Is employer-sponsored insurance a tax problem or a structural problem?
Our Unhealthy Tax Code
By Jason Furman
Democracy: A Journal of Ideas
Issue #1, Summer 2006
American health care is beset by a well-known litany of problems.
If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet:
while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An important principle for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current “private” health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more are Social Security, national defense, and Medicare.
The fact that the tax subsidy, which supports the employer-sponsored system, is better than nothing is a feeble excuse for resisting any changes to the status quo. This massive program of tax breaks is ineffective and regressive, wasting money on those who have health insurance while doing little for those who can barely afford it and nothing at all for those without it.
A single-payer national health care system would, by definition, remedy the problem, but it is unlikely to happen any time soon, if ever at all. Beyond the political limitations, it is also an open question whether a single-payer system would be the most efficient way to provide quality health care for all Americans. In the meantime, reforming health care will come down to a set of incremental changes that build on the current system.
But that does not mean that change cannot be ambitious. As Massachusetts has shown, achieving a plan for universal health insurance coverage need not wait for the establishment of single-payer government insurance like Medicare or a national health care system like the United Kingdom’s.
http://www.democracyjournal.org/
And…
Employment-Based Health Insurance: A Prominent Past, But Does It Have A Future?
Hosts: Brookings Institution and the New America Foundation
kaisernetwork.org
HealthCast
6/16/2006
Andrew Stern, president, Service Employees International Union:
…this is not a matter of policy. If we could solve this health care system by policy it would have been solved every single year. There’s more good policy about health care in America than I can imagine. It is the most studied, researched, you know, we have commissions and committees publicly and privately all throughout Washington and the United States. It’s really about politics and leadership.
Our choice is we could keep making incremental changes in the health care system. And I certainly appreciate that everyone would like to build a better funding stream for the health care system but the truth is we’re way past incremental change. It’s not going to work.
…so the fundamental change for me means one, you have to recognize that employer based health care is ending, it’s dying in front our very eyes. The charts say it there. It will not rebound, I believe, in the next economic upturn in America. It was a good friend. It served America well in the 20th Century. We love it dearly. Employers, to their credit, lived with it for a long time despite all of the distortions that it created. But it’s collapsing in front of our eyes. It may still be breathing but anybody who can look into the future says, “This employer based health care system is over in America.”
I’m here to also say I don’t think we need to import Canada or any other system. We’re going to build an American system because we’re Americans and we don’t like anybody else’s system.
I think the single payer issue is kind of a stocking horse for I’m not sure what, because we’re going to have a multi-payer system or some kind of system, you know, that it’s built into the cost of goods in America.
Video and Transcript:
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1768
Comment:
By Don McCanne, M.D.
The conservative policy community has long advocated for an end to employer-sponsored coverage. They believe that insurance should be an individual choice while recognizing that government has to play some role in funding care for low-income individuals.
What are we hearing from these voices in the progressive community? They agree that the regressive tax policies are highly inequitable and must be changed. Andrew Stern goes even further and states that the deterioration in employer-sponsored coverage, declining enrollment, and the financial burden placed on employers leaves no real option other than to replace it with a better system.
The progressives acknowledge that the policy issues are well understood. In fact, single payer would certainly accomplish our goals (though Furman conjectures on the well-documented and irrefutable efficiency of single payer). So what do they say? Let’s adopt any better system, except single payer.
The policy issues are well understood. Simply changing tax policy (Furman) or adopting a universal, multi-payer system (Stern) perpetuate and expand some of the crucial policy flaws that we face today.
Single payer won’t fix all of the problems in our health care system, but it will fix all of the problems with the financing of health care. And isn’t that what the debate is all about?