One Cheer for Pete Stark

Commentary by Pete du Pont

All right everybody, let's hear one cheer for Rep. Pete Stark (D-CA) and his new proposal to provide health care for all of America's uninsured children. Hip, Hip, Hooray!

While Mr. Stark's proposal takes one step forward in the right direction, he also takes two steps back - and that is why he doesn't get the other two cheers.

Pete Stark is one of Congress' most committed health care socialists. He has wanted to nationalize the U.S. health care system for years. Though he supported the Clinton health care plan, his ideal would be to extend Medicare, the almost bankrupt federal health insurance program for seniors, to all Americans.

Now he talks as though he's changed his ways. But has he?

Why Stark gets only one cheer. Rather than hawking the benefits of expanding Medicare to everyone, Mr. Stark is now promoting a system of tax credits that could be used to pay most or all of the health insurance premium for low- and middle-income people. A number of market-oriented groups and think tanks have been pushing a system of tax credits - instead of the current system in which the employee gets a tax exclusion for health insurance - for years. Economists generally see tax credits as fairer than tax deductions and more easily manipulated to give lower-income working people a larger subsidy than higher-income workers.

In addition, the current system is open-ended, meaning the more an employer pays for insurance, the bigger the employee's tax benefit. By contrast, a tax credit is "defined," or limited, to a determined amount.

The fact that Pete Stark is extolling the beauties of tax credits means that he is taking a stand with the free-market advocates.

Why Stark doesn't get a second cheer. Pete Stark is adamant about making health insurance available for children on a voluntary basis. "This bill is not a mandate; it does not require any individual to buy health insurance." So one might conclude from this statement that Mr. Stark has been persuaded by market-oriented health policy analysts who have long opposed forcing individuals to buy health insurance (known as an "individual mandate").

But one would be wrong.

The reason Mr. Stark doesn't require parents to buy a health insurance policy is that it is not necessary under his proposal. Mr. Stark would require insurance companies to sell children's policies to families at any time regardless of their health status (known as "guaranteed issue").

Most proponents of guaranteed issue know that to make the system work everyone has to purchase a policy. Otherwise, people would simply wait until a child is sick, buy health insurance then, and cancel the policy as soon as the medical bills have been paid. That is bad health care policy as well as bad economic policy.

But Mr. Stark knows that. He knows that no system of auto insurance would work if people could purchase auto insurance after a car wreck. His attempt to give the impression that he has decided to let parents voluntarily determine whether or not to purchase health insurance for their children is a ruse.

Why he doesn't get a third cheer. A credible proposal for creating a new entitlement program for millions of people ought to come with a credible solution as to how to pay for that program. Mr. Stark has no credible solution: "I do not spell out how the 80 percent credit is to be financed, but the money can be found as part of a future reconciliation bill."

There are many ways to fund a health care proposal; some direct and some disingenuous. For example, Senator Kennedy (D-MA) is suggesting a 75 cent-per-pack tax on cigarettes to pay for his plan. Of course, Kennedy's plan is effectively a tax on the poor, since those who make less than $30,000 per year pay about 53 percent of cigarette taxes, while those making more than $60,000 pay only 14 percent.

On the other hand, Senate Minority Leader Tom Daschle (D-SD) would pay for his program by reducing corporate welfare and closing tax loopholes. However, everybody in Congress with an unfunded pet project has their eyes on that corporate welfare money. Republicans hope to save only about $11 billion over the next several years by cutting some of those corporate subsidies - not enough money to pay for everyone's wish list, especially providing health insurance for all of America's uninsured children.

But Congressman Stark doesn't even go that far. He's for enacting the benefit now and figuring out how to pay for it later. Stark has taken a step in the right direction by looking to tax credits to finance health care. But he only gets a temporary cheer. Unless he comes around on his other suggestions, that may be all he ever gets.