The Great Health Divide

Commentary by Pete du Pont

The stimulus package appears to be dead. Senate Majority Leader Tom Daschle once again has refused to allow it to come up for a vote. As was the case before Christmas, when the Senate first refused to act, the main disagreement is over how to provide financial assistance for the uninsured. Regardless of the fate of the stimulus package, however, the health debate will likely continue throughout the year.

What makes this impasse especially strange is that the difference between the two parties isn't that great, at least on the surface. Under current federal law, workers who lose their health insurance because they lose their jobs can continue coverage under the previous employer's plan by paying the full premium (both what they used to pay and what their employer used to pay) for another 18 months or so. To help them pay those premiums, the Democrats propose a 75 percent spending subsidy. The Republicans propose a 60 percent tax subsidy. The cost of both proposals is relatively small - less than $15 billion out of a $200 billion total stimulus package.

So if the dollars aren't far apart, what's the problem? In a word: politics. Bush is steadily gaining the upper hand in polls on both traditionally Republican issues like defense and taxes, and traditionally Democratic issues like education. This is disturbing enough. But in the Democrat's view, nothing could be worse than the perception that President Bush and his fellow Republicans are solving health care problems. After all, nothing is more important to Democrat's long-term electoral prospects than Social Security and health care.

Yet it's not just that Bush is either pulling even or passing Democrats in the polls on these two critical issues, it's how he's doing it. Rather than the traditional Republican course of "me too, only less," Bush is pushing for a rival vision - a vision that reduces the role of government and increases the control of individuals.

On health care, Bush would solve the problem of the uninsured by offering refundable tax credits so that families can purchase a private health insurance option that best meets their needs. This is anathema to the left wing of the Democratic Party. Because they prefer government-run national health insurance, the left always prefers enrolling more people in government health programs. But, if health insurance must be in the private sector, the left sees employer-provided insurance as always better than individually-owned insurance. They reason that if we are ever to have national health insurance it is a whole lot easier for the government to take over an employer's benefit than to seize control of something that is individually owned.

That's why the Democrats' proposed subsidy would only be available to pay premiums for coverage under a previous employer's health plan. There would be no help for those who purchase their own insurance, even though individual policies often cost half as much as employer-provided coverage. And there would be no help for the unemployed who were not covered under a previous employer's plan.

Bush's approach, by contrast, would give tax relief to every family regardless of the source of the insurance. People would be free to compare the cost and benefits of every plan offered in the market. This approach saves money and more efficiently meets people's needs.

It also opens the door to something desperately needed: personal and portable insurance. The problem with employer-provided coverage is that people must switch health plans whenever they switch jobs. Given the prevalence of managed care, this often means they must also switch doctors. And for people with a health problem, that means no continuity of care. Democrats argue that nationalized health care solves the portability problem. It does, but at a terrible cost to quality and flexibility. Individually-owned health care provides portability, quality and needed flexibility.

Federal income tax subsidies for health insurance currently total $141 billion a year. The problem is, the current system is arbitrary and unfair, lavishly subsidizing health insurance for some and providing no relief for others. Properly designed, tax credits for health insurance need not cost the government extra money. Instead, they would make sure that the money we are now spending is spent more rationally.