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Study: 'Medicare for All' means taxes on the middle class, but it could save them money

The new report, from a think tank that supports balanced budgets, estimates that the proposal could boost payroll taxes 32 percent, or double taxes on income and business.
Image: Sen. Elizabeth Warren speaks alongside Sen. Bernie Sanders about Medicare for All legislation on Capitol Hill in 2017.
Sanders and Warren have faced pressure from presidential rivals to detail how they would pay for their Medicare for All proposal.Jim Watson / AFP / Getty Images file

WASHINGTON — Paying for "Medicare for All" could require raising payroll taxes by 32 percent on workers and businesses, among other options, according to a new report from a think tank that advocates for balanced budgets.

But the report, released Monday by the Committee for a Responsible Federal Budget, also suggested that middle class families could save money overall, even with significantly higher taxes.

The study comes as Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., both presidential candidates, face pressure from rivals to detail how they would pay for their proposal to move the country onto a more generous Medicare program with no premiums and minimal out-of-pocket costs. Warren has said she is working on such a plan.

The new report assumed Medicare for All would add an additional $30 trillion in federal spending over 10 years, which is toward the lower end of outside studies and in line with rough estimates by Sanders, the author of the Medicare for All bill.

“It’s probably generous for how much it would cost in the real world,” Marc Goldwein, the committee's senior vice president, told NBC news.

Other options that on their own could fund Medicare for All, according to the study, include a 25 percent income surtax; a 42 percent value-added tax on consumption; a move to more than double all individual and corporate tax rates; or, more likely, a combination of taxes.

The report estimated that taxing the rich, corporations and the financial sector could cover only one-third of the total cost on its own.

While the report warned that some of the tax options presented would slow economic growth or push top tax rates so high that they no longer maximize revenue, its authors also suggested that Medicare for All could reduce average total costs for lower- and middle-income families by eliminating more medical expenses than they would pay in taxes and requiring higher earners to pay a larger share of their tab — the standard both Warren and Sanders have argued voters should apply to their plan.

The report also grants the assumption of the plan's supporters that the new system will save some money by making health care more efficient. But the benefits would vary depending on the individual, and some low-income recipients of federally backed health care plans could see their costs go up depending on how it’s financed.

While Medicare for All proponents have emphasized the lack of premiums in their plan, the report notes that an average $7,500 mandatory premium per U.S. resident could pay for it. The premium would rise to an average of $12,000 if it exempted current Medicare, Medicaid and CHIP recipients.

Proponents of Medicare for All have offered a menu of options to help finance their plan, including requiring states and employers to continue their existing contributions to help offset the cost. Sanders has suggested a payroll tax, a wealth tax, a financial transactions tax and an increased estate tax, among others, though the details have not been fully fleshed out and do not appear to cover the full cost of his plan.