Health Versus Wealth
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| Fri, 07-09-2004 - 11:54am |
By PAUL KRUGMAN
Published: July 9, 2004
Will actual policy issues play any role in this election? Not if the White House can help it. But if some policy substance does manage to be heard over the clanging of conveniently timed terror alerts, voters will realize that they face some stark choices. Here's one of them: tax cuts for the very well-off versus health insurance.
John Kerry has proposed an ambitious health care plan that would extend coverage to tens of millions of uninsured Americans, while reducing premiums for the insured. To pay for that plan, Mr. Kerry wants to rescind recent tax cuts for the roughly 3 percent of the population with incomes above $200,000.
George Bush regards those tax cuts as sacrosanct. I'll talk about his health care policies, such as they are, in another column.
Considering its scope, Mr. Kerry's health plan has received remarkably little attention. So let me talk about two of its key elements.
First, the Kerry plan raises the maximum incomes under which both children and parents are eligible to receive benefits from Medicaid and the State Children's Health Insurance Program. This would extend coverage to many working-class families, who often fall into a painful gap: they earn too much money to qualify for government help, but not enough to pay for health insurance. As a result, the Kerry plan would probably end a national scandal, the large number of uninsured American children.
Second, the Kerry plan would provide "reinsurance" for private health plans, picking up 75 percent of the medical bills exceeding $50,000 a year. Although catastrophic medical expenses strike only a tiny fraction of Americans each year, they account for a sizeable fraction of health care costs.
By relieving insurance companies and H.M.O.'s of this risk, the government would drive down premiums by 10 percent or more.
This is a truly good idea. Our society tries to protect its members from the consequences of random misfortune; that's why we aid the victims of hurricanes, earthquakes and terrorist attacks. Catastrophic health expenses, which can easily drive a family into bankruptcy, fall into the same category. Yet private insurers try hard, and often successfully, to avoid covering such expenses. (That's not a moral condemnation; they are, after all, in business.)
All this does is pass the buck: in the end, the Americans who can't afford to pay huge medical bills usually get treatment anyway, through a mixture of private and public charity. But this happens only after treatments are delayed, families are driven into bankruptcy and insurers spend billions trying not to provide care.
By directly assuming much of the risk of catastrophic illness, the government can avoid all of this waste, and it can eliminate a lot of suffering while actually reducing the amount that the nation spends on health care.
Still, the Kerry plan will require increased federal spending. Kenneth Thorpe of Emory University, an independent health care expert who has analyzed both the Kerry and Bush plans, puts the net cost of the plan to the federal government at $653 billion over the next decade. Is that a lot of money?
Not compared with the Bush tax cuts: the Center on Budget and Policy Priorities estimates that if these cuts are made permanent, as the administration wants, they will cost $2.8 trillion over the next decade.
The Kerry campaign contends that it can pay for its health care plan by rolling back only the cuts for taxpayers with incomes above $200,000. The nonpartisan Tax Policy Center, which has become the best source for tax analysis now that the Treasury Department's Office of Tax Policy has become a propaganda agency, more or less agrees: it estimates the revenue gain from the Kerry tax plan at $631 billion over the next decade.
What are the objections to the Kerry plan? One is that it falls far short of the comprehensive overhaul our health care system really needs. Another is that by devoting the proceeds of a tax-cut rollback to health care, Mr. Kerry fails to offer a plan to reduce the budget deficit. But on both counts Mr. Bush is equally, if not more, vulnerable. And Mr. Kerry's plan would help far more people than it would hurt.
If we ever get a clear national debate about health care and taxes, I don't see how President Bush will win it.

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I would agree with this, but this bit about law suits being the primary reason medical costs high is a smoke screne, to prevent the public from looking to the real reason. High corporate provits and excessive overhead costs. It is also true that the majority of law suits are brought by corporations.
http://www.epf.org/pubs/newsletters/2003/et20030113.pdf
http://www.healthinsurance.org/01-50waysintro.lasso
it was in downtown Milwaukee where Dick Cheney swooped into town for a visit last week, and that's where I came across a satirical group of very, very well-dressed protesters called the "Billionaires for Bush" and they actually made some really good points... anyway their site explains it good (and it is funny too! if you ask me!)
www.billionairesforbush.com
I wasn't aware that Bush was getting the flack. I do know that Clinton worked on a broad-ranging health care system but was stopped dead by partician politics. Interestingly, one of the proposals from that commission was that small employers should ban together to to reduce costs, now being suggested by Bush. I also think Bush is off the mark in blaming tort costs for the increase. As your second site shows, there are many causes. In fact it is the last I would like to address.
"Malpractice insurance costs billions for physicians and providers. Unnecessary tests, performed solely to protect doctors from liability add to the exploding costs of “defensive medicine”. The U.S. Office of Technology Assessment in a recent study estimated that about 8% of diagnostic testing is “consciously defensive”. An American Association of Health Plans report in February 2000 estimated that “defensive medicine costs the U.S health care delivery system about $50 billion per year”. Those costs are passed on through higher doctor bills and hospital bills."
I agreed that suits should pay for actual and future expenses resulting from physicians negligence. People should not be deprived of a recourse when Drs. fail. However, this paragraph seems to rest on the perception that drs order tests to protect themselves. These perceptions are derived from fear. Drs should work with the states to stop the small percentage of drs who cause the majority of cases. This might in turne relieve drs of their fear.
The list did not mention the unprecented profit margins of large health corporations. Nor did it mention the excesses of corporate CEO's, e.g. HealthSouth. Corporate fraud is legal and widespresd.
"..........moral compass is spinning out of control."
Well said!
This is of course is a terrible number, but the more alarming fact is that the percentage of uninsured is trending up, i.e., it will be worse next year. Bush's plan will no more help the uninsured than his medicare plan helped the seniors. To continue to ignore this problem will not make it go away. We really do need to take care of America instead of building an empire. Most voters don't realize that the US is building an empire; it is one of those little secrets not shared with the public.
Your either/or thinking bothers me because between either and or there are many alternatives which you are not open to because you already think your system, despite all its problems is best. Conservatives cling on to the past while progressives look for a better way.
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