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Summing Up the Clinton-Sanders Policy Debate in One Line

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Reprinted from Campaign For America's Future

I like Jonathan Cohn personally and have great respect for his work as a reporter and writer on health care issues. However, I think he actually told readers the opposite of what he intended in his Huffington Post piece headlined, "This one line sums up the big Clinton-Sanders policy argument."

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The big line in Cohn's piece is that Senator Sanders' proposal for a single-payer system would cause a single mother with two children, earning $26,813 a year, to pay $2,314 in payroll taxes rather than getting health insurance for her family free through Medicaid, as would be the case now. Cohn sees this as a major hit to this family, which is a serious problem with Sanders' proposal.

There are several points here worth noting. First, as Cohn points out, Sanders is also proposing a $15 an hour minimum wage. This means that if this single mother were working a full-time job, she would see her pay increase by almost $3,200 a year, even if her pay was only at the new minimum. Of course, since she is earning substantially more than the minimum wage now, it is likely that her pay would increase enough to leave her still well above the minimum. This means that she would be substantially better off with Sanders's agenda. (There are serious questions about whether we can have a $15 an hour minimum wage without a considerable impact on employment, but we'll ignore those for the moment.)

The second point is that Cohn has to be very selective in finding his victim here. Let's suppose that this single mother was getting healthcare insurance through her employer, as most workers do. If we say the employer was paying $5,000 a year for healthcare insurance, under standard economics assumptions, this money will find its way into the worker's paycheck. This means that she will be paying an additional $2,314 in payroll taxes, but this will be deducted from the $5,000 a year that her employer used to pay in premiums that now going into her paycheck. (No, this will not happen immediately and not be the story with all workers, but this is what all good economists believe will eventually be the case.) This means that this worker will be $2,686 better off as a result of the Sanders plan.

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But let's say that Cohn's single mother is a loser under the Sanders plan. Does this mean the plan is a failure? There were losers under the Affordable Care Act (ACA).

Let's take the case of a young African American woman just out of college, with $30,000 in debt. Let's suppose this woman has an income of $35,000 a year. Let's say she is in excellent health and from a family of people enjoying excellent health. In the pre-Obamacare days she might have opted to either buy one of the low-cost catastrophic plans that is no longer available under the ACA, or go without insurance altogether.

Under the ACA, this young woman will be expected to pay roughly 8 percent of her income, or $2,800 a year, for health insurance that she does not want. Should we feel bad about this young woman struggling to meet a large debt burden, while working at a low-paying job and now being forced to buy insurance?

Well, that is a bad story and there are many like them. But many of the same policy wonks who have endlessly highlighted the plight of the Medicaid mother under the Sanders plan (I have seen it featured as a news article in the Washington Post and also as a topic of numerous columns and editorials), have been content to largely ignore the plight of young people struggling to pay their ACA premiums. At least they don't see it as a basis for rejecting the Affordable Care Act.

Of course, that is the correct position. Any major policy change will have losers. Odds are that if you don't recognize the losers it's because you haven't thought about the impact of the plan closely enough. The goal should always be to minimize the number of losers, at least among people with low and moderate incomes, and to try to assist the hardest hit so that they end up in a decent situation.

I actually agree completely with Cohn that Sanders' proposal to move to single-payer would be all but impossible in a single step. Even if he somehow had the majority needed in Congress to get it through, the practicalities of such an enormous shift would almost certainly require that it be phased in. That is an entirely legitimate criticism that Clinton and her supporters have raised.

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But the single Medicaid mother as victim is a silly scare story being passed off as serious policy expertise. It isn't, and the fact that serious policy wonks are trying to sell it as such is exposing more about them than Senator Sanders' proposal.

Originally posted at Beat The Press.

 

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Dr. Dean Baker is a macroeconomist and Co-Director of the Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. (more...)
 

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