This is the second of two post on the Warren plan to finance Medicare for All. The first <\/a>dealt with why I think the time is ripe for M4A and especially for Warren’s version of it. This second post is about some questions that have been raised about Warren\u2019s plan from the left. <\/p>\n\n\n\n

The Warren plan calls on businesses that have 50 or more employees and provide health insurance to them to pay a the federal government roughly 98% of what they pay for that insurance. A critique of the plan in Jacobin said that businesses would be able to escape from this requirement by reclassifying employees as independent contractors or by breaking themselves down into units with 49 or fewer employees.<\/p>\n\n\n\n

The whole question of reclassifying employees as independent contractor is not a new issue. There already are many incentives to do that. There are also business incentives to not do so and laws that prohibit it. Those of us who work to expand workers’ rights have been dealing with the issue for some time and thinking about how federal and state regulations can stop this practice. A very strong law to stop the reclassification of employees as independent contractors was just enacted in California and we are analyzing it now in my shop to see how we can adapt it to PA. I know of no reason why including such provisions in the health care law is impossible or any harder than enacting M4A to begin with. <\/p>\n\n\n\n

If you think about a larger employer that has 5,000 or more employees, the logistical and coordination problems of breaking it into 49 person units would be prohibitive. At any rate, it is fairly easy to prevent businesses from escaping mandates by doing this simply by requiring the components of a large business that has been broken up into pieces to inherit the obligations of the larger entity. Again, this is not the first time that this issue has come up in public policy debates. <\/p>\n\n\n\n

Another criticism of the Warren plan holds that instead of requiring businesses to pay a per-employee head tax that is based initially on the average amount they pay for health insurance to the federal government, we should fund M4A with payroll tax as Sanders does. (To be more correct, that is one of the options on Sanders\u2019 menu of taxes he proposed to fund M4A. Sanders has never actually said what he would pick from that menu.)<\/p>\n\n\n\n

While a payroll tax would, in some respects, be more progressive than a head tax, the progressivity of the funding scheme as a whole can\u2019t be judged by one element of it. The funding scheme Warren has proposed for M4A is quite progressive and more progressive than any plan that new taxes on the working or middle classes. <\/p>\n\n\n\n

I suspect that one reason Warren is calling for a head tax rather than a payroll tax is so that no one can say “you are raising taxes on the middle class through a hidden tax that workers pay.” We know that taxes paid by employees ultimately come from wages. If Warren proposed a payroll tax, the amount would increase over time. Warren wants to be able to say, honestly, that she is proposing no new taxes on working people. Proposing a head tax that is set at 98% of what businesses pay now is a mechanism to force businesses to hand over the money they spend on health insurance now to fund M4A without creating a mechanism that increases taxes on workers over time. <\/p>\n\n\n\n

Another reason to propose a head tax rather than a payroll tax is it avoids the disincentive to creating high rather than low wage jobs that results from a payroll tax that increases with wages. One of the central goals of public policy, I believe, should be to encourage more high wage jobs. (That’s one of the reasons for supporting an increase in the minimum wage rather than just supplementing wages with government subsidies.)<\/p>\n\n\n\n

And that rational for the head tax is connected to another one: businesses that turn over what they spend on health care now to their employees in the form of wages will not be require to pay the head tax. As I just mentioned, the employee share of health insurance comes out of wages. What Warren did not want to do is let businesses of the hook for what they pay for health insurance without forcing them either to pay for M4A or turning what they now pay into wages. And if they do turn their employer share of heath care costs over to employees in the form of wages, they need to do it on a per-worker basis, not on the basis of a percentage of an employee\u2019s salary. The employer cost of health insurance is, of course, paid on per-worker basis not on proportional basis. If it is returned on that basis as well, then workers with lower wages will get proportionately more than workers with higher wages which, of course, is progressive result. <\/p>\n\n\n\n

There is nothing in Sanders plan similar to Warren\u2019s proposal to help workers recoup what they have been paying for health insurance in wages. Rather than being a bug, it is an important feature of the plan, a brilliant addition that is meant to make the transition to M4A be even more worker friendly as a whole\u2014including to unionized workers, some of whom have been concerned that value of the health care benefits they have bargained for would be lost to them.<\/p>\n\n\n\n

So far from retaining employer-based insurance, as some Sanders supporters have claimed, the Warren plan actually creates in incentive to move more quickly away from it the employee based funding of it.<\/p>\n\n\n\n

Of course, the more companies that embrace this option, the more funding the Warren proposal will have to secure from other sources. Some of that funding will come from taxes on the wages that replaced M4A\u2014and that will be a tax on working people. But the tax will be only a part of the additional wages workers receive. (And that\u2019s another part of the genius of the Warren plan). Other funding will have to come from the other taxes she has proposed. <\/p>\n\n\n\n

This plan may ultimately need to be supplemented with higher taxes on the working and middle classes. But by the time that happens, M4A will be established and the benefits will be clear. And, at that point, a small tax increase to keep what will then be a popular program will not be a political problem at all.<\/p>\n","protected":false},"excerpt":{"rendered":"

This is the second of two post on the Warren plan to finance Medicare for All. The first dealt with why I think the time is ripe for M4A and especially for Warren’s version of it. This second post is about some questions that have been raised about Warren\u2019s plan from the left. The Warren plan calls on businesses that have 50 or more employees and provide health insurance to them to pay a the federal government roughly 98% of what they pay for that insurance. A critique of the plan in Jacobin said that businesses would be able to escape from this requirement by reclassifying employees as independent contractors or by breaking themselves down into units with 49 or fewer employees. The whole question of reclassifying employees as independent contractor is not a new issue. There already are many incentives to do that. There are also business incentives to not\u2026 Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[190,153,45,16],"tags":[],"class_list":["post-8245","post","type-post","status-publish","format-standard","hentry","category-190","category-elections","category-health-care","category-public-policy"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p35YuU-28Z","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/8245","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8245"}],"version-history":[{"count":4,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/8245\/revisions"}],"predecessor-version":[{"id":8404,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/8245\/revisions\/8404"}],"wp:attachment":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8245"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}