Oh dear.

The debate over Medicare for All financing is stupid. I think everyone involved with it knows it’s stupid. It leads to a narcissism of small differences and pointless fights over things that don’t really need to be fought over.



Matt Bruenig the other day wrote a way to approach Medicare for All financing, where he said you 1) bring in existing health spending, 2) applying cost savings from a universal single payer program, 3) rich people taxes, and 4) employer payments. Elizabeth Warren released a financing plan which included 1) bringing in existing health spending, 2) applying cost savings, 3) rich people taxes, and 4) employer payments. Each have a few more elements, but that’s the bulk of the stuff.



He doesn’t like the employer payment and wants it to be a different employer payment. That’s a valid argument to make, though I don’t think it’s as big a deal as he does (I’ll discuss later). But what he’s really mad about is a headline I wrote suggesting that Warren’s plan doesn’t add any new middle-class taxes. He wants to focus on the word “taxes.” I want to focus on, and have been focusing on, the word “new.”

Bruenig is deeply committed to the idea that replacing the employer contribution to personal premiums with an employer contribution to a government-run universal Medicare program equals an increase in indirect taxes. Of course, for years now, Bruenig has been insisting that premiums are actually best thought of as taxes. Here he is in the New York Times making the argument in April.



In this sense, converting the employer premium contribution to an employer Medicare contribution is a tax. It’s just nothing new. Under our system of employer-sponsored insurance, businesses segregate a bunch of money to pay insurance premiums, and then use the rest to determine salaries. Under the new system, businesses will segregate a bunch of money to pay Medicare taxes, and then use the rest to determine salaries. I see this as a semantic difference. Not a new tax.

Now Bruenig thinks he’s caught me in a contradiction by citing a story I wrote describing Bernie Sanders as “replac[ing] insurance premiums and co-pays with middle-class taxes.” Again, the focus of this contradition is on taxes, not the only point I was making, that these are not new. Bernie’s replacement is a tax, in the same way as Warren’s replacement is a tax. But it’s the same bucket of money (actually a tiny bit less in Warren’s case). I just see it as semantic.



I plead guilty to not making that more explicit in the Sanders case; that story was about the dishonesty of this entire financing conversation. But if you believe that premiums are taxes, I don’t see why you’re so damn concerned about describing something that replaces a premium contribution with a tax contribution as a novel, new thing.

Now, you can certainly quibble with the type of taxes being replaced. Bruenig’s contention with the employer head tax, which he considered as a temporary but not a permanent solution, is two-fold: 1) it’s regressive because it’s not a payroll tax that collects a percentage of income, 2) it’s subject to gaming because of a separate exemption for small businesses under 50 employees, who do not have to pay the employer contribution.

On 1), if we’re talking about this as a whole system, there are a whole bunch of givebacks on workers, like their individual contribution to employer premiums, co-pays, deductibles, etc. I’d love to see a distributional analysis, but I would doubt that the entire thing is regressive. Is the point now that each element of a system must be regressive, and we’re going to look at each of these parts in isolation? I don’t know.

On 2), the gaming would come in two forms, Bruenig says. First, companies could split and shrink and create affiliates to get under 50 employees. Second, companies could hire a bunch of independent contractors and not have to pay a share for them under the head tax.



So, the system we have now has the same exemption. We have an employer mandate, with an exemption for small businesses under 50 employees. If this has led to a mass shifting of companies into 50 employees or less, let me know; in fact we’re in a time of frequent mergers. Now, independent contractors have been a problem, particularly with tech startups. Warren’s campaign says that they will expand the definition of employee, along the lines of California’s Dynamex decision, as well as an expansive joint employer standard.

Now there’s no reason to have to tie the method of employer payments to some other regulatory standard. In that sense, the employer-side payroll tax is fine with me. I don’t think there’s enough difference to call it the ultimate sellout of progressivism, but it could be preferable, sure.

But that’s the larger point. People are at each other’s throats about semantics and whether the design of a functionally same tax distributionally speaking would be better as temporary or permanent. I don’t see why. There are a lot better things to start a flame war about. I guess it’s fun at a conceptual level but it’s about eighteen steps ahead of the game, in a world where the Speaker of the House just loudly stated on Bloomberg that she doesn’t like Medicare for All.



You can criticize Elizabeth Warren for bothering to create a financing plan at all, because this was the inevitable result. The way she talked about it as lowering overall healthcare costs was correct, it’s still correct, and one reason why is that premiums are taxes. The whole discussion is a red herring that has now, helpfully for the Pelosi-Biden axis, set supporters upon one another. Take a bow, everyone.

