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Who's the Real Health Care Radical?

Shikha Dalmia
July 7, 2009, 10:32am

OK. So isn't this precious? President Barack Obama recently declared that he couldn't support a health care alternative proposed by a fellow Democrat - Oregon's Sen. Ron Wyden -- because it is too "radical." "There are a lot of good concepts to what Ron is proposing," said Obama. But the plan - called the Healthy Americans Act -- is too "radical."

What could the plan possibly have that would make it too "radical" for someone who has not blinked an eyelash before virtually nationalizing financial institutions; taking over banks; putting car companies under federal receivership; and airdropping over a trillion dollars in corporate welfare stimulus/bailout cash.

It couldn't be the plan's costs given that the CBO has estimated that it would be revenue neutral - unlike other Democratic plans that Obama backs that would cost anywhere from $1 to $1.6 trillion.

It couldn't be that the plan would force everyone to buy coverage because Obama has said he is in favor of that after raking poor Hillary over the coals for suggesting something along the lines during the campaign.

No, what is "radical" about the plan is that it would presumably put patients - instead of Uncle Sam - in charge of their own health care dollars.  

Here is how the Wyden plan would work: It would make workers responsible for choosing and paying for their health care plans. In return, it would require employers to give workers a raise equal to what they were spending on their coverage. The raise would be taxed like income, but workers would get a very generous health care tax deduction to offset the cost of their coverage.

How generous? A typical family of four spends about $13,000 a year for its health care, the Healthy Americans plan would set the deduction at $19,000. That's enough to grandfather even most of the gold-gilded, Cadillac plans that union members enjoy. "If you get a deduction of between $17,000 and $19,000 for a middle-class family of four . . . [that] now spends $13,000 on health care, we've got a chance to give millions of people . . . more money in their wallet because they got a chance to shop in a new system driven by informed choice and financial incentives to make those choices," Wyden correctly notes.

In short, Wyden would give ALL Americans the same tax treatment  currently enjoyed mainly by those employed by corporations. That's too "radical" for Obama because it would ostensibly delink health coverage from employment.

But errr... President Obama, that linkage is one BIG reason for America's large uninsured population -- something that you and your fellow Dems assure us is a pox on the face of this great country. It makes health insurance unportable because every time workers lose their jobs, they lose their coverage as well. It also forces the unemployed or the self-employed to purchase their health coverage with their after-tax dollars which makes it hugely more expensive for them. And it has heavily skewed the insurance market in favor of group corporate buyers ignoring the needs of individual purchasers - the exact opposite of what happens in auto, home, life and every other insurance market. Forcing insurance companies to compete for the business of individuals instead of corporations would vastly increase competition and drive down costs - or, in your lingo, "bend the cost curve" -- because (a) there are more individuals than companies (b) individuals spending out-of-pocket are likely to be much more cost-conscious than corporate bureaucrats.

Calling this plan too "radical" is not a complaint that someone who is proposing to set in motion the eventual government takeover of our health care system by forcing private plans to compete with a government plan - the so-called public option that Obama favors - can honestly make. More on that here.

Of course, those who believe that it is none of the government's beeswax whether individuals buy - or don't buy - coverage have plenty to object in the Wyden plan. But that's a topic for another day.........


Shikha Dalmia is Senior Analyst


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