Bolder thinking needed

We’ve come a long way from the Clinton universal healthcare fiasco of 1992. The idea that everybody in the United States should have healthcare has finally become popular even with politicians. Just within the last couple of weeks, President Bush made a proposal to broaden health coverage a centerpiece of his State of the Union speech, and Governor Ed Rendell came up with a plan for Pennsylvania.

Bush (typically) has decided that the cure-all is a tax break. He would make employer-paid healthcare premiums taxable, then offset that with standard deductions of $7,500 for individuals and $15,000 for families. People with more expensive policies would have to pay taxes on premiums in excess of the deductions.

One part of Bush’s plan is fair and sensible: it finally puts people who have to buy their own insurance on the same tax-free footing as people who receive health insurance as a benefit. Some such reform is long overdue.

Otherwise, however, Bush has grossly misdiagnosed the healthcare crisis in this country. He seems to think the problem is that people are consuming too much health insurance, and wants to deter them by making “luxury” premiums taxable. With 47 million uninsured and many millions more underinsured, we think it’s because they don’t have enough.

There are two principal reasons that people are uninsured: because they are too poor—in which case they pay low taxes to begin with, and will receive little or no benefit from a tax break—or because they have pre-existing conditions that make the cost of insurance prohibitive even for the middle class.

Bush’s plan addresses neither of these problems. People in tax brackets high enough to experience significant savings from it are mostly already insured. By Bush’s own estimates, only about five million additional people would join the insurance rolls under his program. Many employees who already have jobs with benefits would gain, getting a tax break on the difference between the cost of their existing insurance and the deduction. But this is not a group in dire need of handouts.

Meanwhile, it is not only rich people who would be penalized by taxing expensive policies. Some people have to pay more than the deduction limits because they are diabetic, or cancer survivors, or have some other risk factor. Under Bush’s plan, insurance would become even less affordable for these people.

Bush’s plan, in short, doesn’t help the working poor, provides an unneeded windfall to people who already have company insurance and penalizes the sick.

Rendell’s plan is a much better start. It would require individuals with incomes that are more than 300 percent of the poverty level to buy health insurance, but would help by providing reasonably priced plans for small employers, as well as for individuals buying their own health insurance. It would also provide subsidies to lower-income individuals to allow them to afford premiums.

Apparently, Rendell’s plan would call for supervision of the extent of coverage provided. This is crucial; otherwise, one can imagine a situation in which people are forced to pay for policies with deductibles, co-pays and limits in coverage so extreme as to make them useless; a cash cow for the companies and a scourge for the working class.

But the plan’s complexity could be a problem: like Schwarzenegger’s proposal for California, it would consist of a complicated patchwork of measures that might not only be difficult to pass in any cohesive form, but also could spell out more paperwork—read costs—in implementation. And by keeping private insurers as middlemen, it maintains all the associated administrative tangle and overhead costs associated with a myriad of payers.

During the election campaign, Rendell told an audience, “I would sign a single-payer plan if it came to my desk.” We wish he’d been willing to give it a try. It seems to us that a single-payer plan is the only one that would address all the principal issues: affordability, costs, simplicity of administration and completeness of coverage. Maybe we’re wrong—but with 50 states in this country, it would surely be worthwhile for one of them to try it. Instead, it looks like the all-powerful insurance industry is pushing all of them towards the forced-pay model.

We would like to challenge Pennsylvania legislators to thank Rendell for starting the healthcare dialogue—and then call his bluff by sending a single-payer plan to his desk. Such a bold experiment would put Pennsylvania at the forefront of the nation’s quest for a solution to the healthcare crisis. And it might just work.

Also in this issue:

• My view: It’s not a problem

Dr. Punnybone

Right UR