issue with this plan: it’s a head tax instead of an income tax. That’s inherently regressive and not nearly as fixable.
Put it this way, a head tax is another flat tax. So for the lowest paid employees, a huge portion of their paycheck is going to be eaten up. The plan talks about the savings from not having healthcare deducted from your paycheck. But I don’t actually see anything that prevents the new tax from being passed along. So what this actually means is that companies with high discrepancy in employee salary (think Amazon coder vs warehouse worker) are going to royally screw over the people on the low end.
So that’s not great.
Finally, this seems like it’s the campaign trying to find a way to say they’re not raising taxes. And to be fair, while converting your current employer contribution into a tax is technically raising taxes, it’s a pretty good way of explaining the situation. But it also falls into the trap of being another attempt to play the conservative game as if they’re dealing in good faith. Like the blood test I see this as a poor attempt to meet the enemy head on. The end result is just going to be “Warrens Medicare bill is $50 TRILLION in new taxes.”
That’s one area where Bernie has her beat. He’s not afraid to come out and tell the blunt truth, and people trust him when he says it. If Warren wants to win, she needs to learn how to deal with disingenuous critiques. And as anyone who regularly drives on snowy roads will tell you, don’t try to swerve around them.