Like any serious presidential contender, Sen. Elizabeth Warren, D-Mass., has a policy team that tries to justify her most ambitious policy plans. For Warren, Moody’s Chief Economist Mark Zandi has played a very public role in defending the feasibility of her "Medicare for all" proposal. Zandi wrote a CNN op-ed claiming Warren’s Medicare-for-all math won’t increase taxes on the middle class. This just isn’t true.
Despite Zandi’s stellar credentials, his Medicare-for-all commentary reveals some common and glaring holes in the reasoning and logic. Zandi effectively ignores the entire study of tax incidence stating, “by replacing trillions of dollars in individual spending on healthcare with new taxes on large corporations and the rich, her plan overall is clearly progressive.” His assertion strongly implies that higher corporate income and payroll taxes come at no expense to workers. This stands in stark contrast to the mountains of empirical research on corporate tax incidence that show workers do share the burden of corporate taxes. It’s very unlikely that an established Ivy League-educated economist like Zandi is ignorant of the academic literature on corporate tax incidence. It’s far more likely that Zandi’s omission is a strategical move to gain favor with certain political powerbrokers.
In addition to dubious dealings in omission bias, Zandi makes a fairly peculiar appeal to trickle-down economics. Like other Medicare-for-all advocates, he argues that by transferring employer health care costs to the government, the money saved by firms will be passed on to workers. Zandi wrote, “Warren's Medicare-for-all plan is also paid for in part by the taxes generated from the increase in take-home pay that workers will enjoy as they no longer pay toward private health insurance.” This is functionally the same as arguing financial gains from lower tax rates will be passed on to workers in the form of higher wages. Undoubtedly, if Medicare-for-all actually resulted in net savings (a big if), it’s feasible that workers could share in the gains. This should be viewed as a positive by those who seek to sell Medicare-for-all. However, it’s nearly impossible to make such a claim without making a huge concession to the field of supply-side economics. In short, it’s illogical to argue that savings from tax cuts are not passed on to workers, but health care savings will be.
Zandi doesn’t stop at just claiming that Medicare for all will increase; He takes it a step further in claiming that the tax revenue generated from the higher wages will help finance Medicare for all. Without a hint of irony, Zandi claims that Warren’s Medicare-for-all plan would not cost the middle class more in taxes, but then goes on to cite increased tax revenue from worker wages as a means of financing Warren’s Medicare-for-all plan. This blatant contradiction alone should put to bed the idea that an ambitious government takeover of health care will come at no additional costs to middle-class families. According to research from healthcare policy expert Kenneth E. Thorpe, under Medicare for all, over 70 million households would see their increased tax burden amount to more than what they would pay under the private healthcare insurance system.
Socialized medicine is a very serious policy proposal and it may become a reality. However, the inescapable truth is clear. We will all pay more in taxes to make it work. Advocates of single-payer healthcare reform must be forthcoming about this with voters.
Williams is the policy director for the North Dakota Young Republicans. He’s an active economist who has worked for numerous liberty-based academic research centers and think-tanks. He earned a bachelor's degree in economics at Florida International University and his master's in financial economics from the University of Detroit Mercy. He is a co-host of The Policy radio show on 88.1 KPPP-FM and a regular contributor to The Forum's opinion pages.