Lose-Lose-Lose
The universal health coverage plan announced by Democratic presidential
hopeful Dick Gephardt would provide coverage to an additional 30 million
Americans at an initial cost of about $210 billion a year.
That's a gold-plated price tag of $7,000 per person.
And it's only the beginning of the high cost of the plan.
Mandates for all. Every employer would be required to provide health insurance. An employer mandate by any other name is an employer mandate. Companies no longer would be able to deduct the cost of health insurance premiums from their gross receipts - worth approximately 30% of the cost of the coverage - but would instead receive a 60% tax credit.
How would Rep. Gephardt pay for this? He would rescind all of the tax cuts enacted in 2001 and any that will be passed this year or next.
Further, employers who want to reduce their health premium costs can forget it. If they do, they forfeit the entire credit.
Play, or else. Companies that don't offer health insurance would have to start doing so. They would get the 60% refundable credit, and their workers would be responsible for 40% of the premium costs.
No exit. Many lower-income workers are opting out of employer coverage right now because they can't afford it. Opting out would not be an option. Gephardt would, however, provide subsidies to some workers to offset part of their share.
Americans who are not employed would be signed up for existing federal entitlement programs - Medicare, Medicaid, and the Children's Health Insurance Program.
The whole scheme, which certainly was not developed by health policy experts or economists, assumes that government knows best how to redistribute and spend our money.
Utopia? Gephardt said his plan "covers every American, stimulates the economy and creates jobs" in a speech on Wednesday before the Service Employees International Union in New York. Nirvana, if it were only true.
It is, at its core, based on a Keynesian notion that government spending creates prosperity. By increasing taxes to pay for the plan, he would be cycling money from taxpayers, through government, and to employers to be spent on health coverage or, he says, wage increases for workers.
The higher tax rates would be a disincentive for Americans to work, save, and invest. Instead, all of us will have an extra incentive to consume as much health care as we can to get our money's worth. And guess what that would do to health care inflation.
The more the government gets involved in directly paying for health coverage, the more strings will be attached as to exactly what the insurance must cover. And you can bet that the requirements will never be reduced, with the Gephardt price tag going higher and higher, already estimated to be $2.5 trillion over 10 years.
And what do we get for this? The Gephardt plan would increase the number of Americans with health insurance to 97%, with 30.4 million of today's nearly 41 million uninsured getting coverage but with 10 million still outside the system.
See the article section below for links to the actual plan. You'll see it is a clear employer mandate paid for with a generous bribe of taxpayer money. Gephardt calls it a win-win-win, but it is a lose-lose-lose for consumer empowerment, market-driven cost efficiency, and continued innovation in health care financing.
