President Bush's health plan, unveiled in his State of the Union address, is one more illustration of the folly of attempting heath reform piecemeal. Bush would end the current tax deduction for employer-provided health coverage, and substitute a personal deduction -- $7,500 for an individual and $15,000 for a family.
Bush's advisers evidently believe that the source of America's health insurance crisis is that many Americans have too much insurance. His formula would punish those whose insurance he considers "gold plated." (Exactly what planet is he living on?)
The plan, if enacted, would do three things. First, it would induce many employers to drop coverage. Second, it would push more Americans to buy the individual plans being promoted by insurers, which are even more inefficient (and lucrative) than group plans. Third, since a tax deduction is worth more the richer you are, the plan would subsidize well-to-do Americans to buy insurance while leaving decent coverage far beyond the reach of less affluent Americans who make up the bulk of the uninsured.
Our colleague Paul Starr thinks that Bush's idea is so bad that it should promptly be enacted. Once Americans grasped just how inadequate individual insurance was, they would clamor for universal health insurance.
I've teased Paul, who is ordinarily a rather prudent and moderate liberal, that he is sounding a little like the Italian communists who used to say, Tanto peggio, tanto meglio -- the worse things get, the better for us. Health insurance is such a complex mess, and the insurance industry so politically influential, that giving it more economic (and hence political) power via more individual policies is no strategy for achieving universal public insurance. Bush may be something of a dope, but his industry allies who helped craft this idea are not.
A shift to tax-subsidized individual insurance would leave the best off and most politically influential Americans with adequate insurance, and leave the worst off Americans even further behind. Politically, it would set back the process of creating a real coalition for reform.
Leaders on the liberal side suffer from lack of political imagination and nerve. On the eve of Bush's address, a very broad coalition of business, consumer, and insurance industry groups came together to call for an incremental approach that would build on the current system with more tax breaks and subsidies for the poor. It would leave the present system, with all its inefficiencies and middlemen windfalls, intact.
The supposed consumer groups like the AARP and Families USA who lent their names to this travesty are setting back their own cause. Earlier last week, Andrew Stern, president of the Service Employees International Union and a leading labor voice for health reform, held a joint press conference with business leaders in which they all called for universal coverage. But Stern was wisely absent when the grand coalition rolled out its proposed incremental plan.
Face it: the way to get universal coverage is to go directly for universal coverage. We could perhaps begin in one state. But as I suggested in last week's column, both the Massachusetts and the California plans are far too reliant on the inefficient private insurance industry.
We could also get there by age group, beginning by giving everyone under age 25 a Medicare card. Young people are, on the whole, healthy and inexpensive to insure. As they grew up with good coverage, they would quickly become adult constituents for extending Medicare to the whole population.
Another good variant is the strategy that I plugged in last week's column, proposed by Jacob Hacker, which would allow employers to continue coverage but give them a financial incentive to pay a charge instead, which would pay to bring their employers under a public system much like Medicare. The uninsured would eventually become part of the same universal system.
The Democrats did well in their first hundred legislative hours. But with the exception of the minimum wage increase passed by the House, most of their achievements were politically and substantively modest. For example, in the area of health reform, the House Democrats passed a perfectly good bill giving the government the power to negotiate discounts with pharmaceutical companies that provide prescription drugs under President Bush's privatized Medicare drug program.
It would have been much bolder for the Democrats to bring the entire prescription drug program under public Medicare, which is more efficient than subsidizing private insurers. Spending the same money through public Medicare would close the infamous "donut hole" of non-coverage.
Even better, instead of fuzzy partial reform, the Democrats ought to pass a bill for comprehensive, universal health insurance. Bush would doubtlessly veto it, but what an eye-opening national debate we'd have.
Robert Kuttner is co-editor of The American Prospect.
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