During his presidential campaign, George W. Bush pledged to do something
about the 43 million Americans who still do not have health insurance.
But you would never know that from his actions in his first few months
in office. Clearly, President Bush is so focused on ramming his tax cuts
for the wealthy through Congress that he has little time to concentrate
on the nation's critical social investments.
He should reconsider his priorities. For instance, by marrying today's
large surpluses with a progressive approach to cutting taxes, we could
significantly reduce the ranks of the uninsured and improve the nation's
health overall -- at about one-fifth of the cost of the president's $2
trillion, 10-year tax cut plan.
The president should embrace bipartisan legislation introduced in the
Senate in mid-March that would create a special income tax credit for
the purchase of health insurance. The Relief, Equity, Access, and Coverage
for Health (REACH) Act, sponsored by Sens. James Jeffords (R-Vt.), John
Breaux (D-La.), Blanche L. Lincoln (D-Ark.), and Tom Carper (D-Del.),
would allow moderate- and low-income Americans, individually or through
their job, to buy the coverage they and their families so urgently need.
The beauty of a fixed-sum, refundable income tax credit (meaning even
those too poor to pay taxes would receive a credit) is that it breaks,
in a single stroke, the ideological gridlock that has stymied past efforts
to achieve universal coverage. Conservatives can take heart from its emphasis
on private coverage, while liberals will like its basis in public financing.
Rather than offering Americans a government-run system or a fend-for-yourself
marketplace, this plan empowers them to take charge of their own care.
Consumers need to become the purchasers of health care so that doctors,
hospitals, and insurance companies are responsive to their needs.
The tax credit would let workers buy insurance through their workplace
even if their employers did not offer coverage. Employers would be responsible
for making the adjustments in a worker's paycheck. They would also send
a check to the insurance company to pay the premiums. To offset these
administrative costs, employers would also get a tax break.
For employees of companies that do not offer insurance, the credit would
be worth $2,500 for families and $1,000 for individuals. Workers whose
companies do offer coverage would be eligible for a smaller $1,000 family/$400
individual credit. This is designed to both make the workers' share of
premiums more affordable and give their companies an incentive to keep
their policies. Otherwise, many companies would drop their coverage to
let workers take advantage of the bigger tax break.
Low- to middle-income taxpayers would be eligible for the credit. Very-low-income
workers would be eligible for the credit even if they did not pay income
taxes: They would receive a refundable credit on their payroll taxes,
similar to the Earned Income Tax Credit. Higher income taxpayers would
remain eligible for the existing tax breaks for health insurance received
through a job or as a self-employed worker.
The credit is part of a four-pronged approach for achieving universal
coverage. The other components are:
- purchasing groups that let employees choose their own health plan
and provide them the information necessary to make the best decision
for themselves;
- grants to states so they can help create an equal opportunity for
everyone to get health insurance;
- a financial penalty for people who do not acquire coverage once
it is affordable and available.
To be sure, this proposal is ambitious and would cost as much as $40
billion annually in lost tax revenues if many of today's uninsured chose
to buy coverage. Yet much of that amount would represent a tax cut for
low-to middle-income taxpayers who currently have coverage but would gain
little from President Bush's tax cut plan. Given the large surplus, this
is an ideal time to press for a tax policy that can significantly reduce
the ranks of the uninsured.
