A Courageous Stance

Congress is tied in knots trying to pass legislation that will keep the federal government operating for another year (no jokes, please), and the leadership now hopes to pass one big bill next week that will roll the budgets for nearly all departments, agencies, and programs into one huge package costing more than half a trillion dollars.

This is a dangerous time for the Republic because it is nearly impossible for anyone to know what's in a bill that big, especially one that is being so hurriedly drafted. A lot of midnight oil is being burned on the Hill and in the Administration to get this done and hopefully to get it done right. But beware of mischief and mistakes.

One thing that Congress is not going to get done this year is a big expansion of the State Children's Health Insurance Program. President Bush this week vetoed the second, equally flawed, bill that Congress sent him, and Congressional leaders know they don't have the votes to override. The president's position was courageous and correct.

SCHIP will be reauthorized, and the only question now is for how long — a few months, until next fall, or into the administration of a new president? My vote would be for the latter to allow this to be part of the bigger health reform effort that the next president must undertake.

The SCHIP bills that Congress passed would have expanded this government health benefits program well into the middle class, crowding out the private coverage that many children already have. Further, poor kids who most need the coverage would have been lost in the stampede, as legislators meeting here last week with the American Legislative Exchange Council confirmed to me.

The American people need to decide if they want a much bigger role for government in the health sector, and the 2008 political campaigns are the proper venues for those conversations.

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The next president will need to tackle health care. Not only is it threatening to gobble up the federal budget, as the director of the Congressional Budget Office warned again yesterday, but health care also is consuming more and more of the pay of average workers.

A CBS News poll taken earlier this year found that Americans believe that the middle class is falling behind. But a study by Brookings Institution economist Gary Burtless shows that from 2000 to 2006, the pay for an average worker in the U.S. rose by $3,500 a year after inflation.

What's going on?

Burtless says that only $849 of that $3,500 pay increase went to take-home pay. The biggest share, $1,045, went to fund employee health expenses.

Burtless writes that, "Since we do not see this consumption reflected in our money incomes and because workers seldom know how much their employers are paying for insurance premiums, most of the consumption and income gains arising from health care are invisible to most Americans."

So Americans are getting pay increases, but more than two-thirds of the raise is going to pay for benefits, primarily health coverage. (The rest of the pay increase went to higher contributions to pension and profit-sharing plans.)

One bright note: "Americans across the distribution have derived notable benefits from recent tax cuts. For many middle class families the cuts have made the difference between suffering a loss and experiencing a gain in spendable income," Burtless says.

So if the Bush tax cuts are not extended, middle-class workers will fall even further behind.

Health policy and tax policy will have to be on the agenda for the new president if American workers are to prosper. The Galen Institute is a health and tax policy research organization, and we will be actively involved in getting attention for these issues — and offering solutions!

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And thanks to all of you for your many, many wonderful comments and congratulations about the "2007 Outstanding Achievement Award for Promotion of Consumer-Driven Health Care" that I received last week from Consumer Health World. You are very kind.

Mark your calendars now for the next conference in Las Vegas, May 5 to 7. It is the place to be for those of us who believe that there is a brighter future ahead for our health sector.

Grace-Marie Turner

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