The Economic Effects of Joe Biden’s Healthcare Plan
A major debate in American politics has been over the type and method of healthcare provided. Medicare for all, expanding the public option, expanding Obamacare, and repeal and replace have all been discussed and advocated for by different politicians. Now that the primary season is long gone and the general election is in a few short weeks, assessing healthcare plans and their economic impact is an important task.
Joe Biden’s plan on his website is a comprehensive change including a public option, expanding credits, and lowering prescription drug prices. He claims all of this can be paid for by raising the capital gains top rate to 39.6%. At the very least, people making under $80,000 would be paying much less in insurance premiums as a percentage of income (Figure 1).
According to a non-partisan organization that analyzes the economic effect of large-scale public policy, Biden’s plan would increase health spending by about 12% over the next decade. Some of this would be offset by an increase in capital gains and income tax. However, a middle estimate would guess that the deficit would increase by $850 billion over the next 10 years.
The question then is: would the government eat the loss through debt, would they raise taxes or would they cut expenditure elsewhere? Most estimates put the increase in insured people at about 20 million under the Biden plan, which could pay for itself. Right now, taxpayers pick up the bill for people who go to the hospital but cannot pay. If that group of people is largely eliminated, spending outside of planned healthcare would reduce. This would allow the government to effectively plan healthcare spending. Planning for expenditures makes each dollar spent more effective by treating more patients at a lower total cost.
In light of Covid-19, it seems almost inevitable that a bill for a sizable increase in government-funded healthcare will pass. Balancing coverage with affordability has always been a challenge for the American health system. However, Biden’s changes would bring America’s system closer in line to many European countries that have high marks on both outcomes and affordability. While the methods are diverse, European countries share the common practice of having largely socialized healthcare.
It is natural for politicians to make big promises to the public and figure out the details later. However, figuring out those details can often be more difficult than the policy in the first place. As bills are often held hostage by budget hawks in the government, understanding the economics behind healthcare will be an important step in the reformation of the American healthcare system. If Biden is elected and puts forward a bill similar to what he has proposed while running, the debates in congress and the news will be ubiquitous. Therefore, it is important to recognize that the numbers being given to the American public may not be accurate. The GOP and Democrats may emphasise or ignore current spending, cost saving measures, or higher tax rates for wealthy Americans to try and paint a picture of the future. All of these measures together show a clearer picture of the real cost of healthcare reform. That is why I urge anybody who wants to be informed of the current state of US politics to not only listen and watch their preferred news media, but to also try and piece through and understand the key points of the bills themselves.
Edited by: Shail Saraiya
References:
https://joebiden.com/healthcare/
https://www.vox.com/policy-and-politics/21493251/presidential-debate-2020-biden-trump-health-care-plan
https://www.crfb.org/papers/understanding-joe-bidens-2020-health-care-plan
https://www.griffinbenefits.com/blog/how-does-healthcare-in-europe-work#
https://www.griffinbenefits.com/blog/how-does-healthcare-in-europe-work#
