Politics and complex policy are a dangerous mix, as we see in the presidential election campaign debate over health care.
"Sen. McCain, for the first time, is going to be taxing the health care benefits that you have from your employer," Sen. Obama said during Wednesday's debate. "For the first time in history, you will be taxing people's health care benefits."
The Obama campaign is buying thousands of ads in battleground states airing those charges and adding that "Sen. McCain's health plan would lead to the largest tax increase in history." Everywhere I travel on my current 10-day speaking trip, I see these incessant ads on TV — from Washington to Salt Lake City, Albuquerque, Phoenix, Dallas, and now Charleston.
Here is a bracket-by-bracket analysis of the tax savings that someone with job-based health insurance would receive under the McCain plan, compared to the tax benefit the employee gets now. You decide for yourself if this is a tax increase.
|
$12,000 EMPLOYMENT-BASED FAMILY POLICY
|
|||
|
Tax bracket /
Income level |
Current income tax benefit
|
Value of McCain tax credit
|
Total tax savings under McCain plan
|
| 10% up to $15,650 |
$1,200
|
$5,000
|
+ $3,800
|
| 15% up to $63,700 |
$1,800
|
$5,000
|
+ $3,200
|
| 25% up to $128,500 |
$3,000
|
$5,000
|
+ $2,000
|
| 28% up to $195,850 |
$3,360
|
$5,000
|
+ $1,640
|
| 33% up to $349,700 |
$3,960
|
$5,000
|
+ $1,040
|
| 35% over $349,700 |
$4,200
|
$5,000
|
+ $800
|
HAWAII AND SCHIP: During the last debate over reauthorization of the State Children's Health Insurance Program, we warned that expanding coverage to children in families making up to $80,000 a year would primarily crowd out existing private insurance.
Now the Associated Press tells us this is exactly what has happened in Hawaii. Here's today's report:
Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.
Gov. Linda Lingle's administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.
"People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don't believe that was the intent of the program."
Congress will be required to take action reauthorizing SCHIP by the March 31 extension deadline. Members should heed Hawaii's experience.
A major expansion, as leaders in Congress advocate, would be most disadvantageous to children who have few if any other options for coverage. Political leaders would have less incentive to find these harder-to-enroll children as middle-income families flood the enrollment lists.
When you hear criticisms that candidates "voted against health insurance for children," it might be helpful to point out that they were in fact voting against a major expansion of the program that would be harmful to poorer children who would get shoved to the back of the political priority line.
A GOOD BI-PARTISAN EFFORT: The top Republican and Democrat on the powerful Senate Finance Committee have jointly sponsored, along with other leading Senators, a bill that would require employers to tell their employees how much of their compensation package is going to health insurance.
While we are adverse to mandates like this, the legislation may well have the effect of encouraging many more employers to do what leading companies do now: Provide a periodic report to employees of the full value of their pay packages, including wages and all benefits.
Health insurance is not a free gift. And the share of premiums an employee pays is seldom the full cost of the coverage.
"As long as people are insulated from the cost and just think someone else is paying for it, then it's easy to overlook expenses," Sen. Charles Grassley said. "But once they realize they themselves are paying for it, it should spark a genuine conversation about what to do." In addition, he said, "Some employees might want to receive different compensation in the form of a higher salary, additional vacation, or more child care instead of more health coverage than they need."
The growing cost of health insurance is a major factor in depressing employee take-home pay. More visibility of the cost of these benefits will encourage a more intelligent conversation between employers and employees in finding the best balance.
Senate Finance Committee Chair Max Baucus (D-MT) and ranking member Chuck Grassley (R-IA) are accepting comments on the bill until December 31. Your voice can be heard here.
Grace-Marie Turner
Recent News Articles and Studies
McCain's Patient-Centered Health Care Provides Better Choices and Less Federal Bureaucracy
The Candidates' Health Care Plans
Obama and Big Business vs. A Freer Health Insurance Market
Physician Disempowerment: The View from Canada
The 2008 Health Confidence Survey: Rising Costs Continue to Change the Way Americans Use the Health Care System
Health Savings Accounts' Last Chance?
HealthGrades Hospital Quality in America Study
Millennial Voters & Health Care Reform
Let People Decline Medicare Benefits
GALEN IN THE NEWS
McCain's Patient-Centered Health Care Provides Better Choices and Less Federal Bureaucracy
Grace-Marie Turner, Galen Institute
The Sacramento Bee, 10/10/08
The American people have a clear choice between two sharply contrasting visions for health reform, writes Turner. Sen. John McCain wants to create a patient-centered health care system that gives people more choices of more affordable care and coverage, with new subsidies to help people purchase portable health insurance. In contrast, the reform plan offered by Sen. Obama offers failed policies from the past that have been proven to drive up costs and deny people choice. His plan would expand government's role in our health sector and impose new taxes on businesses and limits on individuals, with government dictating decisions about coverage.
THE CANDIDATES' HEALTH CARE PLANS
Bob Moffit and Nina Owcharenko of The Heritage Foundation offer detailed analyses of the health reform plans of Sens. John McCain and Barack Obama. Despite Senator Obama's rhetoric of "choice and competition," his plan is a vehicle for new regulations and federal power that would leave ordinary Americans with even less control of their health care dollars than they exercise today, Heritage concludes. In contrast, they say Sen. McCain's plan "focuses on reforming the system to empower individuals and families to make health care decisions and to control their health care dollars."
Obama and Big Business vs. A Freer Health Insurance Market
Timothy P. Carney
The Examiner, 10/17/08
Barack Obama attacks John McCain's health care plan as spurring the "unraveling of the employer-based health care system." Sure, this is a bad thing for employers, but it might also be good for everyone else, writes Evans-Novak Political Report editor Carney. The core of McCain's health care plan is replacing the special tax treatment of employer-based health insurance with a broad tax benefit for all health insurance purchases, whether through your boss or on your own. Small businesses would have a much easier time attracting employees if people owned and shopped for health insurance the same way they own and shop for their car insurance and life insurance — buying it on the market, and owning it regardless of your job. You see the battle lines here, and they are the same as always: Big businesses want things to stay the same and so they favor government barriers to markets; small businesses want a more level, open playing field, and so they want government to be out of the way — or at least more neutral.
INTERNATIONAL HEALTH SYSTEMS
Physician Disempowerment: The View from Canada
Brian Lee Crowley, Atlantic Institute for Market Studies
Center for Medicine in the Public Interest, 10/14/08
Brian Lee Crowley, also a senior fellow at the Galen Institute, spoke about the physician's loss of power within the Canadian health care system at this week's CMPI conference. Physicians surrendered great power to order their own professional lives and to act in the interests of their patients when physicians and hospital care was essentially taken under full political direction in the 1960s in a wave of ideological enthusiasm and economic ignorance. Despite the misgivings of some in the medical community, doctors largely embraced a public sector health care monopoly model, a monopoly that has only extended its tentacles and its centralizing control in the intervening decades, said Crowley. Things are beginning to shift within the medical community, however, and the last two presidents of the Canadian Medical Association have been advocates of the private sector, a sea change of huge proportions.
HEALTH CARE COSTS
The 2008 Health Confidence Survey: Rising Costs Continue to Change the Way Americans Use the Health Care System
Ruth Helman, Mathew Greenwald & Associates, and Paul Fronstin, EBRI
Employee Benefit Research Institute, 10/08
Fewer people say their health costs increased this year over last, with 55% reporting an increase, down from 63% in 2007, according to a new EBRI survey. But rising costs nonetheless are influencing the way Americans use the health care system: 76% say they take better care of themselves and 74% choose generic drugs more often. Substantial majorities also say they talk to the doctor more carefully about treatment options and costs (63%) and go to the doctor only for more serious conditions or symptoms (62%). The study also finds 87% would support tax incentives to help people pay for coverage they purchase on their own and 84% support tax incentives to help people pay for employer coverage.
CONSUMER-DRIVEN HEALTH CARE
Health Savings Accounts' Last Chance?
Investor's Business Daily, 10/13/08
The fate of health savings accounts — and consumer-driven health care in general — could well be decided on Nov. 4, writes Investor's Business Daily. For consumer power to function there must be a robust market of competitive plans. Different insurers from all over the country should be vying for premiums (this is what McCain has in mind), and consumers should have more than one type of plan to choose from. But the Obama proposal would ultimately limit these choices to one, and it would be nothing like the HSA type. All the participating private plans would have to be "at least as generous as the new public plan and meet the same standards for quality and efficiency." This would set up an unequal competition that the public plan, with its access to taxpayer money, is bound to win. The endgame for the consumer is a "choice" between an employer plan (itself shaped by federal mandates) and a government pla
n.
HealthGrades Hospital Quality in America Study
HealthGrades, 10/14/08
Patients have on average a 70% lower chance of dying at the nation's top-rated hospitals compared with the lowest-rated hospitals across 17 procedures and conditions analyzed in this study issued by HealthGrades, an independent health care ratings organization. The study finds that if all hospitals performed at the level of five-star rated hospitals, 237,420 Medicare deaths could potentially have been prevented over the three years studied. More than half of those deaths were associated with four conditions: sepsis, pneumonia, heart failure, and respiratory failure. The study also finds that the region with the lowest overall risk-adjusted mortality rates was the East North Central region, while the East South Central region had the highest mortality rates.
A survey from the Kaiser Family Foundation finds that 30% of Americans say they have seen health care quality comparisons of health insurance plans, hospitals, or doctors in the past year.
HEALTH CARE REFORM
Millennial Voters & Health Care Reform
Center for Medicine in the Public Interest, 10/08
CMPI's survey of millennial voters (18-28 year olds) demonstrates that while there is strong support for health reform, there is limited acceptance for the potential consequences of greater government control over health care. Key findings:
- 83% of millennials believe that America's health care system is in need of reform and that health insurance should be available to all Americans, but a majority (51%) were not in support of any health care reforms that could raise their personal tax burden.
- 62% said they would not support any health care reforms that could increase wait-times to see a doctor or the availability of treatments and medicines.
- Millennial voters were also equally unsupportive (62%) of health care reforms that would increase the role of the government regulation and oversight in doctor-patient decision-making.
MEDICARE
Let People Decline Medicare Benefits
The Examiner, 10/17/08
The Medicare Freedom to Choose Bill, introduced Oct. 1 by Rep. Sam Johnson (R-TX), would restore common sense and original congressional intent to rules governing Medicare, writes The Examiner. Bureaucratic rules promulgated in 1993 and reiterated in 2002 actually force people to accept Medicare — with the taxpayers picking up the bill — unless they also agree to forfeit the Social Security benefits. The Johnson bill would allow patients to enter into private contracts with the doctors of their choice, without penalizing the doctor (as current law does) for doing so. The bill also would let seniors opt out of the Medicare hospital program altogether, and it would allow seniors to continue building their HSAs after turning 65. Taxpayers would save money, doctors would escape paperwork headaches, and bureaucrats would have one less file to monitor.
Upcoming Events
National Consumer Driven Healthcare Summit
October 19-21, 2008
Washington, DC
Grace-Marie will speak about "The Impact of the November Elections on Consumer Driven Health Care" on Tuesday, October 21.
Grace-Marie Turner speaking on the Good Morning Texas show
KLVT-AM Radio Broadcast
Monday, October 20, 2008, 8:50 a.m.
Lubbock, TX
Grace-Marie Turner speaking on the Georgene Rice show
KPDQ-FM Radio Broadcast
Monday, October 20, 2008, 5:00 p.m.
Portland, OR
Grace-Marie Turner speaking on the Community Focus show
WAPF-AM Radio Broadcast
Wednesday, October 22, 2008, 8:30 a.m.
Jackson, MS
Grace-Marie Turner speaking on the Morning Bulletin show
KBUL-AM Radio Broadcast
Wednesday, October 22, 2008, 8:30 a.m.
Billings, MT
The Top 10 Myths of American Health
Pacific Research Institute Book Launch Reception
Monday, October 27, 2008, 6:00 p.m. – 8:00 p.m.
San Francisco, CA
What the Next President and Congress Need To Do About Medicare, Medicaid, and Social Security
Center of the American Experiment Event
Tuesday, October 28, 2008, 12:00 p.m. – 1:30 p.m.
Minneapolis, MN
Monthly Briefing: Health Care Refom
PhRMA Event
Wednesday, October 29, 2008, 2:30 p.m. – 4:30 p.m.
Washington, DC
For more information, please contact Michelle Nyman at mnyman@phrma.org or 916-233-3483.
Medicare Prescription Drug Benefit Symposium
Centers for Medicare and Medicaid Services Event
Thursday, October 30, 2008, 8:45 a.m. – 5:00 p.m.
Baltimore, MD
Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.
If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org.
The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.