RudyCare

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In New Hampshire on Tuesday, Republican presidential hopeful Rudy Giuliani released a new health care plan--except that it is not really new and it's not much of a plan.

Instead, it's just a two-page summary of Giuliani's general approach to reform--which, from the looks of it, is closely modeled on an idea President Bush proposed in January of this year. While there may be some differences between the two--it's impossible to know, since the campaign isn't getting into such details--it's fair to judge Giuliani's proposal based on the verdict experts rendered when Bush trotted out his idea. And that verdict wasn't too good. At best, the Bush plan would have made only a small dent in the number of people without insurance--at a time when even other Republicans were endorsing far more sweeping schemes. And at worst? It could have resulted in more people struggling with their health bills.

Since that time, of course, two of the leading Democratic candidates (John Edwards and Barack Obama) have published detailed proposals of considerably greater ambition, with a third (Hillary Clinton) likely to follow soon. By that standard, Giuliani's proposal seems even more diminutive. But does that bother the former mayor? Probably not. In the last few days, he's spent as much time trashing those Democratic ideas as promoting his own. For Giuliani, you get the feeling, it's all about what his plan isn't (Michael Moore, Cuba, "socialized medicine") rather than what it is. Or, to put it more bluntly, it's about stopping universal health care--not achieving it.

Which, perhaps, is a good thing. Giuliani hasn't made a meaningful contribution to the policy debate. But he has offered an important preview of what universal health care's opponents will say during the presidential campaign--and afterwards, if Congress seriously takes up the issue.

 

The central feature of Giuliani's proposal would be a tax deduction of up to $15,000, available to all Americans who buy an insurance policy--regardless of whether they buy it on their own or through an employer. That's a change from the present setup, in which only people who buy coverage through employers get the break.

Making the tax treatment of individual insurance more like that for employer insurance could have far-reaching effects. Most experts agree that the tax break for employer-sponsored insurance has been instrumental in propping up our existing health insurance system, in which it's assumed most working people will get coverage through their jobs. That's been particularly true in the last few years, as employers have grown weary of bearing such a huge financial burden on behalf of their workers. Reducing or eliminating that preference will likely weaken the system further, because--as fewer workers demanded such coverage--even fewer employers would provide it.

In principle, that would be just fine--employer-based health insurance is nobody's idea of a perfect system--just as long as Giuliani proposed to create something in its place. But there's no such effort from Giuliani. Instead, he'd just let people shop around in the individual insurance market, buying whatever policies they could find.

And here's where the problems start. People with pre-existing conditions--and if you have even a minor condition, like allergies, that means people like you--frequently can't find affordable coverage because insurers won't offer it. (Or, if they do offer coverage, it will be prohibitively priced.) Giuliani hails his approach as giving consumers more choices. But for these people, it'd actually mean less choice--or no choice at all.

That's one reason that, at the end of the day, Giuliani's plan is unlikely to make a significant dent in the uninsured. Another is that tax deductions, by definition, are worth less to people who are in lower tax brackets--who, as you might imagine, tend to make up the bulk of the people without health insurance. In a recent analysis of the latest Bush proposal--on which, again, the Giuliani proposal is patterned--the Center for Budget and Policy Priorities noted that married couples with taxable incomes between roughly $15,000 and $60,000 (the second lowest tax bracket) would get a tax break of $2,250. That's not chump change, for sure, but when group coverage for the average family costs $12,000--and when individual coverage costs much more than that, as it does because of higher overhead and marketing expenses for insurers who sell to that market--it's easy to see why few analysts think it will enable many more people to buy coverage.

Precisely what result this produces is unclear, since some of the details are murky and Giuliani has said he won't put out specific numbers for a few months. (My efforts to clarify the plan were fruitless. Giuliani's advisers referred me to the official organizing committee; a spokesperson there, Maria Comella, referred me to the speech and official campaign materials) Among the key unanswered questions: Would Giuliani cap the existing employer deduction at $15,000 for a family, like Bush would, or simply offer an individual tax credit worth up to that amount? For the poor, would he offer the deduction as a refundable credit, which would be worth more? Would he pay for it with cuts in Medicaid?

Still, it looks like the Giuliani proposal will be relatively close to the schemes which Bush has proposed, about which we do know quite a bit. A year ago, after Bush first floated an embryonic version of his proposal, economist Jason Furman wrote in the National Tax Journal that "Empirical estimates show that eliminating the tax incentive for employer-provided insurance, without creating another pooling arrangement, could increase the number of people without insurance--even in a relatively limited proposal like that of President Bush." What's more, research has suggested that those getting insurance will probably be relatively healthy, while those losing it will be relatively unhealthy.

Some might complain that Furman, though a well-respected economist in his own right, worked in the Clinton White House and frequently advises Democrats. (As it happens, that's true of most highly regarded economists who work on health care. Make of that what you will.) But the Joint Committee on Taxation came to the same conclusion. Even the U.S. Department of the Treasury, which is part of the administration, strained to put an attractive gloss on this idea when Bush trotted it officially out this year. Its own evaluation, under favorable assumptions, suggested the proposal would reduce the number of uninsured by 3 to 5 million--meaning around 40 million people still wouldn't have coverage.

In sheer scope, that's a far cry from what Giuliani's counterparts--the ones seeking the Democratic nomination--are proposing. In fact, it's not even close to comparable.

 

Why might Giuliani support such an approach? One possibility is that he simply doesn't think the problem of people losing health insurance is, well, a problem. Among Giuliani's advisers is David Gratzer of the Manhattan Institute. Gratzer, a physician, is a smart and prolific writer. (He and I had a cordial debate in these pages some weeks ago.) And among his many articles are repeated protestations that the problem of the uninsured is significantly overstated--because, among other things, a lot of them are already eligible for public programs or lose coverage for only part of the year.

Gratzer's other passion--which he shares with Sally Pipes of the Pacific Research Institute, another Giuliani adviser--is deep opposition to universal health care. Both Gratzer and Pipes are Canadian by birth. Both have spent enormous time warning people that health care in their country means long waits, no cutting-edge care, and maddening bureaucracy. And what's true of Canada, they suggest, would be true of any system giving insurance to everybody. "A universal health-care system run by government will reduce the quality and access to health care for all Americans," Pipes wrote for National Review Online in 2003. "It's a prescription for disaster."

This is a pretty good harbinger of how the debate over universal health care will play out should it become a huge, all-encompassing fight in 2009, just like it was in 1993 and 1994 when Bill Clinton tried it. Conservatives will promise a little help, for some people, but mostly they'll tell scare stories about universal health care.

And the arguments are weak. People eligible for public programs frequently don't sign up because enrollment procedures are so difficult, frequently by design--since states are reluctant to spend too much money on them. (Put another way, if everybody eligible for these programs signed up, the states would quickly find other ways to reduce their public programs, probably by limiting eligibility.) If somebody loses insurance for only part of the year, it's still a problem--particularly if it coincides with a medical problem, which will very quickly induce serious financial distress. Indeed, if anything the 40-something million figures understate the problem. Studies have shown that 80 million Americans--over a quarter of the population--lose insurance at some point during a two-year period. That's a lot of people worrying about medical bills and, in many cases, rationing their own care because they fear the cost.

As for the supposed deficiencies of systems abroad, that's been covered pretty exhaustively in these pages before--as well as by folks like Kevin Drum, Matthew Holt, Paul Krugman, Maggie Mahar, and Ezra Klein. But just in case anybody needs a refresher, the horror stories abroad have been wildly exaggerated. A lot of those supposedly inferior countries seem to get overall results that are as good, if not better, than the U.S. while spending less. And the best countries--like France, Germany, Switzerland, take your pick--do it while offering as much if not more convenience and immediacy than the U.S. does to its citizens.

Still, Giuliani's argument will likely resonate with a lot of voters--thanks, in part, to Michael Moore. Sicko did a great service by highlighting the very real problems in American health care and stressing the far superior systems of (some) European countries. But his hyping of Cuba has given people like Giuliani an easy line of attack, like this quip from a speech on Monday: "Only Michael Moore, Hillary Clinton, [and] Barack Obama want to go to Cuba for health care."

 

Needless to say, neither Clinton nor Obama have ever said anything remotely of the sort. But maybe it's good that Giuliani puts this propaganda front and center now--because it will force them and other universal health care advocates to start thinking up responses.

A new memo from the strategy firm of Democracy Corps, published last week, might help in that effort. Based on a recent poll, they concluded that the issue of insurance security--whether you feel like your insurance will be there and take care of you--resonates more than mere affordability--how expensive your insurance is. Reasonable people can dispute the poll's true meaning. And, to be quite honest, I've often thought the opposite might be true. But the Democracy Corps conclusion does have a certain logic to it, given the rising number of people without insurance--and the creeping sense, even among the insured, that their coverage won't be there when they need it. Keep in mind, too, that pollster Stanley Greenberg is one of the founders of Democracy Corps. He was Clinton's pollster during the 1993-94 debacle, so if anybody knows the perils of misinterpreting health-care polling, it's him.

If the finding is right, then the best rejoinder to Giuliani and others who make similarly flawed arguments may be to ignore the policy minutiae and focus on the big picture. A candidate who supports universal health care can make voters this promise: "You will have health insurance from the day you are born until the day you die, and nothing can take it away." Giuliani and his allies can't make the same promise. And maybe that's enough to do the trick, no matter how many times they scream about "socialism."

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