Some Uninspiring Health Proposals

The health proposals put forward so far by President Bush and the Democratic presidential hopefuls haven’t exactly sparked a national debate.

Representative Gephardt’s proposal -- a sweeping employer mandate to provide coverage with heavy behind-the-scenes funding from the government -- is mind bogglingly expensive (over $200 billion a year), paternalistic (why should employers decide what coverage we get?) and inflationary (there’s no incentive to economize if employers and the government are picking up the tab). To be fair, Gephardt’s plan probably would succeed in covering most of the uninsured.

The other Democratic candidates’ health proposals also assume large expansions in coverage. But because those assumptions are based mostly on expansions of public programs -- which may not be possible due to budget constraints, especially at the state level -- those claims are somewhat dubious.

Governor Dean’s main proposal is pretty standard Democratic fare: Federally funded, state-based public coverage for low- and middle-income kids and their parents. This proposal -- sometimes called “family care” -- is popular among Democratic activists in Washington, but it wouldn’t have much impact in the current fiscal environment faced by states. States are cutting, not expanding coverage. And states certainly don’t trust federal promises of future funding. Dean’s second proposal -- tax credits and purchasing pools (like the federal employees’ system) to give everyone a fair deal on coverage -- seems like an excellent combination. However, the structure of Dean’s tax credits -- which could cover 100 percent of premiums if they exceeded 7.5 percent of a taxpayer’s income -- would also be inflationary, rewarding people for choosing the highest-cost coverage.

Senator Kerry’s proposal includes some interesting stuff: Public reinsurance for the highest cost enrollees (those with more than $50,000 a year in health spending) and new federal employees-style purchasing pools. Plus some good ideas on quality improvement and electronic medical records. But Kerry’s “family care” plank is an even worse deal for states. And in general, the Kerry proposal is so convoluted that it may be hard to explain on the campaign trail.

President Bush’s long-standing health proposal -- tax credits for low-income people purchasing health insurance -- is less ambitious. It would not be inflationary, but it could disrupt employer-based health coverage because workers with employer coverage would not be eligible. Therefore, some healthy employees would have an incentive to drop job-based coverage and purchase a plan outside the workplace (and thereby receive the credit). However, that would raise costs for those remaining in the employer’s plan.

And after three years of tax cuts for virtually every other purpose, it’s clear the Bush Administration isn’t pushing its own proposal very hard. In sum, Bush’s proposal wouldn’t cost much, wouldn’t do much, isn’t really on the legislative agenda, and could mess things up if it actually was enacted.

Senator Lieberman hasn’t weighed in yet, and President Bush may modify his old proposal after the primaries are over and the one-on-one campaigning begins.

But so far, the candidates’ health proposals have not captured the public’s imagination. Nor have they inspired a groundswell of support for action on health coverage.

Links:

Gephardt Health Proposal
Dean Health Proposal
Kerry Health Proposal
Bush Health Credits Proposal

Posted by Jeff Lemieux at June 29, 2003 11:45 PM