House GOP to Push Revised Stimulus Bill
The Washington Post
December 19, 2001
by Glenn Kessler and Juliet Eilperin
"The stimulus bill has been mired in disputes between Democrats and Republicans over the best mix of tax cuts and spending, but the biggest hurdle in recent days has involved health insurance. The issue has prompted a fierce philosophical debate, with Republicans pushing individual tax credits and Democrats arguing to keep such credits within the employer-based system."
"House-Senate negotiators had met for barely an hour last night when Rep. Bill Thomas (R-Calif.), chairman of the negotiations, left to go to a vote. Participants said he then phoned the negotiating room and informed the other negotiators he was terminating the meeting and not returning."
Rep. Bill Thomas:
"There are people who are employed and do not get health insurance. If we get a structure, it ought to be available to them when they are working. Why would it be available to them only when they are not working?"
<http://www.washingtonpost.com/wp-dyn/articles/A62608-2001Dec18.html>http://www.washingtonpost.com/wp-dyn/articles/A62608-2001Dec18.html
Comment: Whether the tax benefit of purchasing insurance coverage accrues to the employer or to the employee seems like a minor issue, especially when considering that most economists consider health coverage to be part of the employee's compensation package anyway. Besides, as Rep. Thomas points out, tax credits could also assist employed but uninsured individuals to purchase health care coverage. What could be wrong with this? Well, plenty.
Employers are looking for ways to escape the burden of escalating costs of their health benefit programs. Many are switching to partial payment through defined contribution approaches to coverage, if not outright terminating employee coverage. Granting tax credits to employees will encourage employers to shift the responsibility of purchasing health care coverage to the employee in order to take advantage of the tax benefit. Since tax policy carries the endorsement of our government, employers would be relieved of much of the guilt they might have by making this change.
By converting to the equivalent of vouchers or cash, employers will have fulfilled their responsibility, and employees are left to fend for themselves in the health care marketplace. The defined contribution received by the employee would be inadequate to purchase comprehensive coverage, and so the employee is left with either an inadequate plan, or very likely, pocketing the allowance and taking a chance on not having catastrophic health care losses. Thus tax credits for individuals will severely damage or destroy the link between health care coverage and employment, resulting in dramatic increases in the numbers of uninsured and under-insured.
There are other issues. Individuals in the health insurance market are vulnerable, having to pay higher premiums than with group coverage, and not being able to obtain affordable coverage if they have pre-existing disorders. This is great for insurance industry profits, but terrible for beneficiary-patients.
By making the patient the decision maker in health care purchasing, tax credits support the consumerism movement in health care. As we have seen previously, consumerism shifts costs to those that need care, threatening affordability and access for those with major acute and chronic disorders.
Individual tax credits are being supported by conservatives as the answer to the covering the uninsured. But it is very clear that the credits will never, never be large enough to assure affordability of health care coverage. Credits will be used primarily by those who now receive coverage through their employment or by those who can afford to purchase coverage on their own. As targeted tax policy, it entirely misses the target.
In the future, the linkage between health care coverage and employment should be terminated as we place everyone into a universal program of health insurance. But until then, it is absolutely essential that we continue with policies that encourage maximum employer participation in the health benefit programs for the employees. Failing to do so will only increase the numbers of the uninsured and under-insured.