January 27, 2007
A Long Overdue Debate

Somewhat lost in the shuffle of a State of the Union speech heavy on political drama and pre-'08 positioning, President Bush hopefully stimulated a serious debate about healthcare in this country and how we pay for it.

Thursday the Seattle Times ran a Washington Post story on the issue. later, the P-I picked up an AP story on the potential savings involved in Bush's proposal.

At a macro level, his ideas outlined in the State of the Union are an attempt to move the country away from a system which rewards employers for providing expensive benefits, but conversely does nothing to reward individual consumers shopping for health benefits on their own. Moreover, the current system does nothing to encourage individuals and families to purchase the insurance whose coverage and cost actually meets their respective needs. Consumers are usually at the mercy of whatever plan their employer offers whether that be sparse, overly generous, or somewhere in between.

Bush's plan includes an emphasis on encouraging creative solutions from states. Mitt Romney took on just such a challenge in Massachusetts (just part of the reason I'm a Romney fan). Good people can argue about the details of Romney's initiative, even conservatives are split with the Heritage Foundation in favor and the Cato Institute opposed. The point is his healthcare plan was a creative solution to empowering individuals in the marketplace, much like Bush is trying to do.

Our current system is an odd mix of some market principles, overlaid with a heavy dose of government regulation, and fundamentally driven by a process where the consumer rarely even physically sees the full bill for either medical services rendered or the cost of insurance. Reform of that system would seem to fall in one of two basic solutions, enhanced government involvement or a greater infusion of the competitive forces of the free market that have generally served our country well. Bush obviously prefers the latter.

It's no surprise conservatives would like Bush's idea. Though a number of non-conservative media outlets are giving the proposal good marks, including:

The Washington Post's Steven Pearlstein compliments Bush's "political courage" in addressing the issue in this manner.

The Washington Post's Ruth Marcus laments the "irrational" nature of the current system, and wishes Democrats would engage in serious debate on the issue.

The Washington Post's editorial page sees the Bush proposal as a good step toward greater "fairness" in our healthcare insurance system if Democrats are willing to be constructive.

The Chicago Tribune editorializes, "the Bush plan is directed at fairness and flexibility."

The Christian Science Monitor says, "The plan would also correct a fundamental unfairness."

Long story short, Bush has provided a serious, innovative approach to improving the fundamentals of our healthcare system rather than the usual tinkering around the edges Congress is prone to do on its own. The proposal itself has no prayer as a stand-alone measure in an opposition Congress in the latter half of a second Presidential term. It is, however, an excellent chance to have honest discussions about a persistent challenge in American society, the rising cost of healthcare.

The question remains though, are Congressional Democrats in the aggregate more serious about governing than they are in preparing for 2008? I'm just not sure yet though I'm inclined toward cynicism.

UPDATE: Alicia Mundy's "Letter from Washington" in today's Seattle Times presents the opposition to Bush's plan, predictably clouded in loose rhetoric. Liberal interest groups and allied Democrats bemoan the Bush plan as a "tax." I suppose it would be if the typical American had a family plan costing more than the $15,000 Bush is proposing for a deduction. As discussions of Bush's plan note, however, that's not the case. The typical family premium in 2004 was $11,500. Meanwhile, Bush's proposed deduction of $7,500 comes in well above the typical individual policy priced at $4,200.

For an anecdotal example I used my own family's information - me plus wife and two kids - at this site to get a price comparison on the individual market (which in Washington state's current health insurance environment is worse than the employer-sponsored market). I had a choice of 47 plans ranging from traditional plans to HMO's to health savings accounts, and obviously with a range of deductibles, co-pays, etc. The premiums ranged from $1,644 to $9,792 annually. All well under the $15,000 proposed deduction.

In contrast, Mundy's column cites this example:

An accountant in D.C., age 59, told me that won't be hard. His two-person corporation, in which his wife works, pays $27,000 a year for his family plan. He would have to pay taxes on $12,000, he said.

That sounds like an upper-income family who is using a business tax break to enjoy an expensive healthcare plan. In addition it seems the business tax benefit is helping insulate the family from the cost of the expensive policy they've selected. Is it prudent for the government to subsidize upper-income Americans buying generous health insurance, or would it be more prudent for such tax policy to support more Americans being able to access a typical level of coverage?

Mundy's column further promotes the notion that this should fall on corporations to deal with. That leaves out the little problem that when corporations pay more for healthcare as part of employee compensation, they pay less in other forms of compensation to their employees, or that they have less money to spend on expanding business operation (i.e. creating more jobs). Such criticism also fails to address the fundamental inequity in our current tax system which favors large employers over small businesses and individuals. That's one of the key purposes of the Bush proposal.

This is all evidence we need to have a serious debate about how our health care financing system works. Mundy's column doesn't indicate one side of that potential debate is willing to do so in good faith.

****

Footnote (to the original post):

For the true policy wonks wishing to read more about the Romney plan, here's a couple additional takes on the matter from Joel Klein at Time and from Ramesh Ponnuru at the National Review.

Those wishing to read more about the Bush plan can start here with the White House, here with the Heritage Foundation, and here with PBS.

Posted by Eric Earling at January 27, 2007 11:39 AM | Email This
Comments
1. This is all spot on. And it doesn't even take into account the likelihood that newly empowered health care insurance consumers will start to demand that state insurance regulations be liberalized to allow carriers to sell cheaper, more flexible products.

But that all flies in the face of the Democrats' preferred model of union- and employer-based insurance for some of us and government-subsidized healthcare for the rest. And that's why it's dead-on-arrival in this Congress.

Posted by: DJ on January 27, 2007 03:53 PM
2. Good points. Getting dems to consider such an issue would be with a difficulty factor comparable with fitting a camel through the eye of a needle, however.

The party that is willing to quibble over the meaning of "is" is unlikely even realize that complexities exist, let alone comprehend them in their proper light. The dem leadership considers truth to be a minefield of uncontrollable facets and a decided threat to their web of sacred cows.

When I can think of some more metaphors to mangle, I'll get back to you. Lineal thought processes don't readily apply to predicting moonbat behavior and reactions, which is why the reasonable nature of OP recalls jousting at windmills.

Posted by: scott158 on January 27, 2007 09:21 PM
3. Bush's plan is all fine and good. Practically anything is better than what we have now. But there is a clinker in all of this as the WAPO expressed: "...fairness in our healthcare insurance system if Democrats are willing to be constructive." The Looney Left have been knee-jerk "opposition" (politely and for lack of a better term) for so long I doubt that their hatred of anything Bush/conservative will allow them to do something constructive for the country. For them, disturbingly, it's all for the party and if it just happens to be good for the country, well, that's OK too.

What will really bring health care and insurance around is for the nanny state to get their regulating fingers out of it and let the market function. In state after state it has been proven that the greatest amount of government insurance regulation results in the highest cost. Additonally, once single payer health care arrives (and it will come, sooner rather than later), we can expect less access and less quality, just like Canada and Cuba . . . but it will be cheap, just like Canada and Cuba.

Posted by: G Jiggy on January 27, 2007 10:47 PM
4. I had a problem with granting amnesty to "illegal's" and about securing our borders!

OH BOY COULD SOCIALISM BE ON THE MENU!? New Zealand is looking pretty good to me!

Posted by: dcat on January 28, 2007 10:06 AM
5. Eric -

Slavery was abolished 150+ years ago. No one is "at the mercy" of an employer. If they don't like the health care provided, they are free to find a different employer. It's called the free market.

Posted by: Chris on January 28, 2007 01:25 PM
6. Chris -

Except the employer gets a tax break on paying the premium for the employee. The employee who shops on his own doesn't get a tax break. Correcting that imbalance in the marketplace is the whole point of Bush' proposal. Moroever, the employee is "at the mercy" of the employer since he invariably has a smaller choice of options offered by the employer than if he had an equal amount of money to shop on his own in the open market (an example of which I gave in the Update above).

Posted by: Eric Earling on January 28, 2007 01:44 PM
7. Bush is more reactive than proactive, as demonstrated here. As the title of the article state - it is a Long Overdue Debate. No wonder his rating is in the low 30's. You'd think that he would consider changing his style for the benefit of all, even himself.

Posted by: KS on January 28, 2007 09:07 PM
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