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Elizabeth Warren’s Health Care Plan is Pure Fuzzy Math

She hopes we won't notice that her plan is an attempt to redistribute money on a scale never before seen in America.
Elizabeth Warren

Under pressure to fill in the blanks as to how she would pay for Medicare for All, Elizabeth Warren has released a plan built on empty assumptions and fulfilled by unrealistic revenue expectations. It’s bad to the point that it raises questions about whether she is a serious candidate, and that raises the question of what the heck the Democrats are doing less than a year from the election.

Warren’s revenue plan is 19 pages. It describes how she expects to overhaul the entire health care system in America if not our entire society. Actually the first five and a half pages are introductory, mostly scary stuff about how expensive health care is, while the last page is cheerleading. That means the actual prescription for acquiring and spending trillions of dollars fits into about a dozen pages. That’s either some damn efficient writing or some pretty thin thinking.

It’s pretty thin thinking. Even how much the whole thing might cost is a fuzzy number. Outside estimates range from $14 to $34 trillion in new federal spending over a decade; Warren says $20.5 trillion. And yes, it is a problem when a program of this size can’t get its actual cost estimate closer than plus or minus multiple trillions.

Underlying those goofy cost estimates are Mickey Mouse assumptions on savings. Warren’s plan envisions cutting the cost of health care dramatically so that when the government takes over from private insurance companies it will need less money. While eliminating insurance companies’ profits will have an obvious effect, Warren simply imagines other economies of scale and efficiencies in health care payments ($2.9 trillion) that the private sector has failed to realize to its own benefit but that a massively expanded Medicare government bureaucracy somehow will.

Warren also assumes that Big Pharma will accept lower profits of some $1.7 trillion based on negotiated drug prices while continuing to produce the same range of drugs and invest in long-term research for new ones. And if they don’t play ball, her plan will take away patents on their existing drugs and manufacture them publicly.

Things will go so well that Warren will apparently (the plan is unclear, an example of the kind of detail needed but lacking) do away with payments Medicare users are responsible for today so everything will be free. Currently all but the most basic Medicare coverage requires premiums and many people end up buying supplemental private insurance that Warren would outlaw. “High income beneficiaries”—meaning people with incomes over $85K, a far cry from Warren’s billionaires—already pay much higher costs. Outpatient coverage leaves one responsible for 20 percent of the actual cost. Medicare prescription coverage has enough gaps in it that they’re referred to as the “donut hole.” Warren’s plan says little about these shortfalls even as it promises everything will be okay just over the next hill.

But Warren’s biggest assumption is the unstated one, that the billionaires she will tax to pay for all this will passively accept their new role in society, buying stuff for the rest of us, rather than offshoring their money and ordering the Congress they own to create loopholes for them. If there is any truth to the idea that the wealthy control government (and, oh boy, is it true), how can anyone think they’ll allow any of this to come to pass? Amazon paid $0 in taxes last year. Warren’s plan assumes that will jump to 35 percent. She does not explain how she will move them from paying nothing to paying 35 percent. It’s like saying the plan to pay off my mortgage is to “earn more of the monies” without anything more complex in mind.

Same for the power of the American Medical Association, the cartel that controls health care in the United States, from med school intake to every detail of practice until a doctor retires. Warren’s plan assumes medical professionals and organizations, all the doctors, nurses, and hospitals, will accept lower standards of living, as their fees will be set by government and payments tied to below-market Medicare rates. But American medicine has evolved in a for-profit ecosystem. Remove the profit incentive and it will adapt, adjust, or die off. Many hospitals in rural and underserved areas are already facing insolvency. Others lose or make very little money on Medicare patients, and charge insured payers more to make up for it. It’s called cost shifting and Warren’s plan will do away with it. Cost shifting smells bad, but for better or worse it helps fund underfunded Medicare payments. The resulting shortfall may be in the trillions and Warren expects health care providers to, um, just deal with it for the greater good.

On the revenue side, Warren still needs $20 trillion in new money, and she says she’ll get it from the rich. That’s a nice argument to throw out to the rubes she is targeting, people to whom a paid off Visa card is a dream. But a trillion is a really big thing, 1,000 billions. Warren’s $20 trillion is about the same as the current national debt, which will still be around as she works this out. The total of all mortgages in America is $11 trillion. Warren could pay those off twice for what her health care plan will cost. The current defense budget is $686 billion. Warren’s plan is about 30 times that.

Meanwhile, Jeff Bezos’ net worth is only $109 billion (see how that works when we’re talking in trillions?). That’s everything he has, not just the 6 percent tax Warren wants him to pay on it yearly. The net worth of the entire Forbes 400 is under $3 trillion. That’s everything they all own, like if we killed them and took it. If we reach down into the top 10 percent of Americans, people whose net worth is a couple of million and whom Warren claims she won’t need to bother, we get to $35 trillion. We’ll have to kill them too, and even then under some estimates it won’t be enough. It simply isn’t possible to tax even the wealthy to pay for free health care for everyone, but dang it sure sounds good.

Warren thinks we won’t notice that her Medicare for All plan is in fact an attempt to redistribute money on a scale never before seen in America. She wants to systematically reduce the wealth of Americans, effectively nationalize the private health care industry (America’s largest employer, surpassing manufacturing and retail, the new steel industry), then parcel out what’s not eaten up by the bureaucracy for a mediocre standard of basic health care. She’ll also do something similar, though that plan is even less detailed, to provide free child care, free college, and disappear some $2.6 trillion in student loans.

If you think people who already have some sort of health care (69 percent rate their current coverage as excellent or good), or purple voters who saved for college the hard way, will vote for that once they figure out the grift—the Trader Joe’s suburbanites already know they’ll end up paying while Amazon somehow skates free again—you’re a fool. Even one of the economists Warren cited in her plan has reminded everyone he was talking only theoretically and acknowledges the practical problems.

The hollowness of this plan is a body blow to a candidate who presents herself as a policy wonk. How could she have gotten something so central to her message so wrong? Warren is flirting with the Beto phase of her candidacy, where she says yes to everything (tax churches! impound guns! no borders amigo!) to bully up support. As Joe Biden fades into hair plugs and botox, Warren will likely be pushed aside by someone else, maybe Michael Bloomberg, and end up as an “issues” candidate running to influence the discussion, not to win (Warren’s wealth tax may not even be constitutional). She’ll join the others in barking that the moon is too damn bright and somebody needs to fix it.

For the rest of us, this means that after putting up with three years of hashtags, pussy hats, trans-mania, and having every form of culture soaked through with mob-enforced diversity, no one in the 2020 race has a real plan to address health care. Sanders is Warren except he admits he’ll raise taxes across a deeper swath of society. They all had years to come up with something and this is what we get. To say the system for producing a viable candidate is broken is to still believe there is a system.

Peter Van Buren, a 24-year State Department veteran, is the author of We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, Hooper’s War: A Novel of WWII Japan, and Ghosts of Tom Joad: A Story of the #99 Percent.