What a Waste of a State of the Union
I love the idea of Democratic Rule through 2010
By Thomas Posted in The White House — Comments (108) / Email this page » / Leave a comment »
If you're, ahem, fortunate enough to be constantly plastered with White House
spam email, you'll have noticed that the President is pushing health care reform as one of his major initiatives. Here is the point-by-point. The executive line summary is an attempt to start taxing a portion of employer-provided benefits to push folks into tax-deductible individual healthcare plans. (blackhedd ably discussed this here.)
To this I say: You have to be kidding me.
Let me start with first principles, and why I'm hacked:
(1) We're Republicans. We do not tax. We became, over the last twelve years, the Other Party of Spend. I don't see why we should cede our last bit of ground on that front now. I may have to accept abortion-philes and cowards in my Party, but I should not have to have the one reason God made Republicans taken away. And as this creates a new taxing structure, you're gonna have to pardon me if I don't believe it's not a tax, and if the public doesn't buy the argument that it's not.
(2) This will not pass. Regardless of the merits of the thing -- and I believe them dubious at best -- this is gonna be one phenomenal waste of what little political capital Bush has left. There are only two reasons to set forth something this high-profile when it has no chance of passing: (a) You want to embarrass your opponents when they shoot it down, or (b) you want to build on this into and through the next election, because you believe it's a high-profile issue that can produce key electoral votes. Neither of these things apply here.
I can't even begin to fathom what went through what's left of the WH brain trust. Well, we need a home run shot to recapture political momentum. War? Nope. Something for the base? Ok, everyone, stop laughing. I know! Let's tax medical benefits!
It doesn't end there. Read on.
Let's begin with the underlying logic, such as it is. The President is pushing this plan as if it will be the first, vital step in reforming our seriously screwy healthcare system. I believe the basic animus is that because these benefits are provided by employers, there is no disincentive to stock up on the best possible plan offered, at no or little additional cost, and to use health care resources inefficiently, because the increased cost the consumer is creating is hidden from their eyes.
To anyone who thinks that hidden price signals account for the majority, or even a plurality, of the problem with health care, I have this beautiful bridge off of one of New York's boroughs, and it can be bought cheap cheap cheap! This is unserious. The problem with our system, frankly, is that we allow people over the age of 45 to have health insurance, and they demand increasingly complex and expensive treatments, surgical and non-surgical, to hold off the Grim Reaper a little longer. Because they demand it, their state legislatures require insurance companies to give it; and because of some lovely court rulings and legislative acts at the State and Federal levels, insurance companies have to offer that insurance, and at affordable prices. The insurance companies then do the rational thing and raise premia across the board. And because those middle-aged-and-older folks keep pushing back the scythe, and because the tools to lock blades with Old Bones grow exponentially more expensive for every five years of additional life, we're caught in a death spiral. Thus, it's undisputed that getting the best of the best (with honors sir!) coverage at what appears to be a confused price weighs in, as do medical malpractice suits (and increased premia for medical malpractice insurance), bond market issues for the insurance companies, and an increasingly overweight, underexercised populace; but all of those things work at the margins. They exacerbate, they do not cause.
So pardon me if I'm not wowed and amazed at this placebo. Do you want to solve the healthcare "crisis" right now? I'll do it for you: Kill the Baby Boomers -- and my fellow Gen-Xers, it's time to start partying like it's 1999, because we're next. (That would solve a number of other problems as well.) Want something more complex? Forbid the States or the Federal government from all but minimal regulation of health insurance; allow tiered insurance and risk pools, with vastly more expensive premiums for each five-year step, to the point where it becomes financially impossible for all but the wealthiest to afford coverage after the age of 60; and encourage folks under 45 to buy the "gold-plated" insurance plans, because they're giving the insurance companies premium for options they'll never use. "Gold-plated" insurance is a wonderful thing, because the young saps who buy it are subsidizing everyone else.
Now, none of that will ever happen; it therefore has at least as much going for it as the President's plan.
But we'll get back to that in a second. Let's talk first principles. The fundamental lesson that Republicans should know, but appear to be forgetting, is that no tax ever disappears -- or if it does, it takes a century and change. At best, they only grow a little over time. Right now, this is only a tax on certain benefits offered and accepted by an employee. Why stop there? Why not on the whole amount offered by the employer? Why not tax insurance benefits received above the premium you pay? What about employers who self-fund their own risk pools and have a TPA (third party administrator, for those of you smart enough not to know these things) handle claims (best insurance I've ever had), who, because they're in a controlled risk pool, can set premiums and pick up portions better that employers who sign on to Humana, BlueCross, or whoever's plan?
This plan is fundamentally about growing the Federal Government. Remember when we were against that? Can't we at least have an offset? Where's that overhaul of ERISA that should accompany this? You know, the one to offer tax incentives to employers to rearrange how benefits are offered, to protect employers who don't offer those benefits or who only provide the cash for the benefits, and so on? Oh, no, wait, that monstrosity keeps coming.
While we're at it, one of the lines they're trotting out is that this plan is a good thing because it will force people to be more responsible with their health care dollars. I missed the part where being a Republican involved having the government teach me personal responsibility. Can someone show me that plank?
Now let's talk about why this is awful politics.
This tax -- let's be frank about what it is -- does not affect me, because I currently work for a law firm that has elected not to provide generous benefits as part of its compensation package. But let's assume it does, and use me as an example. My eldest son and my daughter both have diagnosed medical conditions (not uncommon), that may or may not need surgery. My wife and I are expecting again. (We're Catholic. The reason is obvious.) The announced point of this plan is to drive me from my employer's risk pool into a risk pool composed entirely of individuals. Ok. Let's be honest about what happens:
Step One: I apply to, say, Humana to cover my family. They say, We're happy to have your business. Let's do some underwriting.
Step Two: During the underwriting process, they decide that they don't want to cover anything associated with my kids' pre-existing conditions. Perfectly rational. So they attach a rider exclusion excluding any treatment for those (or any other pre-existing condition, including pregnancy, ahem, which group coverage cannot do, under HIPAA) to the coverage.
My premium is now tax deductible. Woo hoo. It's still, of course, out of pocket. But at least it's not taxable!
Step Three: My wife, pregnant as she is, goes into labor on time, as most women do, no complications, vaginal birth, healthy kid who needs an incubator because, as all of my kids are, s/he is freaking huge and was too big for the uterus. Total hospital and doctor bill (where they're still offsetting the massive rate-slashing insurance companies insist upon, because even now, most people are insured through their companies): $25,000.00, which is to say, a not insignificant chunk of my yearly salary. Hm. That sucks.
Step Four: My daughter contracts an infection and her specialist recommends surgery to correct the underlying problem. Total bill (see parenthetical above): $18,000.00. Hm. That also sucks.
Step Five: Meanwhile, rather than merely have to pay 80% of each visit to my son's regular treater, I pay 100% -- and now they have me on the uninsured rate, so see parenthetical above. So that's now running me some extra money every week -- roughly $150, which means I have an extra $600 out of pocket every month. So there went what's now the chump change of an extra $7200 every year.
The good news is that as much of all this is over 7.5% of my income, but below a certain cap, is tax-deductible! Woo hoo!
Anecdote is not the singular of data, as our good streiff likes to put it. But imagine, oh, say, the majority of Americans are being pushed into this choice. Then imagine, just for fun, that some significant portion of them vote. Just for giggles, humor me.
Now imagine that even assuming the Yellow Brick Road vision everyone's laying out over this acts as modern markets and market events tend to, which is to say, at the speed of human. Transition costs are not zero; there are micro- and macro-inefficiencies that take years to work out. Who bears those costs? Would it, by chance, be those voters?
And, as I mentioned above, there is no way in heck this passes a Democrat-controlled Congress, two of whose primary constituent groups -- government employees, and other union laborers -- enjoy "gold plated" coverage from their employers. So the net effect of this is to shove a great, stinking pile of turds under the voters' noses, then have the Democrats bravely beat it away.
Dumb. Dumb. Dumb, Mel Martinez dumb.
While it's a cliche to say that Bush lost me -- and it's untrue -- this is the first time I honestly think he's betrayed first principles. That he's chosen to do so and waste political capital in the process. We've neatly gone from one of the finest political operations in modern memory during his first three years in office, to one of the worst since.
What a waste of a bully pulpit.