Guest guest Posted July 16, 2004 Report Share Posted July 16, 2004 > Fri, 16 Jul 2004 06:46:49 -0700 > Krugman: Medical Class Warfare > > > <http://www.nytimes.com/2004/07/16/opinion/16KRUG.html?hp> > Medical Class Warfare > By PAUL KRUGMAN > > Published: July 16, 2004 > > If past patterns are any guide, about one in three > Americans will go > without health insurance for some part of the next > two years. They > won't, for the most part, be the persistently poor, > who are usually > covered by Medicaid. They will be members of working > families with > breadwinners who have jobs without medical benefits > or who have been > laid off. > > Many Americans fear the loss of health insurance. > Last week I described > John Kerry's health plan. What's the Bush > administration's plan? > > First, it offers a tax credit for low- and > middle-income families who > don't have health coverage through employers. That > credit helps them > purchase health insurance. The credit would be > $3,000 for a family of > four with an income of $25,000; for an income of > $40,000, it would fall > to $1,714. Last year the average premium for > families of four covered by > employers was more than $9,000. > > A study by the Kaiser Family Foundation estimates > that the tax credit > would reduce the number of uninsured, 44 million > people in 2002, by 1.8 > million. So it wouldn't help a great majority of > families unable to > afford insurance. For comparison, an independent > assessment of the Kerry > plan by Kenneth Thorpe of Emory University says that > it would reduce the > number of uninsured by 26.7 million. > > The other main component of the Bush plan involves > " health savings > accounts. " The prescription drug bill the Bush > administration pushed > through Congress last year had a number of > provisions unrelated to > Medicare. One of them allowed people who purchase > insurance policies > with high deductibles, generally at least $2,000 per > family, to shelter > income from taxes by setting up special accounts for > medical expenses. > This year, the administration proposed making the > premiums linked to > these accounts fully tax-deductible. > > Although the 2005 budget presents that new deduction > under the heading > " Helping the uninsured, " health savings accounts > don't seem to have much > to do with the needs of the families likely to find > themselves without > health insurance. For one thing, such families need > more protection than > a plan with a $2,000 deductible provides. > Furthermore, the tax > advantages of health savings accounts would be small > for those families > most at risk of losing health insurance, who are > overwhelmingly in low > tax brackets. > > But for people whose income puts them in high tax > brackets, these > accounts are a very good deal; making the premiums > deductible turns them > into a great deal. In other words, health savings > accounts will offer > the already affluent, who don't have problems > getting health insurance, > yet another tax shelter. Meanwhile, health savings > accounts, in the view > of many experts, will actually increase the number > of uninsured. > > This perverse effect shouldn't be too surprising: > unless they are > carefully designed, medical policies often have side > consequences that > worsen the problems they supposedly address. For > example, the > Congressional Budget Office estimates that one-third > of the retirees who > now have drug coverage through their former > employers will lose that > coverage as a result of the Bush prescription drug > bill and will be > forced to accept inferior coverage from Medicare. > > In the case of health savings accounts, the key side > consequence is a > reduced incentive for companies to insure their > workers. When companies > provide group health insurance, healthier employees > implicitly subsidize > their sicker colleagues. They're willing to do this > largely because the > employer's contributions to health insurance are a > tax-free form of > compensation, but only if the same plan is offered > to all employees. > > Tax-free health savings accounts and premiums would > provide healthier > and wealthier employees an incentive to opt out, > accepting higher > paychecks instead, and would lead to higher > insurance premiums for those > who remain in traditional plans. This would cause > some companies to stop > providing health insurance, or raise employee > contributions to a level > some workers can't afford. > > The difference couldn't be starker. Mr. Kerry offers > a health care plan > that would extend coverage to most of those now > uninsured, paid for by > rolling back tax cuts for those with incomes over > $200,000. President > Bush offers a tax credit that would extend coverage > to fewer than 5 > percent of the uninsured, plus a new tax break for > the affluent that > would actually increase the number of uninsured. As > I said last week, I > don't see how Mr. Bush can win this debate. > -- Quote Link to comment Share on other sites More sharing options...
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