There’s no such thing as universal healthcare | Opinion

Every four years presidential candidates list the things they’ll give Americans in exchange for their votes, and every four years Americans seem to forget there’s no such thing as a free lunch. Front and center this time around is Medicare for All. As with lunches, there is no such thing as free, or in this case universal, medical care. There is simply medical care, and it is expensive. The government can hide who pays for it. It can hide the fact that some people don’t have access to it. It can even force some to pay for others. But there is nothing it can do to make it universal.

At the front of the Democratic pack, Elizabeth Warren and Bernie Sanders have been happy to talk about universal access to medical care, but less interested in discussing the cost. Given the government’s declining ability to afford what it’s already doing, let alone new programs, the pressing question is what exactly Medicare for All will cost and who will be paying.

The Urban Institute, a decidedly left-of-center think tank, estimates that Medicare for All will cost an extra $3.4 trillion in government spending per year. That’s around 100 percent of 2019 federal receipts. The CBO projects that, long-term, the annual cost of Medicare for All will be about two-thirds of federal receipts. But the CBO has a history of overestimating long-term tax revenues, while underestimating long-term spending.

The reality is likely to be much worse. Cutting other programs is a political non-starter. It’s politically difficult just to restrict spending increases, let alone to impose multi-trillion dollar spending reductions. Borrowing won’t be much more attractive — paying for Medicare for All without raising taxes and without cutting other programs would mean quadrupling the federal deficit.

That leaves raising taxes. But that doesn’t look any better. If the government were to fund Medicare for All through tax increases, the payroll tax would jump from 15 percent (employer and employee halves together) to over 30 percent. Tariffs would double. The corporate tax rate would rise from around 20 percent to around 40 percent, and federal income taxes on the middle-class would jump from around 22 percent to 44 percent. To afford Medicare for All, the federal government would end up raising taxes by an amount equal to the entire German economy.

Whether in increased taxes, increased deficits, or reduced spending elsewhere, Medicare for All is going to cost a lot. And who will pay? Everyone. That’s what politicians would prefer you didn’t think about.

Elizabeth Warren has refused to say where she would come up with the money for the program. Tellingly, she has also refused to say it won’t come from higher taxes on the middle class. Mathematically, there is simply no combination of cuts, tax increases, and borrowing that could raise the kind of money the plan requires without doing serious damage to the economy and everyone in it. Elizabeth Warren certainly knows this, which means she also knows that, if elected, she cannot deliver what she is promising.

What Warren would deliver is increased taxes on the poor and the middle-class. Where federal taxes are concerned, those two groups are largely untapped. According to the Congressional Budget Office, many households earning less than $88,000 receive transfers from the federal government (largely via Social Security benefits and the Earned Income Tax Credit) that exceed the federal taxes they pay.

» READ MORE: The 4th Democratic debate was an Elizabeth Warren pile-on

In short, around 60 percent of U.S. households actually contribute, net of transfers, nothing — or less than nothing — to the federal coffers. If she is to avoid unprecedented deficits, those are the households Warren will have to tax to pay. What those households lack in resources compared to the rich, they more than make up for in numbers. Clearly, they will not be receptive to her plan.

In June, Bernie Sanders stated publicly that he will need to raise taxes to make his plan work, and his poll numbers have fallen since. But that’s what the lunch bill often yields.

So as the Democratic candidates talk about what kind of health care people should have, remember that there is nothing any of them can do to manage the cost to the point where any of this becomes feasible. All they can do is to shift the cost from one group of people to another. And the people about to have to pick up the tab won’t know what hit them.

For politicians, that’s a problem for after the election. For the rest of us, that’s a problem to consider now.

Antony Davies is associate professor of economics at Duquesne University. James R. Harrigan is managing director of the Center for the Philosophy of Freedom at the University of Arizona. They host the weekly podcast, Words & Numbers.