Elizabeth Warren’s Medicare for All: A complex idea with huge ramifications for Massachusetts

Senator Elizabeth Warren spoke during a town hall at UNH on Wednesday. She released her $20.5 trillion Medicare for All plan on Friday.Jessica Rinaldi/Globe Staff/Globe Staff

Elizabeth Warren’s plan for funding universal health care is everything you’d expect from the Massachusetts senator: comprehensive, data-driven yet passionately argued, and reliant on the usual bad guys for paying the tab.

Wall Street speculators, tax-dodging multinationals, and 1 percenters would cough up nearly half of the $20.5 trillion in new spending that Warren said Friday would be needed over the next decade to switch everyone to her version of a government-run Medicare for All plan. The other half would come from employers — by replacing their payments to insurers with payments to the government — as well as from more effective tax collection, cuts to defense spending, and additional revenue generated by overhauling the immigration system.

The rest of us, the 99 percent, would pay nothing. No premiums, no copays, no out-of-pocket costs. And no new taxes.

It would be great — if it were truly that simple.

But Medicare for All would be dauntingly complex to put into place, even over a four- or five-year transition period.

“There are substantive questions of the workability of some of these things, especially the current employer payments that are routed into government payments, and the wealth tax,” said David Hopkins, an associate professor of political science at Boston College. “There are also political questions about whether any of this is remotely passable in Congress.”

Here are some caveats to keep in mind.

1. A government-run system would leave no corner of our sprawling health care sector untouched. That has enormous implications for Massachusetts, where health spending accounts for almost 10 percent of the economy.

Private health insurance would be eliminated (something not even Britain did with its National Health Service). Doctors, hospitals, and other health care providers would get paid much less than they do now from nongovernment plans. Drug companies would be squeezed to cut prices. And state and local government health plans would get folded into the national system.

In local terms, think of the pain that could be caused by shrinking revenue to big employers such as Blue Cross Blue Shield or Harvard Pilgrim, Massachusetts General Hospital and UMass Medical Center, Biogen and Vertex.

“Today, for example, insurers can charge dramatically different prices for the exact same service based on where the service was performed,” Warren wrote in her post announcing the plan. “Under Medicare for All, providers will receive the same amount for the same procedure, saving hundreds of billions of dollars.”

Translation: An expensive teaching hospital in Boston, a powerhouse of our local economy, would get paid the same as a community hospital in, say, Ayer.

But the dynamics are complicated, and adding millions of people to the health insurance rolls could mitigate cost reductions.

“Private insurance goes away, so there is a lot more spending on doctors, nurses, hospitals, etc. . . The number of good jobs in this sector likely goes up significantly,” said Simon Johnson, an MIT economist who reviewed the plan for the Warren campaign.

2. Under Warren’s Medicare for All, the burden of supporting the system is lifted from consumers.

Employers would pay about $8.8 trillion from 2020 to 2029, essentially sending what they now pay insurance companies to the federal government instead. Warren says employers would save about $200 billion over current premiums.

Large corporations would get hit with $2.9 trillion over 10 years from higher taxes, including new levies on overseas profits, and less generous writeoffs for depreciating assets.

Those would come on top of two proposed taxes that Warren would use for other programs: a $1 trillion surcharge on corporate income, and the repeal of the 2017 Republican tax cuts, which would raise another $1 trillion.

Combined, that’s a tax hike of almost $5 trillion, or $500 billion a year.

Meanwhile, the top 1 percent of US households would be required to pay higher taxes on their investment gains (except on retirement accounts), an amount she pegged at $2 trillion over 10 years. Warren also expanded her previously announced wealth tax by $1 trillion, doubling to 6 percent the rate on net worth above $1 billion. (She left unchanged at 2 percent the rate on net worth from $50 million to $1 billion, which would be used for other purposes.)

Wall Street would contribute $800 billion over a decade through a new tax on trades of stocks, bonds, and other securities. The nation’s 40 biggest banks would be taxed $100 billion in a way that penalizes them from taking on too much risk, Warren said.

It’s hard to feel sorry for Wall Street and billionaires, but Warren’s approach to redistributing wealth on a large scale could have economic consequences that affect the rest of us: layoffs in the health care industry, for example, or corporations scaling back investments in the face of new taxes, and the wealthy finding new ways to avoid taxes.

“Every big, serious macro economic policy involves risks,” said Johnson, the MIT economist. “But you can do this big kind of change if you do it properly.”

3. Warren may be too optimistic in her targets for cost savings and raising revenue. For example, can she really bring in $2.3 trillion over 10 years with tougher enforcement of tax laws and closing loopholes? Will restructuring the nation’s immigration laws generate $400 billion from newly legal taxpayers?

Johnson said the estimates used in Warren’s plan are conservative on both fronts. But others weren’t so sure.

‘‘They are making more aggressive assumptions about the same things we already made aggressive assumptions about,’’ said John Holahan, an economist at the Urban Institute who coauthored a recent cost analysis that the Warren campaign is using as a starting point for its estimates.

Universal health care isn’t universally popular. Many Americans don’t want to be forced into a government health insurance scheme, even if they can keep their doctors. In a recent poll by the Kaiser Family Foundation, 51 percent of respondents said they favored a national health care plan. But 61 percent of Republicans and 35 percent of independents said they opposed Medicare for All, compared with 16 percent of Democrats.

Pete Buttigieg, the mayor of South Bend, Ind., has gained recently in the primary rankings, in part because he favors letting people keep their private insurance if they want to. The position is popular among the moderate Democrats and independents who could be pivotal in the election.

“It’s a good primary strategy,” Hopkins, the BC political scientist, said of Warren’s push for Medicare for All. “I think it’s a different issue in the general election.”