Sen. Bernie Sanders has answered critics and released his healthcare reform plan, which is less a reform plan than a proposal to start over from scratch.
Therein lies both its appeal and its downfall. It's a statement of vision: "It is time for our country to join every other major industrialized nation on earth and guarantee health care to all citizens as a right, not a privilege." But the path to that vision isn't wholly constructed in Sanders' proposal.
Sanders answers one of the primary criticisms of the Clinton campaign and others: How is he going to pay for this and how is it going to affect the middle class, which will have to see taxes raised? Here, his plan is detailed: It would raise taxes on the middle class through a 2.2 percent tax increase on all income. Secondly, workers could possibly see wages dinged because of a 6.2 percent "income-based premium" on employers. The rest of the substantial revenue hike—close to $15 trillion over 10 years, with inflation factored in—would come from taxes on the wealthy, raising marginal rates on incomes over $250,000, increasing the rate on capital gains and dividend income, increasing the estate tax, and closing various deductions and loopholes for the rich.
In terms of the worker and employer taxes, the campaign points to analysis from Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst, who estimates savings to both families and employers. "For a middle-class family of four with an income from wages of $50,000 and an employer-provided family plan of an average price, the Sanders program would save $5,807, or 12% of income," Friedman said. Those savings come from not having to pay their share of premiums or copays and deductibles and other out-of-pocket healthcare costs. Employers, in turn, would save more than $9,400 per worker (using a worker with an annual $50,000 salary and average family).
That part is pretty well laid out. What's overestimated—and over-promised—in the Sanders plan is the savings from the system reforms. The plan goes beyond just expanding Medicare to everyone, which is clear when it promises "no more copays, no more deductibles," as both are features of Medicare coverage. It promises to cover everything, including vision, dental, and hearing. It also promises "no more fighting with insurance companies when they fail to pay for charges." That implies that absolutely everything will be covered by the government, which is a higher goal than any other country's healthcare system guarantees. In the French system and in the British system, there are limits to coverage and governmental bodies set up to do the fighting with patients over what is and is not covered.
Larry Levitt from Kaiser Family Foundation talked with Ezra Klein, and is skeptical about the savings. "They assumed $10 trillion in health care savings over ten years. That’s tremendously aggressive cost containment, even after you take the administrative savings into account." That means cutting reimbursements across the whole healthcare industry spectrum—to providers, hospitals, drug companies and medical device companies. That means massive disruption in the industry, and massive opposition from it in enacting the plan, but it also creates a problem for the government. If the government promises everything will be covered, it has to guarantee affordable access to drugs and devices and treatments. That means the doctors and drug companies, etc., have to agree to the prices set by government and if they don't, that treatment isn't available to patients. It’s a promise that can't be kept.
All of which points to the big political problems well-summarized by Paul Krugman. It means massive disruption to everyone's health plans, and we've seen from Obamacare how politically difficult that is. Disrupting the entire healthcare industry is going to be a massive fight. Getting a Congress that's going to go along with it is, at this point, not possible.
Here's where Clinton is right to embrace Obamacare: There needs to be a basic commitment now on the part of all Democrats to stick with it and expand on it and improve it. As healthcare expert Harold Pollack puts it, we're "in a knife fight to defend, implement, and expand" Obamacare and it's the immediate battle in expanding access. Political reality says: Yes. That's absolutely it.
But healthcare reality exists, too, and the one proven system all over the world is single payer. So that's what ultimately we're going to have to work toward. Here's where Sanders and Clinton should agree. Expanded Medicare needs to be included in Obamacare. We need the public option added to it. That's an interim fight that would definitely be worth both campaigns' time.