​The Bernie Sanders Health Care Plan is a Pipe Dream at Best

Joel Anderson  |

Two hours before the Democratic debate was due to kick off, Bernie Sanders made waves when he actually proposed a plan for how his “Medicare for All” proposal would actually work. However, as Ezra Klein of Vox points out, calling it a “plan” is sort of stretching the definition.

As such, I’d like to propose another way of describing it: fan fiction.

You see, when a person who is a big fan of a particular creative franchise, like “Star Wars” or Twilight, they may engage in writing their own extensions of the book or movies they so love. They can fantasize about R2D2 leading his own X-Wing squadron or Jacob and Edward suddenly developing their own passionate romance and put it all down, even if it’s only for their own mollification.

And that’s not at all a bad way, to me, of describing the proposal put forth by the Sanders campaign. It’s a lovely thought, but it’s not rooted in reality.

Details Matter

Let me begin by stating that I am, in principle, in favor of a single-payer health care system. If nothing else, the entirely inelastic nature of demand in the health care industry makes the functioning of an efficient market there impossible. A simple look at the astronomical levels of per capita health care spending in the United States as compared to, well, pretty much every other country in the world should make that clear.

However, that acknowledgement and $1.75 will get you a subway ride. An actual working single-payer system that addresses these issues without completely destroying an essential part of people's lives is going to take a lot more than talk. The logistics of completely upending nearly one-fifth of the American economy is not something to undertake lightly, and the Sanders plan appears to come at this like simply advancing the idea is all that’s necessary. In fact, the specific details about who will shoulder what costs are what will make or break any attempt to do something like this.

Which brings us to the Sanders plan, which on the whole, reads more as a campaign stump speech than it does an actual policy proposal.

A Grand Scheme for a Better Tomorrow

On the whole, there’s a lot to like for American progressives in the plan proposed. Essentially, it would shift the cost burden for people’s health care to the federal government. As for paying for the estimated $1.38 trillion a year in costs, the plan relies on several new taxes, most notably a 6.2% tax paid by employers, a 2.2% tax paid by all households, and increasing income taxes on those earning more than $250,000 a year.

The main feature of the proposal would be the soak-the-rich taxes, with a new top tax bracket of 52% for incomes of $10 million a year or more, an expansion of the Estate Tax, and taxing investment income as normal income. These will undoubtedly play well on the campaign trail, stoking the populist anger Sanders has depended on so far.

However, there’s plenty in the numbers to create skepticism. For starters, a huge element of the plan is cost savings supposedly created by eliminating the administrative costs created by private insurers to the tune of over $300 billion a year. Undoubtedly, a single-payer system would save a lot of money by centralizing organization, but $300 billion a year?

There’s also the issue of what will and will not be paid for. The plan, as proposed, doesn’t seem to include any limitations on what will be covered, insisting that everyone will get the care they need without copays or deductibles. It’s a nice thought, but the supposed $1.38 trillion cost of the plan is still less than half of the United States’ current annual health care expenditures.

Finding ways to reduce spending on health care is undoubtedly essential to our future, but it’s going to take more than a wing and a prayer. The proposal remains pretty light on details and pretty heavy on optimistic expectation.

A Little Too Perfect to Be Real

Clearly, any policy proposal of this kind is going to have its flaws. Dramatically shifting 17.7% of GDP like this is going to create a lot of winners and losers, and deciding who loses just how much is going to be critical to making something like this work.

Which is where this proposal seems like such a pipe dream. Sanders wants - nay, needs - everyone to believe that we can have everything and pay for it simply by taxing the rich a great deal more. But this just isn’t realistic. Even this proposal starts to reveal that, as much as our country is racked by wealth disparity, the size of the upper class limits how much is to be made from simply boosting taxes on the rich.

I can say that I’m in favor of most of these proposed tax increases regardless of whether they’re paying for this health care plan or not. While it’s possible the three proposed brackets here go too far, creating a few new brackets that gradually increase the highest level to over 40% makes a lot of sense to me. So does expanding the estate tax, limiting deductions for the top brackets, and even potentially removing the separate rates for investment income (though, creating incentives for investment through different taxation rates is an idea with plenty of merit whether that’s acknowledged by liberals or not).

However, combine all these and it accounts for just $238 billion a year. That’s just $28 billion more than what the plan counts on raising from its 2.2% premium on all households. This points to a simple fact: when it comes to raising revenue, there just aren’t enough rich people out there to simply pay for everything.

Rather than a reasonable proposal that accepts a reasonable boost in middle class tax rates that would be more than offset by reduced medical costs, we have an ideological tour de force that doesn’t let reality ruin its party, playing to the cheap seats at Sanders rallies while failing to address policy realities.

A Plan of Action Lacking a Plan of Action

Of course, all of this doesn’t necessarily speak to my biggest issue with this plan. The murky waters of econometrics are impossible to predict all that accurately, and there would be plenty of economists who will stand behind this proposal.

Who knows? It might work. Given how broken our current health care system is, and how much less is spent by other industrialized nations with similar systems, there is reason to believe that a plan like this could actually create new efficiency that would drastically cut costs and make all this affordable.

But that’s the thing about fan fiction. It all sounds good, but it’s not real. Even within the confines of its hypothetical universe.

Like fan fiction, this proposal looks great on paper. However, that’s precisely where it will stay. Even if this plan were flawless and detailed, it would still need to pass congress. And that’s just not going to happen whether Sanders is elected President or not.

I don’t know about the Sanders campaign, but I actually remember the push to pass the Affordable Care Act seven years ago. We had a brand new President arriving with a big mandate after a huge electoral success and a Democratic Party with 59 seats in the Senate and a nearly 80 majority in the House. What transpired? Months of fighting to pass a massively compromised bill on a partisan procedural vote.

It’s not as though no one had the idea for a single-payer system at that point. Or for paying for universal health care with taxes on the rich. Or even a public option. All of it was a part of the debate and none of it had the legs to get passed, even with one of the biggest democratic majorities in the history of our legislature.

So how does Sanders actually plan to get this through congress despite the fact that he doesn’t appear to have half the political talent of a Barack Obama and none of the congressional support? No clue. There’s no detailed proposal on that. Sanders will allude to some grand electoral wave sweeping away congressional resistance, but that’s not exactly a plan. More like a dream some progressives just can’t seem to be woken from no matter how many times it doesn’t happen.

Real Change Means More Pragmatism

At the end of the day, this health care plan is, in a micro chasm, everything that’s wrong with the Sanders campaign. The man’s not running for county commissioner or even Senator from Vermont. He’s running for President. Of the United States. A role that’s most notable for its limited power and need for compromise. Sanders certainly has a lot of great ideas. His broad vision for what this country could be is inspiring. But when it comes to actually accomplishing any of those goals, there isn’t any real reason to believe he’s the person to do it.

At a certain point, progressives interested in actually enacting change rather than just talking about it need to recognize the difference between the two. This health care plan doesn’t appear to have any interest in that, putting forth a blithely naïve vision for change that is not grounded in reality.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer



Symbol Last Price Change % Change










What Is Petrolithium?

MGX Minerals explains the advantages of petrolithium and how they are helping to solve future problems today.

Emerging Growth

Investview Inc

Investview Inc is an investor technology and education company. It provides products that allow the individual investor to find, analyze, track, and manage their portfolio.