Flawed health-care plans

The Washington Times Weekly - - Editorials -

With health care shap­ing up to be the top do­mes­tic-pol­icy is­sue in next year’s pres­i­den­tial elec­tion, the lead­ing Repub­li­can can­di­dates will have to of­fer far more sub­stan­tive ar­gu­ments than the throw­away lines they used dur­ing the de­bate two weeks ago. If the Demo­cratic op­po­nent is Hil­lary Clin­ton, it will not be enough to ac­cuse her of re­sub­mit­ting her 1993 plan. (She has not done so.) Nor will it be enough to ac­cuse her of pur­su­ing a purely so­cial­is­tic health-care pol­icy.

Three lead­ing Repub­li­can can­di­dates, Mitt Rom­ney, Rudy Gi­u­liani and John McCain, have put health-care plans on the ta­ble, but none of them has es­ti­mated the costs. Mrs. Clin­ton’s 1993 plan col­lapsed largely be­cause it threat­ened the em­ployer-based sys­tem that pro­vides health in­sur­ance to 63 per­cent of Amer­i­cans un­der the age of 65, in­clud­ing 71 per­cent of house­holds in the mid­dle quin­tile of the in­come stream, 82 per­cent of the house­holds in the fourth quin­tile and 86 per­cent of house­holds in the high­est quin­tile.

Iron­i­cally, all three Repub­li­can can­di­dates are of­fer­ing health plans that would seek to grad­u­ally shift the bur­den from em­ployer-pro­vided health in­sur­ance to a sys­tem that would re­quire fam­i­lies to use tax in­cen­tives to ob­tain health in­sur­ance from the private mar­ket. Mean­while, hav­ing learned from the many mis­takes she com­mit­ted in 1993-1994, Mrs. Clin­ton has em­phat­i­cally told Amer­i­cans that her new plan will al­low them to keep their em- ployer-pro­vided health in­sur­ance. “You can keep the doc­tors you know and trust. You keep the in­sur­ance you have, if you like that,” Mrs. Clin­ton said in Septem­ber when she un­veiled her plan.

With the av­er­age an­nual fam­ily pre­mium for em­ployer-pro­vided health care ap­proach­ing $13,000, it is not clear how a $15,000-$20,000 tax de­duc­tion (the gen­eral range of­fered by Messrs. Rom­ney and Gi­u­liani) for a fam­ily earn­ing the me­dian fam­ily in­come (about $62,000 to­day) is go­ing to be suf­fi­cient to pur­chase a com­pa­ra­ble pol­icy in the private mar­ket, where in­sur­ance pre­mi­ums for in­di­vid­ual fam­i­lies are higher than em­ployer-paid pre­mi­ums. A tax de­duc­tion to­tal­ing $17,000 would in­crease af­ter-tax in­come by $2,550 for a two-par­ent/two-child fam­ily earn­ing the me­dian in­come. How much health in­sur­ance will that buy? Mr. McCain of­fers a re­fund­able tax credit of $5,000 per fam­ily, which is twice as gen­er­ous as Rom­neyGi­u­liani but still well be­low the cost of in­sur­ance. And how much would th­ese tax de­duc­tions and cred­its cost the fed­eral gov­ern­ment?

It is not enough for Mr. Gi­u­liani to blithely as­sert, as he did dur­ing the de­bate, that “the price of health in­sur­ance would be cut more than half” if 50-60 mil­lion peo­ple bought their own health in­sur­ance com­pared to 17 mil­lion to­day. Worse, Mr. Rom­ney wrongly as­serted, “Med­i­caid and Medi­care, we can solve those. I know that. We did it in our state.” He did not. Mak­ing it up as you go along is no way to run for pres­i­dent.

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