Even After Hitting Employers With A First Of Its Kind "Job Tax" Elizabeth Warren Couldn't Find The $32 Trillion Needed To Fund Her Health Care Takeover And Some Creative Calculations In Her Plan To Fund The Program Have Experts Rolling Their Eyes

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The Facts:

ELIZABETH WARREN'S HEALTH CARE PLAN RELIES ON MASSIVELY INFLATED SAVINGS ESTIMATES TO ARTIFICIALLY REDUCE THE COST OF HER JUST "$20 TRILLION" PLAN

Studies across the political spectrum have placed the cost of a government takeover of health care at around $32 trillion, but Warren's estimate places the cost "considerably lower" at $20 trillion.

Warren claims that she will close the gap with savings generated by a government-run system but a recent study from the liberal Urban Institute found that the 14% increase in utilization caused by a massive expansion in coverage would overwhelm savings.

To generate enough savings to overcome the cost of such a massive expansion of coverage, Warren inflated savings estimates well beyond what experts agree is accurate.

Warren finds significant savings by reducing administrative costs to 2.3%, which counts on reducing Medicare's current 6% rate by more than half at the same time millions of Americans will be transitioning into the system.

The plan claims $2 trillion savings from scaling of Obamacare payment reforms that a 2018 commonwealth study found resulted in no savings .

Warren also lowballed the rate of growth for health spending over the next decade, claiming that they will hold growth to 3.9% while the government's top actuary projects 5.5% growth.

Warren also found savings by cutting hospital's reimbursement rates, a change that would inevitably force a " substantial " amount of hospitals to close, particularly in rural areas.

WARREN'S FUZZY MATH DOESN'T END WITH SAVINGS, EXPERTS ARE SKEPTICAL THAT HER TAX INCREASES WILL RAISE ANYWHERE NEAR THE REVENUES SHE ESTIMATES

Warren has drawn scrutiny from economists for " optimistic estimates " on how much revenue her tax increases would generate.

Many experts, including Democrat economists , say it's "unclear" if Warren's proposed tax hikes can raise anywhere close to the revenue she estimates.

Diane Lim, a former economist for Congressional Democrats worried that Warren's proposed tax hikes are " unrealistic ."

WARREN WILL RAISE THE BULK OF FUNDS FOR GOVERNMENT HEALTH CARE FROM A JOB TAX THE PUNISHES EMPLOYERS FOR ADDING WORKERS AND CREATING JOBS

Initially, Warren would tax employers the same amount they currently spend on health insurance benefits, punishing businesses that offer generous benefits and small firms that opted to offer benefits when not required.

Warren's end-game for employer contributions to government health care is a job tax where employers are taxed per worker.

This job tax would hurt low-wage workers and disincentivize employers from adding jobs.

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ELIZABETH WARREN'S HEALTH CARE PLAN RELIES ON MASSIVELY INFLATED SAVINGS ESTIMATES IN ORDER TO ARTIFICIALLY REDUCE THE COST OF HER PLAN

Unable To Raise The $34 Trillion Needed Without Direct Taxes On The Middle Class, Warren Massively Lowballed The Cost Of Her Government Takeover Of Health Care

The Atlantic : "Warren's Estimate Is Considerably Lower Than Most Projections For A Single-Payer System." "Warren's estimate is considerably lower than most projections for a single-payer system, as her team acknowledged in its own analysis of the plan. Even at a flat $20 trillion, such a plan would cost more than the federal government now spends on Social Security alone or on Medicare and Medicaid combined." ( The Atlantic , 11/3/19)

Estimates Across The Political Spectrum Have Placed The 10-Year Costs Of Warren's Plan Around $31 To $34 Trillion. "Estimates from the nonpartisan Rand Corporation, the conservative-leaning Mercatus Center at George Mason University, and the center-left Urban Institute have each placed the 10-year cost of a single-payer plan at $31 trillion to $34 trillion." ( The Atlantic , 11/3/19)

The Gap Between Warren's Estimate And The Actual Cost Is Important Because Closing It Would Require Direct Taxes On Middle-Class Income . "That gap matters so much because it probably determines whether a single-payer plan can be financed without raising taxes on the middle class, as Warren has pledged. The financing proposals she outlined Friday did not directly hit middle-class taxpayers, but those provisions wouldn't come close to covering the full cost of her plan if the actual price tag is closer to those other studies' estimates." ( The Atlantic , 11/3/19)

Jim Kessler, The Executive Vice President For Policy At Third Way Warned That Warren Will Have To Close The Gap On The Backs Of The Middle-Class. "'The gap between what she says it will cost and what it will really cost is in the trillions of dollars, and the middle class will be on the hook to fill that gap,' says Jim Kessler, the executive vice president for policy at Third Way, a centrist Democratic group that has been critical of single-payer proposals. 'My guess is that with accurate numbers, she's somewhere between $5 trillion and $10 trillion short. [Her plan taps] the rich and corporations as much as possible. Who's left? The middle class.'" ( The Atlantic , 11/3/19)

Warren Claims That She Will Close The Gap With Savings Generated By A Government-Run System But A Recent Study From The Liberal Urban Institute Found That The 14% Increase In Utilization Caused By A Massive Expansion In Coverage Would Overwhelm Savings

Warren Claims Huge Savings Under Her Massive Expansion Of Medicare But Expanding Health Coverage To Every Resident Is "Going To Send Health Costs Shooting Skyward." "How much will Medicare-for-all cost? No more than the current system, she says. In pricing out Medicare-for-all, you're pitting two opposing forces against each other. On one side of the ledger, Medicare-for-all gives every legal resident - and, in some versions, nonlegal residents - insurance that covers everything with no deductibles, co-pays, or other forms of cost-sharing. That's going to send health costs shooting skyward." ( Vox , 11/1/19)

Amy Finkelstein, An MIT Economist Who Has Studied Coverage Expansions Extensively Pointed To The "An Enormous Amount Of Evidence That Leaves No Doubt In Any Sensible Person's Mind That Getting Rid Of Cost-Sharing Provisions Increases Demand For, And Use Of, Health Care." "'We have an enormous amount of evidence that leaves no doubt in any sensible person's mind that getting rid of cost-sharing provisions increases demand for, and use of, health care,' says Amy Finkelstein, an MIT economist who has studied coverage expansions extensively." ( Vox , 11/1/19)

A Recent Estimate Produced By The Urban Institute Concluded That The 14% Increase In Health Care Utilization Would Overwhelm Assumed Savings. "Warren's team begins with a recent estimate produced by the Urban Institute, which concluded that a generous single-payer system would cost $59 trillion over 10 years - a $7 trillion increase over what we'd spend in the absence of reform. Driving that figure is Urban's estimate of a nearly 14 percent increase in health care utilization, which overwhelms the assumed savings." ( Vox , 11/1/19)

To Generate Enough Savings To Overcome The Cost Of Such A Massive Expansion Of Coverage, Warren Inflated Savings Estimates Well Beyond What Experts Agree Is Accurate

Warren Assumes That A Massive Expansion Of Government Health Care Will Reduce Administrative Costs By More To Less Than Half Of The Medicare's Current Level At 2.3%, The Urban Institute Estimates They Would Be 6%. "Private insurers spend about 12.2 percent on administrative costs and profits. Urban assumes that would fall to 6 percent under single-payer, as that's what Medicare spends now. Warren assumes it will fall to 2.3 percent, as that's what Medicare's single-payer program pays now - the higher number includes the private plans in Medicare Advantage and Medicare Part D. That saves $1.8 trillion." ( Vox , 11/1/19)

Warren Claims $2 Trillion Savings From Scaling Of Obamacare Payment Reforms That 2018 Commonwealth Study Found Resulted In No Savings And The Current Medicare Program Has Moved Away From In Recent Years. "Warren's finds more than $2 trillion in savings from scaling a series of Affordable Care Act-era payment reforms across the single-payer system. These are efforts to move health care away from fee-for-service, but the assumptions here are optimistic. Warren's team projects $1.2 trillion in savings from bundled payments, for instance, but a footnote refers to a Congressional Budget Office paper from before the program began in earnest. A 2018 Commonwealth study found no savings from bundled payments, and Medicare has been backing off the program in recent years." ( Vox , 11/1/19)

Warren Also Lowballed The Rate Of Growth For Health Spending Over The Next Decade, Claiming That They Will Hold Growth To 3.9% WhileThe Government's Top Actuary Projects 5.5% Growth. "Health spending tends to grow a lot faster than GDP. The government's top actuary projects 5.5 percent growth over the next decade. Urban, in its analysis, assumed 4.5 percent. Warren's team simply asserts that it'll hold growth to 3.9 percent, which is similar to other developed countries. That adds $1.1 trillion in savings." ( Vox , 11/1/19)

Warren Also Found Savings By Cutting The Hospitals Reimbursement Rates, A Change That Would Inevitably Force A "Substantial" Amount Of Hospitals To Close, Particularly In Rural Areas

To Avoid "Widespread Hospital Closures" Experts Assume That A Government Takeover Of Healthcare Would Need To Fund Hospitals At 115% Of Medicare's Rates But Warren Takes Hospitals Down To 110%. "Medicare pays significantly lower rates to physicians and hospitals than private insurers do. Because providers have built their businesses atop the mix of higher private and lower public prices, the fear is that shifting the system to the lower Medicare rates could lead to widespread hospital closures and physician bankruptcies. Urban assumed that single-payer would pay physicians at Medicare rates but hospitals at 115 percent of Medicare's rates. Warren takes hospitals down to 110 percent, saving $600 billion." ( Vox , 11/1/19)

Such A Cut To Hospital Reimbursement Rates Would Be "Extremely Politically Difficult To Pass Through Congress-And Could Lead To Hospital Closures Or Service Cutbacks If They Do." "Berwick and Johnson write that the lowered administrative costs they assume under a Medicare for All plan would help hospitals (and physicians) survive the crunch, and that Warren's proposal allows for higher rates to be paid to hospitals under greater financial pressure, such as rural facilities. But Blumberg said that reimbursement-rate cuts as big as Warren is envisioning would be extremely politically difficult to pass through Congress-and could lead to hospital closures or service cutbacks if they do." ( The Atlantic , 11/3/19)

"Berwick and Johnson write that the lowered administrative costs they assume under a Medicare for All plan would help hospitals (and physicians) survive the crunch, and that Warren's proposal allows for higher rates to be paid to hospitals under greater financial pressure, such as rural facilities. But Blumberg said that reimbursement-rate cuts as big as Warren is envisioning would be extremely politically difficult to pass through Congress-and could lead to hospital closures or service cutbacks if they do." ( The Atlantic , 11/3/19) Len Nichols, A Health Economist At George Mason, Warned That Warren's Proposed Cuts "Would Inevitably Force A Substantial Number Of Less Efficient Hospitals, Particularly Those In Small-Town And Rural Markets, To Close." "Nichols believes that the largest and best-run urban hospitals could eventually adapt to Warren's payment rates if given a long-enough transition period. But he says such cuts would inevitably force a substantial number of less efficient hospitals, particularly those in small-town and rural markets, to close or transition into outpatient-care centers. "The disruption we are talking about here would be severe," he told me." ( The Atlantic , 11/3/19)

WARREN'S FUZZY MATH DOESN'T END WITH SAVINGS, EXPERTS ARE SKEPTICAL THAT HER TAX INCREASES WILL RAISE ANYWHERE NEAR THE FUNDS SHE CLAIMS

Warren Has Drawn Scrutiny From Economists For "Optimistic Estimates" On How Much Revenue Her Tax Increases Would Generate

Many Experts, Including Democratic Economists, Say It's "Unclear" If Warren's Proposed Tax Hikes Can Raise Anywhere Close To The Revenue She Estimates. "Many analysts, including some Democratic economists, say it is unclear if Ms. Warren's combination of new taxes - including some never tried at this scale in the United States - can raise anywhere close to the revenue she estimates." ( The New York Times , 11/4/19)

Diane Lim, A Former Economist For Congressional Democrats Worried That Warren's Proposed Tax Hikes Are "Unrealistic." "'It's as much an art as a science, trying to figure out the economic effects of policies we haven't seen before,' said Diane Lim, a former economist for congressional Democrats and senior economist at the White House Council of Economic Advisers, who now works for the Penn Wharton Budget Model. 'I'm worried it's unrealistic. It's just unknown.'" ( The New York Times , 11/4/19)

There Are "Lingering Questions" On Exactly How Much Revenue Warren's Tax Proposals Would Bring In And In Particular The Difficulty Of Imposing A Wealth Tax. "But there are lingering questions about how much revenue some of these taxes would bring in or how easy it would be to impose a wealth tax in particular. 'Something like half of the wealth of the wealthiest people in America are held in privately held corporations, privately held businesses,' said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. 'And it's really hard to value those assets for tax purposes.'" ( NPR , 11/1/19)

Warren Has Drawn Scrutiny From Economists For "Optimistic Estimates" On How Much Revenue Her Tax Increases Would Generate. "Warren's plan relies on math that some economists have already begun to question, including optimistic estimates for how much revenue certain plans -- like beefing up tax enforcement -- would bring into federal coffers. To avoid being branded a middle class tax hike, the plan also creates a large new tax aimed at employers that some critics say will likely have the effect of suppressing workers' wages and could create perverse hiring incentives." ( The Washington Post , 11/1/19)

Expert Have Questioned Warrens Revenue Estimates Including Her Capital Gains Tax Hike That In The Light Of Her Other Tax Hikes Is "Unlikely" To New As Much Revenue As Promised. "But other experts have begun asking if Warren is overestimating how much money these taxes would really bring in. For instance, Warren's taxes on the top 1 percent include a plan known as 'mark to market,' which would increase taxes on capital gains taken primarily by the wealthy. But if other taxes on the rich were in place, such as her proposed wealth tax or Wall Street tax, it may be unlikely that such a plan would net as much revenue." ( The Washington Post , 11/1/19)

Warren Is Also Overstating How Much Revenue The IRS Can Generate By Increasing Tax Enforcement. "Warren may also be overstating how much can be realistically clawed back by the government by beefing up tax enforcement. Mark Mazur, a former Obama administration economist, said the 'tax gap' between what is owed and what is paid is about $500 billion, making it difficult but not impossible to imagine Warren could rein in $230 billion a year. 'If you're Senator Warren's staff, you say, 'We could get a lot of that.' But others may say it's too harsh and could trigger privacy concerns,' Mazur said, depending on how aggressive the Internal Revenue Service would have to become." ( The Washington Post , 11/1/19)

WARREN WILL RAISE THE BULK OF FUNDS FOR GOVERNMENT HEALTH CARE FROM A JOB TAX THE PUNISHES EMPLOYERS FOR ADDING WORKERS AND CREATING JOBS

Initially, Warren Would Tax Employees The Same Amount They Currently Spend On Health Insurance Benefits, Punishing Businesses That Offer Generous Benefits And Small Businesses That Opted To Offer Benefits When Not Required

Warren's Plan Would Implement A Job Tax On Employers, Initially Taxing Firms The Same Amount They Pay For Health Care Benefits And Then Forcing Businesses To Transition To A System Where They Are Taxed Per Employee At The National Average Rate Per Employee. "Warren's plan, by contrast, asks companies with over 50 employees to simply calculate their current average expenditure on health insurance and pay 98 percent of that total to the government. The virtues of this plan are twofold. It guarantees that in the short term everyone is paying less in a clear and mechanical way. Warren can say - technically - there is no new tax here. It's a case of transforming the existing legal mandate for large employers to provide health insurance into a mandate to pay into a government-run fund…In the short term this would generate more whining than actual problems. ( Vox , 11/4/19)

Because Of The Large Variation In The Quality Of Insurance Employers Purchase, The Initial Tax Would Punish Employers Who Pay More To Provide High Quality Insurance For Their Workers By Forcing Them To Continue To Pay More Than Their Competitors But Give Up The Recruiting Draw Of Better Benefits. "There's wide variation in the quality of insurance employers purchase, and this plan has the consequence, at the outset, of punishing employers who purchased better insurance for their employees - now they're paying more than stingier competitors, but without any recruiting benefit. Over time, Warren says she'll adjust all employers to the same level, though the details of how that will work are sparse." ( Vox , 11/1/19)

"There's wide variation in the quality of insurance employers purchase, and this plan has the consequence, at the outset, of punishing employers who purchased better insurance for their employees - now they're paying more than stingier competitors, but without any recruiting benefit. Over time, Warren says she'll adjust all employers to the same level, though the details of how that will work are sparse." ( Vox , 11/1/19) In A "Direct Penalty To Small Businesses That Offer Health Insurance Today" Those Firms Would "Have To Keep Paying A Cost Their Competitors Have Dodged, But Paying That Cost No Longer Gives Them An Advantage In Hiring." "There's an even worse inequity for employers with fewer than 50 employees. They're not required under law to provide health insurance, but a bit over half do. Warren's plan says that small businesses 'would be exempt from the Employer Medicare Contribution unless they are already paying for employee health care today.' That's a fairly direct penalty to small businesses that offer health insurance today: They have to keep paying a cost their competitors have dodged, but paying that cost no longer gives them an advantage in hiring." ( Vox , 11/1/19)

Warren's Endgame For Employer Contributions To Government Health Care Is A Job Tax Where Employers Are Taxed Per Worker

Over Time, Warren Would Transition Businesses To A System Where They Are Taxed Per Employee At The National Average Rate Per Employee. "But over time it would be increasingly unsustainable. So Warren says that 'over time, an employer's health care cost-per-employee would be gradually shifted to converge at the average health care cost-per-employee nationally.' If you ignore the transition period and just think about the long-term result, Sanders is proposing a flat tax on wage income while Warren is proposing a kind of regressive employer poll tax." ( Vox , 11/4/19)

Warren's Eventual Job Tax Represents "Head Tax" On Employers Per Worker, Something Democrat Advisor Jared Bernstein Warns Is "Going To Be Regressive For A Lot Of Low-Wage Employers And Their Workers." "But some critics have warned that companies would have strong incentives, particularly in the years before such a law's enactment, to make it appear their health-care costs are low. Jared Bernstein, a former aide to rival Joe Biden who has talked to Warren's campaign about health care, also warned that the apparent 'head tax' that charges employers the same amount per employee could be harmful. 'That's going to be regressive for a lot of low-wage employers and their workers,' he said. 'But Warren has done a great service here. Finally someone has laid out a plan with pretty granular details, with a cost estimate and pay-fors.'" ( The Washington Post , 11/1/19)

Some Have Warned That A Job Tax That Taxes Employers Per Worker Will Create Discourage Hiring And Suppress Wages. "Warren's plan relies on math that some economists have already begun to question, including optimistic estimates for how much revenue certain plans -- like beefing up tax enforcement -- would bring into federal coffers. To avoid being branded a middle class tax hike, the plan also creates a large new tax aimed at employers that some critics say will likely have the effect of suppressing workers' wages and could create perverse hiring incentives." ( The Washington Post , 11/1/19)

Fellow 2020 Candidate Sen. Bernie Sanders Criticized Warren's $9 Trillion Tax Hike On Employers Saying The Proposal "Have A Very Negative Impact On Creating Jobs.' "Mr. Sanders, an independent from Vermont who is also seeking the Democratic presidential nomination, told ABC News that Ms. Warren's proposal would 'have a very negative impact on creating jobs' because she would tap employers to pay $9 trillion in new taxes. The structure of that tax could function, over time, as a per-worker levy, making it more costly to hire low-wage employees." ( The Wall Street Journal , 11/4/19)

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