How To Fund Medicare For All Without Raising Anybody’s Personal Taxes

The first step in fixing a problem is knowing that it’s there. Taking an objective look at the American health care system, it’s impossible not to see two major problems. We spend far more than any country on health care. Our health isn’t good and it’s getting worse.

If we look around the world, we see that single-payer systems (similar to the proposed Medicare For All plan) consistently create better results than we have here in the U.S. Now that this proposal has hit the mainstream, you can expect to be inundated with arguments about how we’d fund it.

In this article, I want to propose a three-step plan to fund Medicare For All and improve our country’s health without raising personal taxes by a dime. Most of the funding necessary would come from shuffling around what we’re already spending. The rest would come from restructuring policies already in existence which favor unhealthy lifestyles, to favor healthy lifestyles.

While the details in implementing these types of polices would be complicated, the principles are simple.

In 2017, American spent $3.5 trillion on health care. $1.5 trillion was paid by the federal government. 880 billion was paid by employers. The rest of the money was spent by private citizens, either out of pocket, private insurance or company insurance plans where employees pay a portion (usually half) of the insurance premiums.

Making funding work is a matter of making the math work. You can do this by raising funds or by cutting costs. Let’s start with our $3.5 trillion. It’s estimated that a single-payer system would reduce administration and prescription drug costs by 500 billion per year. That brings us to $3 trillion annually, which is slightly less than what is already being paid by employers, employees and the government. There would additional savings, but for simplicity sake, let’s use $3 trillion as our working number.

We’ll want to raise $3 trillion without adding to the federal deficit or forcing you to pay more in taxes. We’ll want to account for unpleasant surprises in costs. We’ll also want to improve on the poor health results we’re currently getting, both for quality of life and to lower society’s long-term health care costs. Fortunately, the solutions are fairly simple and are backed up by what we see in other countries.

Step 1- Implement a payroll tax to employers that roughly equals what they and their employees are already paying in insurance premiums. Combined with what the federal government is already paying, this would almost completely cover Medicare For All, without adding anything to the expenses of employees or employers.

Step 2- Restructure our agricultural subsidy system to favor quality of crops instead of quantity. This would lower our long-term health costs by improving the health of our people, without adding a dime more than we’re already spending.

Step 3- Assign scores of 1–100 for food producers, based on the healthiness of the products they produce. Assess a tax or tax credit based on volume of products sold and health score. This would raise the rest of the money necessary to fund Medicare For All, while incentivizing companies to produce healthier products, lowering long-term health care costs.

That’s the Cliff Notes version. Care to join me in the weeds of how this works? Read on!

Step 1- Implement a payroll tax roughly equal to what is already being paid by employers and employees on premiums.

As much as I’d like to take credit for this idea, it goes to my first political man-crush, Dennis Kucinich. He cosponsored a Medicare For All bill almost 15 years ago, funded in this way. I’m not going to spend a lot of time on this. It’s simple to understand, and the details of the policy have already been put together.

The key thing to keep in mind with this proposal is that the quality of care provided by Medicare For All would need to equal that currently provided by private insurance. Fortunately, other countries using single-payers systems get consistently better results than we do. For all of the narratives of long lines and problems in other countries, I don’t know of any that have moved from a single-payer system to a privatized one.

Note that the plan proposed by Kucinich was created by a professional policy team with more data and expertise than myself. Their position was that Medicare For All could be almost entirely funded by this payroll tax, which would be slightly less than what I’m suggesting. Steps two and three of my proposal assume that there will be unexpected additional costs and accounts for them.

Step 2- Restructure our agricultural subsidy system to favor quality of crops instead of quantity.

At the moment, living a healthy life is an expensive luxury that many can’t afford. This is partly due to current policies that favor unhealthy practices. Creating change on that front doesn’t require extra money, it requires looking at the whole picture and adjusting what we’re already spending.

The federal government spends more than $20 billion annually on farm subsidies. The way that this money is allocated leads to major problems for the environment and for our health.

For starters, 40% of that money goes to feed grains, mostly corn. Most of this corn won’t make it to your pantry (at least, not as corn). It will be turned into high-fructose corn syrup, corn oil (aka vegetable oil), animal feed or industrial products. If you are breaking down the foods that are causing the most harm in the U.S., sugars (including high-fructose corn syrup), vegetable oil and corn-fed animal products would all be near the top of the list. The other biggest culprit would be wheat, which brings me to my next point.

Wheat is the third most subsidized crop (behind corn and cotton) in our system. While we don’t have enough data to back up the gluten-free craze, it’s hard to argue that American eat too much white flour, which leads to major health problems.

If you take a broad overview of what these subsidies encourage, you see the pillars of the processed food industry. You have sweeteners, flour, vegetable oil and animal products (butter, meat, cheese, milk, etc.). These subsidies help create a situation where processed foods are the cheapest things in the grocery store. For people living paycheck to paycheck, processed foods are the only thing they can afford. Almost any nutritionist or dietician will tell you that avoiding processed foods is one of the healthiest choices you can make. Many Americans have no choice. When they develop health problems, we all foot the bill, single payer system or not.

This system is a holdover from a time when starvation and malnutrition were our biggest food problems. America now makes more than enough food to feed its citizens; any starvation and malnutrition that exist are economic issues and a topic for another article. Our health problems now come from excess calories and food that is lacking in nutrients. Our current system only makes those problems worse.

More than that, basing subsidies on yield (as we do) encourages monoculture farming. When you plant one crop only, you create a utopia for pests that feed on that crop. This forces farmers to use pesticides, herbicides and fungicides, all of which wash into the water system, all of which damage the environment and public health, and none of which are paid for by the farmer. If that damage is dealt with, it’s paid by taxpayers.

Along with those pesticides, monoculture farming exhausts the soil. If farmers want to continue growing one crop on a parcel of land over and over, they need to add chemical fertilizers. These cause environmental devastation, at no penalty to the farmer. These fertilizers add only what is necessary to grow healthy-looking crops. USDA studies show what the science suggests; crops today have less nutrients like magnesium and iron than they did 100 years ago.

All of these effects created by our farm subsidy programs create costs in other areas, especially the health care system. Since these costs are a non-issue to insurance providers, processed food producers and agribusiness, nothing is being done about them. If we shifted our subsidy program to favor sustainable practices and nourishing foods, we’d make healthier lifestyles more affordable, while cutting costs associated with environmental cleanup.

Step 3- Assign scores of 1–100 for food producers, based on the healthiness of the products they produce. Assess a tax or tax credit based on volume of products sold and health score.

Our first two steps provide most of the funding necessary for Medicare For All while improving our long-term health. Still, we’ll need something to provide the rest of the funding in the short-term. Why not add in a tax on those that are creating the most healthcare costs? Done properly, this both funds Medicare For All and creates incentives to produce healthier products. It doesn’t force choices onto consumers, but it creates a situation where a healthy lifestyle is as affordable as an unhealthy lifestyle.

In our current system, it’s more profitable to produce unhealthy foods than healthy ones. That profitability isn’t honest though. It’s more profitable to grow acres of corn than a diverse selection of vegetables, because the farmer isn’t responsible for paying the costs of cleaning up the chemicals, or the health care costs created by the food they grow. It’s more profitable to run a high-density feed lot than it is to pasture-raise animals, largely because you don’t have to pay to clean up the environmental damage and you don’t have to pay the healthcare costs associated with your products (which are far less healthy than pasture-raised).

If companies like Frito-Lay, Coca-Cola and McDonalds are going to get rich by selling products that raise health care costs, levying a tax on those to help pay those costs is fair, regardless of whether we’re putting a single-payer system into place or not. As with the farmers in the example above, the profits these companies generate isn’t honest, because they aren’t bearing the actual cost of their products.

I propose that the American Public Health Association work with the federal government in creating a system where the companies that create products which raise health care costs pay taxes to offset those costs. I also propose that companies that create products that improve health be given tax credits. Producers would be given a score of 1–100 based on the health impact that their products are making in the U.S. The scoring criteria would be predefined and based on health research. Company scores would be public. The total amount of money raised by this tax would be set to equal the remainder needed to fund Medicare For All for that given year. The ratio between tax and tax credits would be set by those with more expertise than myself in policy.

Industries subject to this scoring would include food producers, but could easily be expanded to include producers of alcohol, tobacco and firearms (all of which greatly impact our healthcare costs).

Tying it all together

The sum of the taxes and credits, combined with the payroll tax in step one of this article, would be enough to fund Medicare For All. Beyond that, these policies would incentivize companies to create healthy, high-quality products. They would make it possible for lower income people to eat healthier. They would lower health care costs in the long run, while making us healthier.

America has unique challenges in creating a Medicare For All system, many of which require solutions outside of the healthcare system. Doctors typically graduate with six figures of student loan debt, which requires them to make more money than in other countries. Americans have higher rates of opiod use and depression, which experts link to low wages and job loss to industrialization. Americans lead unhealthier lives which lead to higher healthcare costs, compared to other similar countries. The solutions to these problems lie outside the healthcare system.

Fortunately, the policy platform proposed in the Green New Deal directly addresses most of these problems. The student loan debt that drives up medical costs would be removed if colleges were tuition-free. A federal job guarantee would do more to address the opioid epidemic than any treatment every could. A higher minimum wage would allow people in low income brackets to afford to live a healthier lifestyle.

Americans have higher rates of chronic diseases than other countries, which leads to higher health care costs. As explained in the article, shifting policies to encourage healthy lifestyles would help reduce health care costs, especially in the long run.