Bush's health care scam
Bush’s health care scam
By Robert Kuttner | May 27, 2004
IF THE MESS in Iraq and the high price of oil were not crowding out other election year issues, health care would top the list. Premium costs keep increasing, out-of-pocket charges keep being shifted onto consumers, and the number of uninsured is at an all-time high.
President Bush, speaking Tuesday at a Youngstown, Ohio, community health center, promised to help more uninsured Americans obtain affordable health care. But his key proposals are dubious health policy, waste taxpayer dollars, and are unlikely to increase coverage. They deserve more attention because they epitomize Bush’s utterly cynical approach to governing.
Here’s what Bush would do.
First, he relies on tax credits. A family earning $25,000 or less could receive a “refundable tax credit” (that is, a government payment) of up to $3,000 toward the purchase of health insurance. The trouble is that the average family health insurance policy provided by employers in 2003 cost $9,000, and individually purchased policies cost even more.
A family with $25,000 income, even with a $3,000 subsidy from Bush’s plan, would still have to pay $6,000 out of pocket. Families with $25,000 or less are just scraping by. How many can afford to spend almost a quarter of their total income on health insurance?
Worse, individual health insurance policies are the least efficient way to provide health coverage because they are more costly than group plans to administer. And they leave families with any history of illness vulnerable to denial of insurance on grounds of a “preexisting condition.” (About half of the uninsured have histories of serious medical problems.) So, few people currently without insurance would actually benefit from Bush’s tax credit scheme.
About two-thirds of workers earning under $25,000 already have employer-provided insurance. For them, the tax credit would be a windfall; it would not reduce the number of insured. Younger and healthier workers would opt out into low-cost individual plans, raising the cost to other workers. A study by the Kaiser Family Foundation suggests that the net effect would be a loss of employer-provided insurance.
Second, the president, working with the National Federation of Independent Businesses (the very conservative small-business lobby), proposes something called Association Health Plans. The idea is that small businesses can organize themselves into associations to purchase health insurance collectively at lower rates.
This sounds like a good idea, except that small businesses are already free to do that. The magazine that I edit, with 23 employees, has long been a member of just such an association so we can purchase affordable insurance for our staff.
The new and insidious wrinkle in the Bush proposal is that it would exempt such associations from regulations that currently prohibit discrimination against individuals based on health status. With this new provision, insurers could offer very favorable rates for health plans whose members were limited to the young and the healthy.
As younger workers bail out of larger insurance pools, middle-aged workers and their dependents, as well as those with histories of illness, would face huge rate increases. The bipartisan Congressional Budget Office has estimated that some 20 million Americans would face higher insurance costs if this proposal were enacted. Both The Wall Street Journal and Forbes magazine, not exactly lefty news organs, have published articles pointing out the serious flaws in this approach.
Why would the business federation support such a scheme? One reason is that it stands to make more than $100 million a year organizing and selling such plans.
Bush would also increase the tax benefits of so called Health Savings Accounts. Under this scheme, taxpayers can set up tax-sheltered accounts similar to IRAs and then use the proceeds to pay out-of-pocket health costs. Bush wants to expand these so they can also be used to pay premiums.
But very few low-income people use such accounts. They are beneficial mainly to people in higher tax brackets. They also create incentives for people to buy policies with very high deductibles, which defeats the goal of preventive medical care.
Taken together, Bush’s new plans would cost the Treasury more than $100 billion over 10 years in lost revenues. He proposes to make up that loss by cutting two proven programs that actually do help more people get health care — Medicaid and the State Children’s Health Insurance Program.
So this is how our president proposes to “help the uninsured.” If the United States is a democracy worthy of the name, we the voters owe it to ourselves to look beyond the photo-ops and misleading rhetoric to the real details.
Robert Kuttner’s is co-editor of The American Prospect. His column appears regularly in the Globe.
© Copyright 2004 Globe Newspaper Company.