Bernie Sanders proposed a single payer Medicare for all solution for American health care (BernieCare). What does that mean? How is it different than Clinton’s plan or ObamaCare? We take a quick and honest look at our political healthcare choices.

TIP: Bernie wasn’t elected President in the 2016 election, but the basics in this article still hold up. And certainly American Health Security Act, S. 1782 remains an important and well-written bill that could still be worked into future plans.

What is the Bernie’s Medicare for All Plan?

The plan is simple. There is a single group fund that covers everyone’s premium and cost sharing. Insurers are out, single group fund with automatic coverage is in. It gives the Government the ability to negotiate drug prices. This sort of thing is sorely needed, but it does all this at the expense of a big progressive tax increase for the top 2 – .01% and some major changes for the healthcare industry (specifically insurance).

Learn more about what single payer is here. Learn about how single payer funding works and how it works for other countries here.

What are the Benefits?

The plan aims to curb root healthcare costs at a greater rate than the ACA (although the exact details are sparse on how, things like debating drug prices and eliminating billing and claims needed for the current system would certainly have an impact).

The plan aims to provide substantial savings for the bottom 98-ish%. So let that sink in. Essentially 98 out of 100 people you meet get a cheaper and simpler deal on the surface. That is a big plus.

Since the top tax rate doesn’t go up until $250,000, and most Americans won’t make this statistically, many will end up with cheaper health insurance except the top 2%-ish (but even then it varies, as looking at this in isolation it lowers the tax rate slightly under $500,000 because of the way the progressive tax system changes under this plan). Only the very top earners will pay a drastic increase in income taxes (and considering the other Bernie plans, the rich generally take a hit in favor of the rest of America).

Does it Save Money or Cost Money?

On one hand we hear numbers like “it costs 28 trillion” and then on the other we hear “it saves 6 trillion“. Considering our budget is way less than both those numbers… which is it? The simple answer is that it does both. When people quote big numbers they are likely against the plan, when they quote savings they are for it. If we are talking net long term savings, it saves money. If we are talking long term gross spending it costs money. Are we factoring cost curbing and revenue? That is going to change what number we get.

The important thing to remember is that we didn’t’ start talking about single payer yesterday. Actually, we have tried this since Clinton was in the Whitehouse the last time. Here is what the CBO thought of single payer in 1991. Here is another look from 1991.

Berniecare 2

source. An image from the side of the argument that says single payer costs more money than is being let on.

How is the Plan Paid for?

The plan is paid for with:

A 6.2 percent income-based health care premium paid by employers.
Revenue raised: $630 billion per year.

A 2.2 percent income-based premium paid by households.
Revenue raised: $210 billion per year.

Taxing capital gains and dividends the same as income from work.
Revenue raised: $92 billion per year.

Limit tax deductions for rich.
Revenue raised: $15 billion per year

The Responsible Estate Tax.
Revenue raised: $21 billion per year.

Savings from health tax expenditures.
Revenue raised: $310 billion per year.

Raising income taxes and Progressive income tax rates.
Revenue raised: $110 billion a year.

Under this plan the marginal income tax rate would be:

  • 37 percent on income between $250,000 and $500,000. (This is lower than current tax rate, so a tax rate decrease for the 2% and some of the 1%)
  • 43 percent on income between $500,000 and $2 million.
  • 48 percent on income between $2 million and $10 million. (In 2013, only 113,000 households, the top 0.08 percent of taxpayers, had income between $2 million and $10 million.)
  • 52 percent on income above $10 million. (In 2013, only 13,000 households, just 0.01 percent of taxpayers, had income exceeding $10 million.)
  • The current top tax rate is around 40%

2016 tax brackets (for taxes due April 17, 2017)

Tax rate Single filers Married filing jointly or qualifying widow/widower Married filing separately Head of household
10% Up to $9,275 Up to $18,550 Up to $9,275 Up to $13,250
15% $9,276 to $37,650 $18,551 to $75,300 $9,276 to $37,650 $13,251 to $50,400
25% $37,651 to $91,150 $75,301 to $151,900 $37,651 to $75,950 $50,401 to $130,150
28% $91,151 to $190,150 $151,901 to $231,450 $75,951 to $115,725 $130,151 to $210,800
33% $190,151 to $413,350 $231,451 to $413,350 $115,726 to $206,675 $210,801 to $413,350
35% $413,351 to $415,050 $413,351 to $466,950 $206,676 to $233,475 $413,351 to $441,000
39.6% $415,051 or more $466,951 or more $233,476 or more $441,001 or more

NOTE: The tax rate used to be a lot more “Progressive”. In this case “progressive” doesn’t mean “liberal” it means a sliding scale where those with more pay more. Since Regan / Bush the progressive tax rate has been somewhat of a joke, taxing the middle class about as hard as the super rich. Learn more about the history of income tax. It’s actually a rather good sign that Bernie distinguishes between someone who makes $250,000 and someone who makes 10 million. They just aren’t the same person.

How is this Different Than ObamaCare?

Obamacare subsidizes coverage expansion through tax credits, Bernie does away with that and does ALL insurance through a tax. This gives government more control over the insurance end and gives them bartering power on the healthcare end. This could be just what America needs, or it could have some unintended negative consequences. Bernie could have gone with a supplemental option like many countries. Honestly, just because it’s not in the plan doesn’t mean it’s not on the table. We can’t replace the PPACA with a “plan overview” (the current “plan” is simply an overview). It’s likely, for all my pondering below, that an actual bill that passes congress with Bernie as President will allow for supplemental options.

It’s not clear what parts of the ACA Bernie would keep, but I think the plan is implying that only the coverage provisions and one’s related to insurance go. Likely Medicaid and Medicare are kept in place. It’s unclear if TRICARE, VA, and such would be affected.

How is this Different than Hillary?

Hillary is another story for another day. You can read her plan here.

To sum this up, Hillary goes after all the same points as Bernie but does it in a way that rocks the boat a lot less. She builds on the ACA, addressing drugs, premiums, and cost sharing, and Medicaid expansion and she goes after quality control and cost inflation, but she does this in a way that doesn’t require a 10% tax increase.

It’s not 100% clear that the Bernie option is “better” than the Hillary one. It’ way more progressive (meaning it in the liberal way now), but it’s also way more risky. Hillary won’t have a big problem passing ACA fixes, but Bernie is up for a battle passing single payer with a tax hike on the top earners and businesses.

A mix of the two plans would be nice, but perhaps that is what either would truly deliver considering the national conversation.

Opinions

Below are the authors opinions.

The 1%

The general direction of the Bernie plan is solid and likely the right direction for America. That being said, spiking the income tax by 10% between the 2% – .01% creates a barrier that keeps the .01% in the .01% and makes it harder for the 2% to rise up. This is true despite the on-paper tax cut for the 2%-ish. Remember the income tax hits the rich, but so does the capital gains, and all the other taxes. This means a big net increase in taxes for the top business people. No one is crying to hard for them, but it also creates this “glass ceiling” for people trying to ascend the ranks.

Do we lose a few superstars who had to revert back to working for a major corporation instead of starting their own company? Is that even a concern when we are talking about health insurance for 320 million? At what point do we have to be competitive with other countries in regards to taxes? Is Rand Paul THAT wrong?

Catastrophic and Drug Coverage

My real worry is the idea that the plan would attempt to provide non-catastrophic coverage. I’m all for the average person not having to think about insurance premiums, but I feel people should be able to choose tiers of plans (even if they pay for it as a tax). America has a bit of a drug problem, why would we fund that without stipulations on people (not just companies)? Why not a Part D (i mean a Part D that actually works)? By going catastrophic and essential, and focusing on health, mental health, food, addition, and other things (like all democrats agree on) we can curb costs and save some of that tax increase.

Bernie’s plan is almost a joke. A joke not in that we tried this in the 90’s and getting congress to pass it is crazy, a joke as in the idea Bernie could actually win and get a single payer bill on the table that passes. Bernie is oddly conservative compared to what he could be, and that is exactly the type of mindset that could result in him being the next President.

My fingers are crossed that we don’t try to over achieve here though. If everyone has a cadillac plan, and we all pay for it with a tax, it leaves very little room to argue that the only part of the plan the average person needed was the catastrophic part. There are some health services that should be a right, but some elective health services are probably always better left to the private market. It’s not simple, so I wouldn’t present or expect a simple answer.

For most people they just want to know they have coverage when they need it and go to the doc for a checkup and when they are sick. Thus, this is the part that is best described as “a right. Others need mental health treatment and drugs, essential treatments should be “a right”… but at some point there really are things like plastic surgery and another happy pill… There is a point in the current healthcare system where it’s behavior, and not cost, that needs the closer look.

NOTE: Happy pill = pill you don’t need, but your doctor recommended, after having the pharma rep hand out free samples. I am not talking about medication your doctor says you need, i’m talking about the underlying more nuanced issue.

I’m, Waiting for the Plan

The most important part to remember is that no Republican or Democrat as put together a final plan yet. Plans aren’t’ a few pages long, they look like this. This means that we don’t have all the information we need to choose between Sanders, Hillary, or Trump. What we do have is the intentions spelled out for each. Sanders has a really attractive plan for 98% of us and it doesn’t look too too bad for the 2%, but that assumes he comes through on the rest without destroying the bridge between the 2% and .01%. Also assumes he can work with congress to actually pass the most radical (in a good way) idea i’ve seen come out of a politicians mouth in my lifetime.

What do you think?

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Shane on

Congress tried this in 2009 when democrats had control of congress and we could not get the votes we needed for a single payer option. We are better off working on what we already have in place.

ObamaCareFacts.com on

That is a wise answer. In politics the art of deal making, Hillary offers a lot.

Joy Hathaway on

Personally, I would like to see prescriptions covered under Medicare instead of having to pay for Part D insurance and having to pay make a co-pay for medications that most seniors need to maintain their overall health.

ObamaCareFacts.com on

I agree, I think medication is really important, especially as you get older. I feel more uneasy about footing the bill for all of America’s drugs than I do about essential drugs for seniors. In theory Part D keeps prices down, but I don’t see it in practice. I’d love to see a smart drug plan that actually resulted in savings and didn’t induce headaches!