First some history: a decade ago Sen. Bob Kerrey made health care the centerpiece of his 1992 presidential campaign. Gov. Bill Clinton offered only a vague alternative, but after the election he and Hillary took a big swing at the problem. They whiffed. “Hillarycare” was a Rube Goldberg contraption that didn’t socialize medicine but certainly would have bureaucratized it further. The defeat of Clinton’s plan in 1994 led the Democrats to lose control of Congress and retreat to a so-called incremental approach. Meanwhile, the ranks of the uninsured swelled to 41 million Americans, plus tens of millions more who have some intermittent health insurance but are terrified of losing it. These folks don’t vote much and have little political clout. So the problem has festered.
When I asked Gephardt last week what happened to incrementalism, he admitted he’d “bought into it” for years, voted for the first Bush tax cut in 2001 because he didn’t want to be “Don Quixote,” then finally realized that crystallizing the choice between the parties with a bold new plan “is what politics ought to be about.”
The basic deal is this: Gephardt’s plan would require all employers to provide health insurance, but Washington would pick up 60 percent of the employer’s tab. Unemployed and low-income workers struggling with their portion of the premiums would get extra help. So would states burdened by health-care costs. The sticker shock of this “universal coverage” is the sticking point. The Gephardt campaign figures it at $210 billion the first year, but with health-care inflation, the number would rise fast. Gephardt says he would get the money by defeating this year’s dividend-tax cut and repealing most of President Bush’s 2001 efforts (except some limited relief of inheritance taxes and lifting the marriage penalty). That won’t be enough to balance the budget. As Gephardt admits, he’s now a deficit dove.
Raising personal-income-tax rates for the wealthy may seem left-wing in today’s politics (though it hardly hurt the economy when President Clinton did it in 1993). But what’s truly amazing is how “conservative” this liberal Democrat’s proposal really is. It acknowledges that the private health-care system we’ve got is here to stay. Canada does not beckon. This plan requires no new bureaucracy, no complex regulation and no overhaul of the health-care delivery system, any one of which would tick off constituencies and kill the idea. At bottom, the whole thing essentially just swaps one kind of tax relief for another. Business wins a mammoth new tax cut (or credit, if the company’s not making profits) instead of affluent individuals getting it. Corporations would take $100 billion or so of what they would otherwise spend on health care and invest it in creating jobs and economic growth, a far more effective form of stimulus than cutting dividend taxes. If a Republican had proposed it, the critics would say: “There go those supply-siders again!”
And the cost savings are obvious. When people are uninsured, they often wait until their medical conditions are acute and therefore much more expensive. All the “cost shifting” currently needed to treat the uninsured in their visits to emergency rooms is extremely wasteful. “This is a terrific plan that would help drive down health-care costs,” says Sen. Jay Rockefeller, who has spent much of his Senate career studying the problem.
The top guy at the country’s largest HMO, Dr. William McGuire, CEO of UnitedHealth Group, doesn’t agree: “Just throwing money at the existing system is ineffective.” That’s a compelling objection considering McGuire’s company would stand to get so much of the new loot. He favors more attention to scientific studies showing that certain remedies and procedures don’t work and shouldn’t be paid for by insurers.
Another Democratic presidential candidate, former Vermont Gov. Howard Dean, a doctor, has already blasted Gephardt’s proposal as impractical. But it’s Dean’s plan to target the uninsured for help that’s a non-starter, because it’s too much like welfare. Gephardt has learned an old lesson first employed by FDR with Social Security: you’ve got to bribe the middle class to help the less fortunate. Whatever the fate of his plan, at least Democrats are talking about first principles again instead of just limply temporizing on Iraq or cowering in fear of Karl Rove. That’s healthy.
