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Search Terms: tax credit AND health insurance

Document 36 of 131.

April 16, 2000, Sunday

SECTION: OPINION;Pg. G-3

LENGTH: 750 words

HEADLINE: Better health care coverage or tax cuts?

BYLINE: Robert Kuttner; THE AMERICAN PROSPECT

BODY:
George W. Bush has proposed a tax credit that would cost the U.S. Treasury about $7 billion a year, to help working families buy health insurance. This is a weak version of a weak approach to health reform. By contrast, Vice President Gore's plan would spend about $35 billion a year, and cover far more people.

Neither approach is ideal, because both would patch some of the cracks in the current system, rather than replacing it with universal, seamless health coverage. But the Bush version is truly pitiful. For context, look at Bush's overall proposed program of tax cuts and credits. Bush proposes tax cuts totaling $1.7 trillion over a decade. The real cost to the Treasury is $2.1 trillion, since Bush's proposed tax cuts would mean a larger national debt, and thus an additional $400 billion in government interest costs. So the total cost of the rest of Bush's tax-cut program averages about $210 billion a year.

Of that, fully 62 percent of the cuts -- about $120 billion a year -- would go the wealthiest 10 percent of the population. It's true that rich people pay more taxes than poor people, so arguably they deserve more of the tax cut. But in the past 20 years the lion's share of income gains have gone to the best-off. The ratio of income between the top 10 percent and the bottom 10 percent is now nearly twice what it was in 1980.

So if we are going to use tax policy to "give back" some of the government surplus to the people, it surely makes more sense to put the money where it's needed. But Bush's plan for health tax credits for the poor and middle class would spend just $7 billion a year, compared to the roughly $120 billion in yearly tax cuts that he proposes for the rich. It certainly gives you a sense of the man's priorities.

Worse, the particular health subsidy Bush proposes is a bad idea. His plan would give credits of up to $2,000 a year for families. They would then go out and buy health insurance on the open market.

But, as everyone knows, $2,000 doesn't buy decent health insurance for an individual, much less a couple, much less a whole family. Individual insurance is also the most expensive and least efficient form of insurance. And if any family member had any "pre-existing" medical condition, insurance would be even more costly.

Further, the Bush plan necessarily has income limits. It would begin phasing out as incomes exceeded $45,000 and would vanish altogether for families earning over $60,000.

This income range, of course, is precisely in the middle of the working middle class. The phase-out of the tax credit as income rose would function as an extra tax on middle class families.

Thanks to higher than expected economic growth and near-full employment, the government has a surplus projected at several trillion dollars over the next decade. The Democrats, at least, would spend most of the surplus on Social Security and Medicare. They would also spend a relatively small amount it on new prescription drug benefits, on nearly universal health coverage for children, and on other relatively modest public outlays.

Vice President Gore can be criticized for failing to think more boldly. There is enough money available to begin moving toward truly universal health insurance, rather than creating separate insurance programs, with separate eligibility standards, for different population groups. There is also enough money for expanded education spending. But compared to George W. Bush, Gore is Franklin Roosevelt.

Interestingly, the Republicans are finding that broad tax cuts, especially when tilted toward the wealthy, are a political non-starter. Polls repeatedly show that most voters would rather have the government spend the money on broad needs like education and health. The fact that Bush even proposes a health tax credit for the poor suggests that he is aware of the Republicans' vulnerability on this issue.

With both major party nominees known in March of the election year, this is going to be the longest general presidential campaign on record. And a lot of commentators have predicted record tedium by the time Election Day finally rolls around. But there is one advantage to this extended campaign.

By November, the voters are going to learn a lot about these two contenders, their programs, and their capacities to govern the country. It is awfully hard to imagine that this knowledge will benefit George W. Bush.

LOAD-DATE: April 18, 2000

Document 36 of 131.


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