Psyche, Science, and Society

Krugman on health reform viciousness

January 22nd, 2007

Paul Krugman takes on the Decider’s disgusting health insurance “reform” plan, which taxes workers with good insurance to fund the well-off who choose not to have insurance. Not mentioned in Krugman’s critique is that tax breaks do not help poor people very much, not only because their tax rate is low anyway, but also because they don’t have the cash to put out all year in hopes of a refund the next spring.

Gold-Plated Indifference

by Paul Krugman

President Bush’s Saturday radio address was devoted to health care, and officials have put out the word that the subject will be a major theme in tomorrow’s State of the Union address. Mr. Bush’s proposal won’t go anywhere. But it’s still worth looking at his remarks, because of what they say about him and his advisers.

On the radio, Mr. Bush suggested that we should “treat health insurance more like home ownership.” He went on to say that “the current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance.”

Wow. Those are the words of someone with no sense of what it’s like to be uninsured.

Going without health insurance isn’t like deciding to rent an apartment instead of buying a house. It’s a terrifying experience, which most people endure only if they have no alternative. The uninsured don’t need an “incentive” to buy insurance; they need something that makes getting insurance possible.

Most people without health insurance have low incomes, and just can’t afford the premiums. And making premiums tax-deductible is almost worthless to workers whose income puts them in a low tax bracket.

Of those uninsured who aren’t low-income, many can’t get coverage because of pre-existing conditions — everything from diabetes to a long-ago case of jock itch. Again, tax deductions won’t solve their problem.

The only people the Bush plan might move out of the ranks of the uninsured are the people we’re least concerned about — affluent, healthy Americans who choose voluntarily not to be insured. At most, the Bush plan might induce some of those people to buy insurance, while in the process — whaddya know — giving many other high-income individuals yet another tax break.

While proposing this high-end tax break, Mr. Bush is also proposing a tax increase — not on the wealthy, but on workers who, he thinks, have too much health insurance. The tax code, he said, “unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need.”

Again, wow. No economic analysis I’m aware of says that when Peter chooses a good health plan, he raises Paul’s premiums. And look at the condescension. Will all those who think they have “gold plated” health coverage please raise their hands?

According to press reports, the actual plan is to penalize workers with relatively generous insurance coverage. Just to be clear, we’re not talking about the wealthy; we’re talking about ordinary workers who have managed to negotiate better-than-average health plans.

What’s driving all this is the theory, popular in conservative circles but utterly at odds with the evidence, that the big problem with U.S. health care is that people have too much insurance — that there would be large cost savings if people were forced to pay more of their medical expenses out of pocket.

The administration also believes, for some reason, that people should be pushed out of employment-based health insurance — admittedly a deeply flawed system — into the individual insurance market, which is a disaster on all fronts. Insurance companies try to avoid selling policies to people who are likely to use them, so a large fraction of premiums in the individual market goes not to paying medical bills but to bureaucracies dedicated to weeding out “high risk” applicants — and keeping them uninsured.

I’m somewhat skeptical about health care plans, like that proposed by Gov. Arnold Schwarzenegger, that propose covering gaps in the health insurance market with a series of patches, such as requiring that insurers offer policies to everyone at the same rate. But at least the authors of these plans are trying to help those most in need, and recognize that the market needs fixing.

Mr. Bush, on the other hand, is still peddling the fantasy that the free market, with a little help from tax cuts, solves all problems.

What’s really striking about Mr. Bush’s remarks, however, is the tone. The stuff about providing “incentives” to buy insurance, the sneering description of good coverage as “gold plated,” is right-wing think-tank jargon. In the past Mr. Bush’s speechwriters might have found less offensive language; now, they’re not even trying to hide his fundamental indifference to the plight of less-fortunate Americans.

Meanwhile, the Washington Post reports that Universal Health Coverage Attracts New Support. Of course, this support is for a corporate-dominated private insurance system that creates a new entitlement program for the nations greediest insurance companies while doing little to reduce the costs of healthcare.

Entry Filed under: Healthcare, Inequality, Public Health, Workers