Politics & Prose September 2004

Your Health Insurance Is on the Ballot

The hidden agenda in Bush's "health-care reform" plan
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"When Dr. Johnson defined patriotism as the last refuge of a scoundrel, he was unconscious of the then-undeveloped capabilities of the word 'reform.'"

—Roscoe Conkling, New York politician of the Gilded Age.

George W. Bush's health-care "reform" plan would destroy the employer-based health insurance system. If this is the first time you've heard that charge, blame the same media that enabled the Iraq war.

Discussion has focused on how many uninsured the plan would cover—not on its effects on the insured. In fact, it would cover at best 6 of the 45 million Americans without health insurance; some experts estimate that it would cover only 1 million. Bush's 2005 budget contains no new funding for the plan, which would cost $70 to $100 billion; it would have to be paid for by cuts in other programs, but the Administration does not specify which ones. Thus, as Edwin Peck points out in a paper for the Center on Budget and Priorities, Bush finesses the situation so he can say he has a plan to extend insurance to the uninsured, "while also maintaining that deficits would be cut in half by 2009."

This is the pattern of deceit Paul Krugman has observed in Bush's overall budget forecast: Bush's claim that he will halve the deficit in his second term assumes that his chief domestic priority for that term—making the tax cuts passed in his first term permanent—will not be enacted.

Bush's "plan" to extend coverage—which consists of tax credits of $1,000 to individuals and $3,000 to families of four earning $25,000 or less—is the same one he proposed in the 2000 campaign. Yet insurance premiums have risen by over 50 percent since then; to more than $9,000. How many families earning $25,000 could come up with the remaining $6,000? Only 3 percent of those eligible have taken advantage of similar tax credits included in trade legislation passed in 2002. An unfunded "plan" to insure families obliged to invest a quarter of their incomes to benefit from it is a hoax wrapped in an illusion.

Clearly, insuring the uninsured is not the purpose of Bush's health-care reform plan. Undermining the employer-based insurance system is. This becomes apparent when you consider the other elements of Bush's plan—Health Savings Accounts and Association Health Plans. They share a common property. They will siphon the healthy and the wealthy out of standard group insurance plans. That will cause premiums to rise for the less healthy and wealthy remaining in those plans. Unable to afford the premium increases, more employees will drop out of these plans, increasing premiums for those who don't; and more employers will stop offering them. That will swell the ranks of the uninsured. Employers of low-wage workers, meanwhile, will curtail their group policies, telling employees to obtain insurance through the tax credits. Few will be able to afford the premiums, and as a result, many will become uninsured. Thus, a plan to insure the uninsured will in fact increase their number, and the crisis of the uninsured will engulf the insured. As a result, the employer-based health insurance system will unravel.

Health Savings Accounts were part of the 2003 Medicare Reform Bill; Bush wants to expand them in his second term. Health Savings Accounts allow individuals and families to opt out of their employer's comprehensive low-deductible medical insurance plans and take out high-deductible plans, which they can pay for by making tax-deductible contributions (of up to $5,000 a year) into IRA-like accounts. Experience bears out the contention that only the wealthy and the healthy would use them. On the "wealthy" point: Of the 16,000 employees of the University of Minnesota offered the high-deductible low-premium option, the incomes of those who took it were 48 percent higher than the incomes of those who did not. On the "healthy" point: Only 7 percent of the 4,600 employees of Humana, the hospital giant, took the high-deductible option and they were, as Gail Shearer and Susan Montezemolo write in a study for the Center for American Progress, "significantly healthier in every measure" than those who did not.

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Jack Beatty is a senior editor at The Atlantic Monthly and the editor of Colossus: How the Corporation Changed America, which was named one of the top ten books of 2001 by Business Week. His previous books are The World According to Peter Drucker (1998) and The Rascal King: The Life and Times of James Michael Curley (1992). More

Jack Beatty"The Atlantic Monthly is an American tradition; since 1857 it has helped to shape the American mind and conscience," senior editor Jack Beatty explains. "We are proud of that tradition. It is the tradition of excellence for which we were awarded the National Magazine Award for General Excellence. It is the tie that binds us to our past. It is a standard we won't betray."

Beatty joined The Atlantic Monthly as a senior editor in September of 1983, having previously worked as a book reviewer at Newsweek and as the literary editor of The New Republic.

Born, raised, and educated in Boston, Beatty wrote a best-selling biography of James Michael Curley, the Massachusetts congressman and governor and Boston mayor, which Addison-Wesley published in 1992 to enthusiastic reviews. The Washington Post said, "The Rascal King is an exemplary political biography. It is thorough, balanced, reflective, and gracefully written." The Chicago Sun-Times called it a ". . . beautifully written, richly detailed, vibrant biography." The book was nominated for a National Book Critics' Circle award.

His 1993 contribution to The Atlantic Monthly's Travel pages, "The Bounteous Berkshires," earned these words of praise from The Washington Post: "The best travel writers make you want to travel with them. I, for instance, would like to travel somewhere with Jack Beatty, having read his superb account of a cultural journey to the Berkshire Hills of western Massachusetts." Beatty is also the author of The World According to Peter Drucker, published in 1998 by The Free Press and called "a fine intellectual portrait" by Michael Lewis in the New York Times Book Review.

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