Senator Sanders released his updated Medicare-for-all bill yesterday. Below is a simple summary of the general contents of the proposal.
The bill requires coverage of hospital services, ambulatory patient services, primary and preventive services, prescription drugs, medical devices, mental health services, substance abuse services, laboratory and diagnostic services, reproductive care, maternity care, newborn care, pediatrics, dental, vision, and short term rehabilitative services. Notably, the bill does not include long-term care, but Sanders has reportedly said long-term care would be handled in a separate bill.
This is a generous coverage universe, but it is not unheard of. Critics tend to roll their eyes at the inclusion of vision, dental, and prescription drugs. But Denmark’s public system covers all of those areas with some cost-sharing.
The bill forbids cost-sharing for anything but prescription drugs. This means that there would be no deductibles, no coinsurance, no copayments, or other kinds of out-of-pocket expenses. The details of the prescription drug cost-sharing are mostly left to the regulators to work out, but there is a requirement that no individual be subjected to more than $250 of cost-sharing in a given year.
Those under the age of 19 would be enrolled immediately into the Medicare system. These individuals would be allowed to maintain their private health insurance in addition to their Medicare coverage during the four-year transition period. After that transition is over, there is a provision forbidding private insurance from duplicating the coverage provided by Medicare, which would effectively kill off any private insurance maintained by children up to that point.
For those over the age of 18, eligibility to enroll will be phased-in over four years. After year one, those 55 and over will be eligible. After year two, those 45 and over will be eligible. After year three, those 35 and over will be eligible. And after year four, everyone will be eligible. During that four-year period, adults will also have the ability to buy in to Medicare on the exchanges or if their employer chooses to offer it as an option.
The bill would bring in existing federal expenditures on healthcare made for Medicare, Medicaid, the Federal Employee Health Benefits program, TRICARE, and other smaller programs.
In addition to the bill, Sanders released a paper with tax proposals that are intended to provide the remainder of the funding. The proposals are:
- A 7.5 percent employer-side payroll tax. This tax is intended to impound the money employers currently pump into the healthcare sector through private insurance premiums.
- A 4 percent income tax surcharge. This tax is intended to impound the money individuals currently pump into the healthcare sector through private insurance premiums. Because the tax is being collected through the federal income tax code, the standard deduction can be applied towards it, meaning that families making less than $29,000 would pay nothing, and families making $50,000 would pay just $844 per year, far less than they currently pay in private insurance premiums.
- Higher income taxes on the very rich. The plan calls for creating more tax brackets for higher earners with marginal tax rates spanning from 40 percent for income made between $250,000 and $500,000 to 52 percent for income made over $10 million.
- Elimination of capital gains preference. Currently capital gains are taxed at a lower rate than ordinary income. This reform would tax capital gains as ordinary income.
- Capping deductions for the very rich. For households with incomes over $250,000, the value of particular itemized deductions would be capped at 28 percent. Currently the value of an itemized deduction is based on your highest marginal tax rate. So, someone whose highest marginal tax rate is 39.6 percent would receive 39.6 cents of value for every 1 dollar of tax deduction they claim. Under this reform, high-income families would only be able to receive at most 28 cents of value for every 1 dollar of tax deduction.
- Increase the estate tax. Under this proposal, the current 40 percent estate tax would be replaced with a progressive estate tax with rates ranging from 45 to 65 percent. There would be a 0 percent rate for the first $3.5 million (single person) or $7 million (married couple) of an estate.
- A 1 percent wealth tax for wealth over $21 million. This would mean wealthy individuals would have to annually add up their net worth and pay 1 percent of any net worth exceeding $21 million to the government.
- Close S-Corp dividend loophole. There is not much detail as to how, but the proposal is to make it harder for business owners to abuse S-corp status to report what is really ordinary labor income as dividends.
- Tax offshore profits. This would apply the corporate tax to money corporations are currently holding “offshore” to avoid paying tax on it. This would be a one time thing.
- A 0.07 percent tax on big financial institutions. Particularly, the proposal calls for a 0.07 percent tax on the covered liabilities of financial institutions with $50 billion or more of total assets.
- Change treatment of corporate inventories. This would forbid the last-in, first-out accounting method that allows corporations to overstate the cost of their inventories in order to claim a lower profit and pay less tax.