For as long as any of us can remember, health care has been an economic and political black hole. Year after year, billions of dollars are wasted while permanent and comprehensive reform never gets past the talking stage. Yet, the fact that health care is a crisis in America is the point at which national consensus stops. From calls for universal health care on one side and complete deregulation of government health-care assistance on the other, the spectrum of ideas is broad but has lacked essential ingredients — a realistic chance of both being enacted and making a difference. So when President Bush launches a major health-care initiative, like he did last week, that incorporates moderate ideas with common sense, we should listen. Congress should too.
As the president highlighted in his State of the Union address, the core thrust of the proposal is to adjust the tax code such that a married couple and a single taxpayer can take a tax deduction of $15,000 and $7,500 respectively, with the tax saving ostensibly applied toward the purchase of health-care insurance. Any employer-paid health-care plan that costs more than these figures will be considered taxable income to the taxpayer. Under this proposal, it is estimated that 80 percent of taxpayers will experience a tax savings while 20 percent will pay tax on the amount by which the cost of employer-paid health insurance exceeds $15,000 or $7,500. This group of 20 percent is largely the wealthiest taxpayers who purchase the most expensive health insurance.
The group that stands to gain the most from the president's proposal is the self-employed. This block of 17 million Americans is penalized under the current tax system whereby they pay health-care premiums with after-tax dollars, whereas most Americans receive health care through their employers, paid with pre-tax dollars. This difference makes it materially more expensive for the self-employed. The president's reform initiative will allow self-employed workers to obtain health-care coverage with the same advantage as employees who receive health-care coverage as part of their employment benefits. Additionally, employees of companies who do not provide health insurance will have the same opportunity to purchase health insurance as the self-employed.
President Bush's reform initiative will not only increase and equalize health-care purchasing opportunities, but should also reduce economic waste. Currently, companies offer gold-plated health-care plans to employees as pre-tax enticements above salary. These plans have low deductibles and low co-pays, thus providing no incentive whatsoever for the patient (a.k.a. the taxpayer) to spend his health-care dollars wisely. Under the Bush proposal, taxpayers will be enticed to purchase more affordable health-care policies with higher deductibles and co-pays, thus pushing the taxpayer to spend his health-care dollars more wisely. Frivolous doctor visits and diagnostic tests will be dramatically reduced, thus reducing the overall cost of health care to the average American.
Unfortunately, the reforms mentioned above do not adequately address the needs of the lowest income Americans. Most workers at the bottom of the economic ladder are not provided health insurance through their employers, and their income is so low they do not pay income taxes. Thus, a $15,000 tax deduction does not increase the income of the working poor and will not help them afford health insurance. While President Bush has promised to couple his health-care tax reform with increased funding for Americans who cannot afford basic health insurance, more must be done to broaden the health-care safety net.
While lacking a direct and comprehensive solution to provide health care to the poorest Americans, President Bush's health-care initiative is an agreeable first step that Washington can take to equalize the cost of coverage for all working Americans. However, the president's plan is only one step in the process of comprehensive change. We must continue with reform efforts to include those on the bottom rung of the economic ladder. To accomplish this, the president and Congress must collaborate to find a viable mechanism to provide health-care coverage to the least able among us, such as children, the homeless and the working poor.
Congress must not use the president's low approval ratings as an excuse to torpedo his health-care plan, nor should the president reject enlarging his proposal to include those currently excluded from his plan. While not perfect, the president's plan is the best first step on the table, and it is now up to a hostile Congress to decide whether they are willing to join hands with Bush and address this overdue crisis.
Will Smith ([email protected]) is a freshman majoring in political science and religious studies.
