NCPA - National Center for Policy Analysis

Bradley's Expensive Health Insurance Plan

October 25, 1999

Democratic presidential candidate Bill Bradley recently came up with his own plan to improve health care in America. Essentially it would: open the Federal Employee Health Benefits Program to the entire nation, have the federal government pay the health insurance premiums of low- and medium-income households, and introduce regulations and controls to reduce costs and impose greater uniformity of care.

Economist Martin Feldstein has some problems with that approach:

  • While Bradley estimates the ensuing costs at about $65 billion a year, Feldstein puts the figure at about $110 billion in the first year -- or $1.4 trillion over 10 years.
  • If the cost were $110 billion in 2002, that would exceed 10 percent of total personal income tax revenue that year -- necessitating a tax increase of $850 that year for a family with $50,000 in taxable income.
  • All parents would be required to buy government-approved health insurance for their children and only those with incomes under $32,800 would be fully reimbursed for the cost.
  • While Bradley claims that his plan would achieve 95 percent coverage for the population, that is suspect since 10 million of those currently uninsured are in families with incomes over $50,000 -- who would not receive any subsidy and would remain uninsured.

Nor is there any way that the subsidies could reduce the 35 million uninsured with incomes under $50,000 to just four million -- especially since many of the uninsured adults have incomes over the $32,800 level at which the subsidy for adults ends.

Source: Martin Feldstein (Harvard University), "Dr. Bradley's Bad Medicine," Wall Street Journal, October 19, 1999.

 

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