By the Editors
Somebody at the White House must have realized that the 44 million Americans without health insurance--and the tens of millions more worried about losing theirs--think the government has better things to do than land on Mars. That's why the talk of moon shots ended abruptly last week, and administration officials instead began promising reporters that the big domestic policy news in this week's State of the Union address would be the president's proposals to make health insurance more affordable.
But the striking thing about the new ideas President Bush presented Tuesday night is that they aren't new at all. In his speech, Bush proposed reforming malpractice laws, creating purchasing pools for small businesses, and offering new tax breaks for health insurance--all ideas he has been touting since the spring of 2000, when candidate Bush first suggested them. But they make no more sense now than they did then. Take malpractice reform, that hearty conservative perennial. There's a respectable case to be made for intelligently curbing frivolous malpractice lawsuits. But, according to the most reliable studies, conservative ideologues have greatly exaggerated the relationship between malpractice lawsuits and rising overall health care costs. If Bush wants to challenge a special interest group, he should forget the trial lawyers and go after the pharmaceutical industry, whose manipulation of the prescription-drug market has a lot to do with skyrocketing insurance premiums.
Bush's effort to help small businesses cover their employees by allowing them "to band together and negotiate for lower insurance rates" at least targets a more germane problem. After all, health insurance works best when large groups of people purchase coverage together so that the modest premiums paid by the vast majority of healthy people are enough to pay the high expenses of the small minority with serious medical problems. But small businesses are already allowed to pool resources; the reason they don't is that states regulate group insurance very tightly, to guarantee minimum benefits and prohibit discrimination against the infirm. The scheme Bush embraces--so-called association health plans (AHP)--would do away with those regulations. So, while more small businesses might offer coverage, that coverage could well be inadequate for the very sick. That's one reason that, a few years ago, the Congressional Budget Office looked at AHPs and decided they might actually increase the number of uninsured.
Of all the Bush health ideas trotted out this week, the most serious and promising is the creation of refundable tax credits to help the uninsured. But, precisely because health insurance is so much more expensive when you buy it as an individual, the $1,000 tax credit by itself won't make decent coverage affordable for many poor adults. Once again, healthier individuals who can make do with bare-bones policies--the only kind $1,000 might buy--might find this an appealing option; but it'd be a lousy deal for people who are sick. Given that some employers would seize on the opportunity of expanded tax-credit options to drop coverage altogether, it's no wonder that some studies suggest these tax credits would be of negligible benefit to the uninsured.
Whatever their individual flaws, the most devastating thing you can say about Bush's proposals is what, together, they signal about his administration's priorities. Even if you accept the most optimistic--and, indeed, wildly unrealistic--estimates of what these proposals would do, they'd reduce the number of uninsured by just a few million. Compare this with what the Democratic presidential candidates are suggesting. The least generous plan out there is John Edwards's, which would reduce the number of uninsured by a full 21 million--cutting the number of uninsured Americans in half. Plans by the other contenders would go even further, reaching more than 30 million people. These plans would cost between $50 and $90 billion, or between five and ten times as much as Bush's proposals--money the Democrats would generate by repealing part of the Bush tax cuts. It'd be a worthwhile trade-off. 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. Bush, naturally, sees things differently. The most emotional pitch Bush made in his State of the Union was a plea for Congress to make permanent his tax cuts--tax cuts that could easily pay to cover every single uninsured American. Hopefully, Americans will remember that when they vote in November.
Somebody at the White House must have realized that the 44 million Americans without health insurance--and the tens of millions more worried about losing theirs--think the government has better things to do than land on Mars. That's why the talk of moon shots ended abruptly last week, and administration officials instead began promising reporters that the big domestic policy news in this week's State of the Union address would be the president's proposals to make health insurance more affordable.
But the striking thing about the new ideas President Bush presented Tuesday night is that they aren't new at all. In his speech, Bush proposed reforming malpractice laws, creating purchasing pools for small businesses, and offering new tax breaks for health insurance--all ideas he has been touting since the spring of 2000, when candidate Bush first suggested them. But they make no more sense now than they did then. Take malpractice reform, that hearty conservative perennial. There's a respectable case to be made for intelligently curbing frivolous malpractice lawsuits. But, according to the most reliable studies, conservative ideologues have greatly exaggerated the relationship between malpractice lawsuits and rising overall health care costs. If Bush wants to challenge a special interest group, he should forget the trial lawyers and go after the pharmaceutical industry, whose manipulation of the prescription-drug market has a lot to do with skyrocketing insurance premiums.
Bush's effort to help small businesses cover their employees by allowing them "to band together and negotiate for lower insurance rates" at least targets a more germane problem. After all, health insurance works best when large groups of people purchase coverage together so that the modest premiums paid by the vast majority of healthy people are enough to pay the high expenses of the small minority with serious medical problems. But small businesses are already allowed to pool resources; the reason they don't is that states regulate group insurance very tightly, to guarantee minimum benefits and prohibit discrimination against the infirm. The scheme Bush embraces--so-called association health plans (AHP)--would do away with those regulations. So, while more small businesses might offer coverage, that coverage could well be inadequate for the very sick. That's one reason that, a few years ago, the Congressional Budget Office looked at AHPs and decided they might actually increase the number of uninsured.
Of all the Bush health ideas trotted out this week, the most serious and promising is the creation of refundable tax credits to help the uninsured. But, precisely because health insurance is so much more expensive when you buy it as an individual, the $1,000 tax credit by itself won't make decent coverage affordable for many poor adults. Once again, healthier individuals who can make do with bare-bones policies--the only kind $1,000 might buy--might find this an appealing option; but it'd be a lousy deal for people who are sick. Given that some employers would seize on the opportunity of expanded tax-credit options to drop coverage altogether, it's no wonder that some studies suggest these tax credits would be of negligible benefit to the uninsured.
Whatever their individual flaws, the most devastating thing you can say about Bush's proposals is what, together, they signal about his administration's priorities. Even if you accept the most optimistic--and, indeed, wildly unrealistic--estimates of what these proposals would do, they'd reduce the number of uninsured by just a few million. Compare this with what the Democratic presidential candidates are suggesting. The least generous plan out there is John Edwards's, which would reduce the number of uninsured by a full 21 million--cutting the number of uninsured Americans in half. Plans by the other contenders would go even further, reaching more than 30 million people. These plans would cost between $50 and $90 billion, or between five and ten times as much as Bush's proposals--money the Democrats would generate by repealing part of the Bush tax cuts. It'd be a worthwhile trade-off. 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. Bush, naturally, sees things differently. The most emotional pitch Bush made in his State of the Union was a plea for Congress to make permanent his tax cuts--tax cuts that could easily pay to cover every single uninsured American. Hopefully, Americans will remember that when they vote in November.
