Twelve years ago Bill Clinton asked members of Congress to “guarantee every American the same health care they have.” That was a hopeful vision. [In his State of the Union address,} George W. Bush asserted we are already meeting our responsibility for the poor and elderly, which is surely news to the 40% of our poor who are uninsured. The elderly, mostly confused about which (if any) new drug plan to select, might also be surprised at his complacency. Astoundingly, the President did not mention the 46 million uninsured at all.
The President did call on Congress to help the wealthy and the healthy, to hurt the chronically ill and the working poor, and to ignore the main cause of health care cost growth which threatens our standard of living far more than Al Queda does. Hopeful is hardly the word for this vision. Of course those words did not appear on his teleprompter, but his intentions were clarified by his specific policies.
The President’s many small proposals have an overarching and dangerous theme: each man for himself in health care markets. This “wild west” ideology is craftily couched in terms of tax breaks. But examine the breaks carefully. In essence they make health spending tax free, which lowers the price for high income patients far more than for the low income population. Over half the uninsured owe no income taxes, so they get no break at all. Furthermore, the full tax breaks are available only to those who purchase policies which permit Health Savings Accounts – HSAs -- to be established, i.e., those with deductibles of at least $2000 for families. The average family deductible is actually over $4000 in products that accompany HSAs. A 15% (tax rate-determined) discount off a $4000 hospital bill – previously covered by traditional insurance -- is cold comfort to a family making $20,000 a year.
The theory of the President’s moves is contradictory. On the one hand, he clearly believes that we must reduce spending through less generous insurance that will make lower income people – even those below poverty on Medicaid—pay more out of pocket. That way, they will become smarter health care shoppers, as if appendectomies are like plasma TVs. On the other hand, by making out of pocket spending tax deductible – if associated with a high deductible, HSA-eligible policy – the President softens the incentive to spend less, especially for higher income patients. Thus, they won’t rein in cost growth much, if at all.
The President’s policies hit the vulnerable especially hard. Reduced benefit generosity guarantees that the chronically ill will pay more out of pocket than the healthy. And by encouraging “each man for himself” health insurance, he threatens to end decades of risk spreading – the way regulated group markets keep costs affordable for those who are already sick.
The Bush proposal to allow insurers from one state to sell to residents of any other will lead to a lowest common denominator marketplace and more perfect risk segmentation. The healthy will have low premiums and the sick will only see very high premiums, easily ten to fifteen times that charged healthier people, if they can find willing sellers at all.
-he is acting as if increasing affordability for the wealthy and healthy will actually solve our health care problems. Someone must have told him that most of us are healthy most of the time. Basic truths that did not penetrate the Presidential bubble but are understood by pragmatic Republicans like Governor Mitt Romney of Massachusetts and moderate Democrats like Rep. James Langevin of Rhode Island , and by many others are these. All of us will get sick someday. Lots of us get really sick each year, and at least 20,000 Americans die prematurely each year because they have no health insurance, according to the Institute of Medicine . Countless more are out of work far longer than they need be. And health care cost growth, driven largely by over-consumption of new technology, is literally eating middle class income growth alive.
We can contain health care cost growth—with better payment incentives and smarter decisions on how we use technology—so that we can afford to help all Americans cover themselves with the same kind of private health insurance members of Congress have. But this will take leaders in both parties less blinded by ideology and more interested in solving problems than in creating talking points for TV combat. These leaders are emerging, and since they are responding to the rising cry for systemic relief from health care cost growth and for coverage expansion, they may be the ones sleeping in the White House come 2009.