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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

“Philosophical Differences” On Health Care

In case you’ve missed it, George W. Bush has picked a major fight with Democrats, many Republicans, virtually all of the governors, and most health care advocacy groups from left to right, over health care policy.
The context is the about-to-expire SCHIP program, the ten-year-old initiative, which has enjoyed strong bipartisan support, that helps states provide health coverage to children whose parents don’t qualify for the restrictive low-income Medicaid program. SCHIP is currently struggling to meet its original goals; more than 3 million eligible kids aren’t being covered, and thanks to rising health care costs, the current level of federal SCHIP funding is certain to create a serious erosion of past coverage.
The Senate Finance Committee has reported, on a 17-4 vote (with ranking Republicans Chuck Grassley and Orrin Hatch strongly in support) a SCHIP reauthorization bill that strikes a compromise between the funding levels supported by most Democrats, and those necessary just to maintain current coverage. The cost of the bill would be paid for by a substantial increase in the federal tobacco tax.
And now Bush has clearly signalled he’d veto this bill, not, as you might expect, on grounds of its cost, but on “philosophical grounds,” because he views SCHIP as a threat to private insurance coverage and sort of a Trojan Horse for “government-run health care.” Instead, he’s demanding congressional action on his own proposal to replace the employer tax break for health insurance with an individual deduction for purchase of health insurance in the chaotic and expensive individual market.
This, my friends, offers Democrats a heaven-sent opportunity to wedge Republican on health care and expose the extraordinary radicalism of Bush’s (and by extension, that of many of the GOP candidates seeking to replace him) approach to health care. The government/private distinction Bush is trying to draw here is completely specious. The vast majority of those covered by SCHIP (and for that matter, by Medicaid) are actually participating in private health plans that contract with the states. The government’s role is simply to finance and organize coverage. Since Bush’s own plan would obviously continue the federal role in financing coverage for those without employer-sponsored coverage, the real “philosophical difference”‘ is over government’s role in creating an insurance pool that holds down premiums, prevents discrimination, and spreads the cost of health risks.
But it gets worse. Bush’s proposal is for a tax deduction for health insurance purchasing, which is highly regressive to begin with (since deductions have a greater value to those in higher tax brackets) and useless to poorer families with little or no tax liability. Since the proposal is explicitly designed to undermine employer-sponsored health insurance, it represents a radical attack on the very idea of pooled purchasing, and would send the U.S. health care system back towards the 1950s, when individual plans, and/or non-insured direct payment of health care costs, was the norm. With the exception of Mitt Romney, who appears reluctant to talk about the Massachussets coverage expansion initiative he signed, the Republican presidential candidates have generally embraced the same sort of “thinking” tilting towards tax-driven individual insurance purchasing.
Will Democrats effectively expose this retrograde GOP approach to health care? They should, but some will be tempted to reinforce Bush’s government/private distinction, to the extent that they support a single-payer system that would radically reduce or eliminate the public role of private insurers and/or providers. It’s a classic dilemma: do you hold the GOP responsible for the evils of the status quo, and propose a decisive break with it, or focus on the GOP’s intentions to make a decisive break with the status quo in precisely the wrong direction?
The entire subject may well offer a fateful decision for both parties.

2 comments on ““Philosophical Differences” On Health Care

  1. edkilgore on

    Albert:
    Yours is about the clearest expression possible for the policy argument in favor of a single-payer system.
    Politically, the advantage of this approach is its extraordinary simplicity. The downsides, as you probably know, are (1) that even if it holds down overall health care costs, it would require a pretty steep tax increase initially, and (2) it does, as my post suggested, enable Republicans to disguise the fundamental radicalism of their position by posing as opponents of a “government takeover” of health care.
    Thanks for commenting. Please continue do so in the future.
    Ed Kilgore

    Reply
  2. Albert Whited on

    I think the SCHIP initiative should be viewed as a stop-gap measure at best, since it really pours money into the broken (private health insurance) scheme. Furthermore, the bill linking its support with tobacco taxes is non-sensical. Would we tell some kids they couldn’t be insured because there weren’t enough smokers this month?
    Raising taxes on tobacco sales is probably a good thing, since it serves as a disincentive to smoking generally. But to make a health care program contingent on it seems paradoxical. Health care should be funded–even if by transfering funds to private insurance companies–in the budget. Tobacco tax revenue may in part offset the budget. But, the two line items should not be linked.
    Ultimately, SCHIP and every other program that includes an insurance component is wasteful. That middle-man insurance industry is just inefficient fat in the system making health care more expensive for all.

    Reply

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