By Jonathan Cohn
Suddenly sensitive to the fact that 44 million Americans have no health insurance while millions more fear losing it because of skyrocketing premiums, the White House has spent the last few days promising that this year's State of the Union address would include a new plan to make health insurance more affordable.
But there was nothing "new" about the "plan" President Bush unveiled last night. It was a hodgepodge of ideas he first touted as a presidential candidate in April 2000, and that he has deployed strategically whenever the polls show health insurance affordability is an issue. More important, it's unlikely these ideas will make health insurance "more affordable"--at least, not for the people who most need the help.
The ideas are so unserious they're barely worth considering, except insofar as they demonstrate just how far out of touch this White House really is.
Malpractice reform: Almost every serious study looking at the relationship between malpractice lawsuits and rising health care costs has shown the relationship to be essentially nonexistent. There's probably a case for reforming the system on other policy grounds: the court system is a lousy mechanism for regulating safety. But it's got almost nothing to do with the cost or availability of health insurance.
Tax credits: This is the most reasonable idea Bush is offering, since it's not hard to imagine how well-crafted tax credits could help a few million people struggling to afford health insurance. But the big problem for the uninsured isn't that they don't have the money to buy a reasonably priced insurance policy; it's that reasonably priced insurance policies aren't available to individual purchasers. Insurance only becomes affordable when you buy it as part of a group (which is why it helps to work for a big company that provides benefits). Without some kind of program to make good group health insurance available to individuals, tax credits would make only a modest dent in the number of uninsured Americans--lowering that number by a few million at best. Meanwhile, tax credits might encourage more employers to stop offering coverage altogether, enough so that at least some studies suggest the overall impact would be negligible.
Association Health Plans (AHPs): These sound like a great idea. Since, as I just explained, it's hard for small groups to buy health insurance, why not let small businesses band together to buy insurance together? Well, no reason at all. But small businesses can already do that in most states. The reason more don't exercise that option is that states regulate insurance pretty tightly--to make sure the benefits are decent, that there's no discrimination against the infirmed, and that the providers of insurance are solvent and legitimate businesses. What Bush and the conservatives aren't saying about their plan is that it would get rid of these regulations. No doubt, rates would get cheaper for many businesses as insurers started offering stripped-down plans perfectly adequate for healthy people--and altogether lousy for the sick. That's one reason that, a few years ago, the Congressional Budget Office looked at AHPs and decided that they, too, would not significantly increase the number of people with health insurance.
If you're a real wonk, you can read more about these policies here or here . But the more important lesson to draw from Bush's speech is what it says about his overall priorities: Even if you accept the most optimistic--and, frankly, wildly unrealistic--estimates of what these proposals would do, they'd reduce the number of uninsured by less than ten million. Compare this to what the Democratic presidential candidates are proposing. The least generous plan out there right now is John Edwards's, which would reduce the number of uninsured by some 21 million--i.e., more than twice as much. The most ambitious plan, by Howard Dean, would reduce the number of uninsured by more than 30 million. John Kerry's would nearly match that, while simultaneously reducing the cost of insurance for those who already have it.
All of these things cost money, naturally--between $50 and $90 billion a year--which is why all of the Democratic candidates are proposing to repeal some or all of the Bush tax cuts to pay for them. But this deal is a no-brainer. Because health insurance is so prohibitively expensive when individuals buy it on their own, the extra cash they'd get from tax cuts isn't nearly as valuable as access to government-provided group coverage, which is essentially what the Democratic plans would provide. It's clear Bush sees the trade-off differently: He'd rather give the money away as tax cuts--most of them for the wealthy--than help people get insurance. What remains to be seen is whether the millions of voters who say health care is a top election concern will grasp this before November.
Jonathan Cohn is a senior editor at TNR and a Kaiser Family Foundation media fellow.
Suddenly sensitive to the fact that 44 million Americans have no health insurance while millions more fear losing it because of skyrocketing premiums, the White House has spent the last few days promising that this year's State of the Union address would include a new plan to make health insurance more affordable.
But there was nothing "new" about the "plan" President Bush unveiled last night. It was a hodgepodge of ideas he first touted as a presidential candidate in April 2000, and that he has deployed strategically whenever the polls show health insurance affordability is an issue. More important, it's unlikely these ideas will make health insurance "more affordable"--at least, not for the people who most need the help.
The ideas are so unserious they're barely worth considering, except insofar as they demonstrate just how far out of touch this White House really is.
Malpractice reform: Almost every serious study looking at the relationship between malpractice lawsuits and rising health care costs has shown the relationship to be essentially nonexistent. There's probably a case for reforming the system on other policy grounds: the court system is a lousy mechanism for regulating safety. But it's got almost nothing to do with the cost or availability of health insurance.
Tax credits: This is the most reasonable idea Bush is offering, since it's not hard to imagine how well-crafted tax credits could help a few million people struggling to afford health insurance. But the big problem for the uninsured isn't that they don't have the money to buy a reasonably priced insurance policy; it's that reasonably priced insurance policies aren't available to individual purchasers. Insurance only becomes affordable when you buy it as part of a group (which is why it helps to work for a big company that provides benefits). Without some kind of program to make good group health insurance available to individuals, tax credits would make only a modest dent in the number of uninsured Americans--lowering that number by a few million at best. Meanwhile, tax credits might encourage more employers to stop offering coverage altogether, enough so that at least some studies suggest the overall impact would be negligible.
Association Health Plans (AHPs): These sound like a great idea. Since, as I just explained, it's hard for small groups to buy health insurance, why not let small businesses band together to buy insurance together? Well, no reason at all. But small businesses can already do that in most states. The reason more don't exercise that option is that states regulate insurance pretty tightly--to make sure the benefits are decent, that there's no discrimination against the infirmed, and that the providers of insurance are solvent and legitimate businesses. What Bush and the conservatives aren't saying about their plan is that it would get rid of these regulations. No doubt, rates would get cheaper for many businesses as insurers started offering stripped-down plans perfectly adequate for healthy people--and altogether lousy for the sick. That's one reason that, a few years ago, the Congressional Budget Office looked at AHPs and decided that they, too, would not significantly increase the number of people with health insurance.
If you're a real wonk, you can read more about these policies here
All of these things cost money, naturally--between $50 and $90 billion a year--which is why all of the Democratic candidates are proposing to repeal some or all of the Bush tax cuts to pay for them. But this deal is a no-brainer. Because health insurance is so prohibitively expensive when individuals buy it on their own, the extra cash they'd get from tax cuts isn't nearly as valuable as access to government-provided group coverage, which is essentially what the Democratic plans would provide. It's clear Bush sees the trade-off differently: He'd rather give the money away as tax cuts--most of them for the wealthy--than help people get insurance. What remains to be seen is whether the millions of voters who say health care is a top election concern will grasp this before November.
Jonathan Cohn is a senior editor at TNR and a Kaiser Family Foundation media fellow.
