ill 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.
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.
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
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
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
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
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.