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The Republican Dilemma on Health Care

Michael Gerson's column today is supposed to offer a shot of optimism to Republicans gloomy about their chances in the health-care debate. That certainly wasn't my takeaway, however.

In the first few paragraphs, Gerson ably sketches the Achilles heel of health care: paying for it. Probably through some policy that taxes employer-provided health benefits. "Obamacare should be regarded as inevitable only when someone, anyone, knows how it will be paid for," he writes. Fair point.

But then he goes on to buck up sagging Republican spirits. "Fortunately for Republicans," he enthuses, "health care is an issue on which conservative policy wonks have been creatively at work for a decade. Most Republican reforms involve shifting away from employer-based health insurance -- replacing the massive tax breaks for companies with subsidies to individuals and families to purchase coverage on their own."

In other words, Republican plans have not only the same vulnerability as Democratic plans, but twice as much of it. Democratic plans are likely to tax some employer-provided health benefits. Republican plans are likely to tax all employer-health benefits. Indeed, Gerson recognizes the problem, and says that Republican fortunes are improved because Max Baucus is "a supporter of partially funding health reform by limiting the tax breaks for employer-based coverage." But he's got that backward. Max Baucus's fortunes are improved because Republicans will find it difficult to attack him for embracing their primary policy idea.

By Ezra Klein  |  June 5, 2009; 10:04 AM ET
Categories:  Health Reform  
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Comments


Good point, Ezra. But I am still choking on the thought that Republicans have been working on health care reform for a decade. What, exactly, have they done what with their past control of the House, Senate and White House?

Posted by: scott1959 | June 5, 2009 10:45 AM | Report abuse

What is interesting in all the debate about the government's role in health care is that, given the "massive tax cuts" employers get for their health care expenditures, the government is footing a big part of the bill, already (apparently.) Would love to know how much the employer health care tax breaks cost the feds each year.

And to Scott1959, if memory serves (I've tried to block out as much of the last eight years as possible), Bush and company were heavily promoting "consumer-driven" health care, in which employers passed more and more health care costs onto employees (not sure if employees were able to get a tax break on that.) That was the big idea they promoted when they had the power to make a difference.... make consumers pay more for health care.

The idea that we'll break up the large employer groups and send everyone off into individual policies seems unsound, speaking as a freelancer who has one of those extremely expensive and not very good individual family policies.

It's a great idea for health insurance companies, though - they can shed even more people who actually need health insurance from their plans - and charge even higher rates to everyone else due to the lack of purchasing power individual families have versus large groups.

http://wardonwords.blogspot.com

Posted by: anne3 | June 5, 2009 10:58 AM | Report abuse

I think Obama and the Democrats in Congress underestimate the problem they face in doing an about-face on cutting the employer tax deduction after running against this so hard in 2008. I think the Republicans will be able to make that stick as dishonest, and then finally stick Obama with the tax-raiser label that hasn't stuck until now. I think the subtleties of their plan (it will only tax some benefits of some employees, this plan is different from McCain's, etc.) will be utterly lost on people. The only way I think it works is if Obama exempts everyone under $200,000 or $250,000 as per his campaign promise -- and if he does that, I can't imagine it'll raise all that much money. Bottom line (as Bai wrote in the NY Times this week), whatever the plan is, Obama is the only one who can sell it. It WILL be his plan, or it will fail, and if "his" plan includes a widespread tax on employer health benefits, watch out.

This has nothing to do with whether it's good public policy, or whether the plan compensates for taxing benefits with something of even greater value (as I imagine it would). I'm talking purely about the politics of the situation.

I realize part of the strategy is painting the current situation as even more untenable than people realize.

Maybe that'll work, but I still think Machiavelli's classic quote applies perfectly to an attempt to eliminate that tax deduction: "...there is nothing more difficult and dangerous, or more doubtful of success, than an attempt to introduce a new order of things in any state. For the innovator has for enemies all those who derived advantages from the old order of things, whilst those who expect to be benefited by the new institutions will be but lukewarm defenders. This indifference arises in part from fear of their adversaries who were favoured by the existing laws, and partly from the incredulity of men who have no faith in anything new that is not the result of well-established experience. Hence it is that, whenever the opponents of the new order of things have the opportunity to attack it, they will do it with the zeal of partisans, whilst the others defend it but feebly, so that it is dangerous to rely upon the latter."

Posted by: bcamarda2 | June 5, 2009 11:13 AM | Report abuse


Anne3...you are not the only one trying to block out the last 8 years. You are correct that Bush pushed consumer driven health care as the answer. But that was less a reform on the administrations part (albeit they did do a small push via allowing it for self employed) than sitting by and watching the market take it and run. So again, I would argue they were not exactly proactive.

Posted by: scott1959 | June 5, 2009 11:51 AM | Report abuse

The tax exclusion for health care benefits EMPLOYEES, not employers. If they were to pay the same $ that they pay for health care as salary, it would still be part of costs, and therefore would reduce taxable income in the same way as paying health benefits does. However, it would increase the cost of insurance to employees by up to 35%. Not sure why the Republicans are so in love with the idea of what would be an incredibly massive tax increase.

Posted by: exgovgirl | June 6, 2009 2:17 AM | Report abuse

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