Taxation and The Battle over Health Care Reform

While it is still difficult to predict the final outcome, momentum for passing health care reform has slowed. Republicans have launched their typical misinformation campaign to scare voters. They continue to confuse the fact that the real changes are over how insurance coverage is handled. This is not a “government takeover of health care” or anything resembling “socialized medicine.” It certainly does not help matters when Republican politicians make uninformed and dishonest statements such as  claiming reforming health care coverage is comparable to placing health care under FEMA as Bobby Jindal does today in The Wall Street Journal.

Besides the endless number of dishonest Republican claims, there are also real concerns about the complexity of the plan and the cost. First Read points out a major problem in passing health care reform:

One of the bigger, but more under-reported, sea changes in American politics is how any kind of tax increase — whether in war or peace, good economic times or bad ones — has become absolutely unacceptable. After all, Ronald Reagan raised taxes. So did every modern American president involved in war, until George W. Bush. But not anymore. Indeed, as one of us pointed out on Nightly News last night, only 29% (or 157) of the 535 and House members and senators serving in Congress were around the last time — 1993! — the federal government raised taxes, and that was on gasoline. Think about that for a moment: Congress hasn’t really had a TOUGH vote in 16 years, if one defines a “TOUGH” vote as the government asking for a financial sacrifice from the American people. This is the political climate that President Obama faces in trying to pay for health reform. Republicans and some Democrats are opposed to a tax on the wealthy, and unions and Obama’s political strategists are against taxing health benefits.

While I am generally not a fan of big government programs and opposed HillaryCare, the situation with health care coverage has deteriorated to the point where government action is necessary. This is also something which costs money despite the claims of the Obama administration that health care reform can largely pay for itself. It costs money to provide coverage to those who cannot afford it, increase the delivery of preventive care, and improve health care information technology. We will not see the savings from improved preventive care and information technology for many years.

As I’ve noted before, reforming health care coverage is something which benefits everyone, not only the near one hundred million who are currently uninsured or under-insured. Having a society in which nearly everyone has health care coverage and nobody has to fear losing coverage due to developing a serious illness, losing a job, or desiring to change jobs is worthwhile but we must be willing to pay for it.

The chances of raising enough money to both achieve these goals and avoid the types of restrictions on care which Americans would not want to see imposed is greatest if the money for this can be raised by a broad based tax as opposed to pretending we can get all the money by taxing the rich alone. Unfortunatley this probably is not politically feasible as there would be protest over a tax increase on the middle class, even if it would be largely offset over time by both lower insurance premiums and ultimately lower costs from a more efficient health care system.

Earlier in the year polls did show that voters were willing to accept a tax increase to pay for health care reform. We are not seeing as many support this now. Some of this is for unavoidable reasons, such as belt tightening during a time of economic crisis and due to the scare tactics of the right wing. This is also due to a missed opportunity by Barack Obama to show true leadership.

If Obama had proposed a health reform plan and honestly discussed both the costs and benefits, he might have received support for the taxes needed to pay for this. Obama has done an excellent job of receiving support from groups which opposed health care reform in the past such as the American Medical Association. He could have further demonstrated a willingness to respond to the crisis by going beyond traditional partisan concerns by taking an even stronger position on malpractice reform. While Republicans do greatly exaggerate the role of malpractice on health care costs, the fact remains that reducing costs on defensive medicine does remain one of the easier ways to reduce costs without negatively impacting quality or patient choice.

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14 Comments

  1. 1
    Eclectic Radical says:

    “Having a society in which nearly everyone has health care coverage and nobody has to fear losing coverage due to developing a serious illness, losing a job, or desiring to change jobs is worthwhile but we must be willing to pay for it.”
     
    This is very true. Thanks to the ‘Republican Revolution’ of the Clinton Era, ‘taxes’ have become a dirty word in American politics. The GOP has promised wave upon wave of tax cuts and budget cuts and has delivered on just enough of the former while failing to really match the revenue loss with spending cuts. President Clinton, with a GOP Congress andtax cuts threatened at every turn, managed to tighten his belt and operate on the lesser revenue stream very well (though there were also costs to this felt by the American people, especially the working class), but the more recent President Bush cut taxes even further while ramping spending up to levels not seen since the Reagan Era.
     
    It is now practically a ‘fact’ of conservative political thought, thanks to the irresponsible Gingrich Congress and the even less responsible Bush presidency, that we can cut taxes indefinitely and never have to change our spending habits or raise taxes again to pay deficits. While I favor increasing the marginal tax rate for the top bracket for basic economic reasons (the richest Americans’ share of American wealth vastly overshadows their share of tax dollars paid), the idea that we can fund everything off increases on the marginal rate for the top bracket is ridiculous unless we are talking about going to the rates of the 1950s. Which even I consider to be excessive.
     
    The notion that taxes can be cut for everyone else and increased for the wealthy, while laudable for the above mentioned economic reasons, does not reflect the revenue needs of the country. After making this adjustment to the tax rates at the various brackets, an across-the-board increase will probably be necessary at some point, or a dedicated health care tax. I would favor adjusting the rates of the MediCare tax and expanding MediCare to include the health budget, but this isn’t going to happen.
     
    Oliver Wendell Holmes said that ‘taxes are the price we pay for living in a civilized society.’
     
    Republicans used to be so smart.
     

  2. 2
    Gene44 says:

    Raise taxes, Cut taxes?   Social national health plan paid for by the people for the people?  Only if the plan includes every legal citizen in America by which I mean the President, Congress, Senate, military, government employees and all the unions because under all the bills being presented they are all Excluded.   As the President stated so strong – I have my insurance – paid for by the American people for the rest of my life.  No rationing, no expense spared, any number of doctors to take care of him and his wife.  So when he is included along with the others I have stated above then and only then will I agree to the Social National Health Plan of the U.S. Government.

    Every citizen should be asking their Congress or Senate member if they will go under the plan.  If not then they have no right to force it on the people at large.  Double standards you know.

  3. 3
    Ron Chusid says:

    Gene 44,

    “Only if the plan includes every legal citizen in America by which I mean the President, Congress, Senate, military, government employees…”

    You totally misunderstand what the plan is. The idea is to allow all Americans to have a plan like the plans which members of Congress and government employees have. The plan is largely modeled on how the government employee’s plan now works, but allowing all Americans to have such choices. (The military is treated by its own system as opposed to private health plans).

    “As the President stated so strong – I have my insurance…”

    No, you are totally misrepresenting what Obama said last night. It isn’t that he has his own insurance but that he has a private physician so while in office the normal considerations of insurance do not apply.

    “So when he is included along with the others I have stated above then and only then will I agree to the Social National Health Plan of the U.S. Government.”

    A “Social National Health Plan” is not what is being proposed. Nothing is being forced on “the people at large.” The point is to give people more choices such as members of Congress now have.

  4. 4
    Sanity Injection says:

    Ron, I will grant you this much: I think you are sincere and being intellectually honest (unlike the President and House Democrats) in your discussion of the issue. However, I have to say if you think the objections by not only Republicans, but also by conservative Democrats to the House plan are simply scare tactics, you do not understand what is being proposed as well as you think you do. The idea that a public health isurance option run by the government can happily coexist with a healthy private insurance industry is a transparent fiction to anyone familiar with the workings of a free market economy. The Democrats know this; for years they have never made any secret of the fact that their goal is government-run, single-payer universal health care on the Canadian and British models, with no private option. That’s what this is a stalking horse for.

    I would encourage you to read some of the articles on this that I’ve linked on my blog here and I welcome your comments:

    http://sanityinjection.wordpre.....re-reform/

  5. 5
    Ron Chusid says:

    “The idea that a public health isurance option run by the government can happily coexist with a healthy private insurance industry is a transparent fiction to anyone familiar with the workings of a free market economy.”

    It depends upon how a private plan is structured. If it is taxpayer funded and pumps more money into the plan than can be raised by private plans it would have an obvious advantage. However they are now talking about having the pubic option be financed by charging premiums as private insurance does. If conservatives really believe what they say about the market being so much more efficient than any government program, it doesn’t make sense that conservatives believe such a public plan would be more successful than private plans. My bet is, regardless of which is more efficient, there are enough people around who would prefer a private plan for private plans to remain around (assuming they change their current behavior).

    The point of a public plan is to force the private plans to play fair. If they find loopholes to continue to drop people because they become too expensive, then there will be an option. That said, you are also right that there are many on the left who are hoping that a pubic plan becomes a way to ultimately convert to a single payer system (although not on the Canadian or British models). I am surprised that supporter of the free market on the right are not as confident in the free enterprise system as I am to believe that private plans can successfully compete with a public plan.

  6. 6
    Fritz says:

    Ron, I have grave doubts that any kind of government-run plan will be funded solely by premiums paid for by the people in the plans.   I think it will be much more likely to be funded by a combination of payments from social service agencies and a tax on private plans.

  7. 7
    Ron Chusid says:

    Fritz,

    It depends upon how the legislation is written. Many are proposing that the legislation be written to require that it be financed from premiums to have a level playing field with private plans.

  8. 8
    Anonymous says:

    Here’s a crazy idea . . . instead of having a mysterious pool of money where everyone has an incentive to take as much health care as they can because their not really paying for all of it, why not make people pay for most things and then have a system to support in times of extreme need. Isn’t that what insurance is for in the first place? I don’t pay for gas or oil changes using my car insurance so why should I pay for my 15 minute check-up and every little prescription with health insurance?

  9. 9
    Ron Chusid says:

    Bad idea. Health care is not like buying gas for your car. People with chronic medical problems have ongoing medical expenses which add up. When insurance does not cover this (or preventive care) people skip such care. The result is that they ultimately wind up with far more serious problems due to lack of routine care, which costs much more to treat.

  10. 10
    Peter says:

    You are being honest about the costs involved to really provide comprehensive universal coverage. The problem is that we have a system in place that serves the vast majority of people fairly well, even as there are admittedly many problems. Disrupting that system will result in numerous unintended consequences. If the insurance companies we love to hate really do lose out to a government plan, for example, it will mean hundreds of thousands of jobs and tax revenue lost. And a government plan will squeeze out private insurers, no doubt, because it will not be required to produce profits while the rules are set by government.

    The problem most people have now isn’t just that the current proposals don’t add up, according to our own CBO, but also that Congress is rushing ahead to address a crisis that most of us don’t see as one and has been around for decades. More careful deliberation and more input from all stakeholders are needed before we move so hastily.

    Some principles I think can be accepted by all sides as we begin this process anew: everyone should be covered, meaning no disqualifications because of existing conditions; no one should have to go bankrupt as a result of a medical condition; and those who truly can’t afford to pay anything for their health care should be subsidized, directly or by tax credits.

    If we start with these basic ideas and move slowly, even if it takes a year or more, then I think we find a bipartisan solution.

  11. 11
    Fritz says:

    Ron — as far as preventative care.  IMO there really is a point where people need to take responsibility for their choices.  If you don’t change the oil in your car, it dies early.  If you don’t take any care of yourself, you die early.    I’ve seen friends make both sets of bad choices.
    I always say “health plan”, not “health insurance” because we aren’t talking about insurance.  Anything that pays out for routine checkups or birth control pills is not “insurance”.

  12. 12
    Ron Chusid says:

    Fritz,

    The problem is that preventive medical care costs more than routine car care. It is more cost effective to pay for preventive care in insurance plans than to pay for the consequences of people not paying for such care.

  13. 13
    Ron Chusid says:

    Peter,

    The principles you lay out are pretty much what is being proposed (minus the public plan). Personally I wouldn’t mind if it reform goes slower. From the point of view of fixing the problem that might make sense. It is more a political issue, with many believing that it is necessary to pass everything at once when there is the chance or opponents will drag it out forever by fighting over every aspect.

    If private companies are really superior to government then private insurance companies should be able to survive with government competition. UPS and Federal Express manage to make a profit despite competition from the US Post Office.

    The crisis has not been around for decades in its present form. More people are uninsured or seriously under-insured than in the past. Insurance costs have gone up tremendously. Many people do realize it is now a crisis and we cannot afford to remain with the status quo. Many of those who do not see it as a crisis have not experienced the problems but do not realize their risk of losing coverage should they develop expensive medical problems.

  14. 14
    Eclectic Radical says:

    “The problem is that we have a system in place that serves the vast majority of people fairly well, even as there are admittedly many problems.”
     
    That’s the problem, it doesn’t serve ‘the vast majority of people fairly well,’ it serves those who have the most ability to afford health care and those with the least amount of medical expenses VERY well and serves everyone else on a range from ‘fair to middling’ to ‘not at all.’ Quite a few people are either have no coverage at all or have inferior coverage from a company they cannot trust… often coverage they were told they would have every reason to trust when they bought it.
     
    Currently, the system we have is subsidized by American business in a manner that amounts to a de facto corporate tax much larger than those conservatives complain about. While this round of reform is likely not going to change that, it’s something that does ultimately need to be changed. It’s a significant handicap on those employers who seek to provide quality benefits, and the fact that many people are dependent on their job for even their base line crap policy means a freedom of the kind of choices conservatives keep advocating is entirely impossible for many Americans.
     

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