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Health-Care Reform's Public Support Problem


"If you can't reform the employer tax exclusion," a well-connected health-care reform advocate told me a few months ago, "you can't find the money to reform the health-care system." Harry Reid is now saying that there will be no reform of the employer tax exclusion. So can we still reform health care?

Probably. By this point in the process, Max Baucus had backed so far down on the exclusion that it was going to raise only $300 billion or $400 billion over 10 years. That's not nothing, but it's not much more than, say, Barack Obama's idea for capping itemized deductions. The money can be found elsewhere.

But, as Jon Cohn says, it's July. August, the supposed deadline for health-care reform in the Senate, is right around the corner. Yet members of the Senate Finance Committee are perusing yet another document with yet another list of ways to raise money for health-care reform. Like the employer tax exclusion and the itemized deduction before them, those options will have their opponents, too. And the Senate doesn't seem so good at facing down opponents.

I'm gripped, however, by a more unsettling thought. Reports are that Reid dropped the employer tax exclusion because polling was so bitterly opposed (probably in part due to the successful effort Obama's people mounted during the campaign to persuade the American people that they were against taxing employer health benefits). Fair enough. But health-care reform isn't simply suffering because the public is overly opposed to some of its revenue raisers. It's suffering because the public is insufficiently supportive of its core.

Polling has shown strong opposition to the tax on benefits, strong support for policies like the public plan and some of the insurance market regulations, and an overall ambivalence on "Obama's" health-care reform bill. A recent Wall Street Journal poll found that 33 percent thought "Barack Obama's health care plan" was a "good idea," while 32 percent remained unconvinced. An even more recent Washington Post poll found that 50 percent thought their health care would be unchanged after reform and only 16 percent thought it would improve.

This isn't terribly surprising: it's not obvious what health-care reform will do for the average American. I could give you a long answer about delivery system reforms and so forth because it's my job to know these things. But it would have to be a long answer. The basic structure of health-care reform has been specifically built to avoid changing people's existing arrangements. The hope was that Americans would be convinced that their health-care coverage wouldn't change for the worse. But that's also made it hard to explain why it will get better.

One of the president's health-care reform principles is that everyone must be able to keep what he or she currently has. But that means we're not really going to change, or improve, what they have. And that means they're not getting much in the way that's new. Higher taxes aren't buying them obvious benefits. Instead, they seem to be paying the health-care bills of poorer Americans.

If support for the overall effort were more robust, the polling on the tax exclusion would matter less. People are willing to pay for things they want to buy. But though they might abstractly favor health-care reform, it doesn't seem directly related to their lives.

So now the Senate is trying to find revenue options that fall on fewer people. That's one response. If health-care reform will only directly help the few, then its fiscal impact will have to be similarly narrow. But another would be to go in the other direction and gamble on policies that would make health-care reform a more direct contributor to the lives of the many, and so potentially something they'd be willing to pay for.

Photo credit: AP Photo/Seth Wenig.

By Ezra Klein  |  July 9, 2009; 10:16 AM ET
Categories:  Health Reform  
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This sounds like good news to me.

Posted by: obrier2 | July 9, 2009 10:43 AM | Report abuse

Let me see if I understand this right.

To pay for adding all the uninsured to the rolls of a bloated and inefficient system, we're looking to tax the health care benefits employees receive as if they are income.

(We're not really looking to reform the bloated and inefficient system, because that's too much to ask people to absorb, apparently.)

Instead, we will in fact be taking money away from the paychecks of employees - that class of people who've seen their income stagnate since Reagan's trickle down pipe-dream became the working policy of the nation back in the 1980s.

And in a year where we expect to see the nation's unemployment surpass 10 percent, we are also working hard to chain the availability of health care to employment.

Is this correct?

No wonder the middle class is not fully supportive of this pathetic little band-aid. It's nowhere near big enough to protect and heal the wound that is our nation's health care system.

Question for you Ezra - do employers see any tax benefits from paying out the health care premiums for employees? Can they claim a tax break for this investment in the health of their workers or is it post-tax income that pays for health care at large companies?

Posted by: anne3 | July 9, 2009 10:54 AM | Report abuse

By all accounts I've heard, our health care system is not underfunded, it's inefficient. I don't see how taking money away from people who are already in the system is a benefit.

Posted by: tl_houston | July 9, 2009 10:55 AM | Report abuse

"The basic structure of health-care reform has been specifically built to avoid changing people's existing arrangements."

Yes, I'm sure many of the same points were made when public schools came into being.

Private schools are something of a luxury now. And more importantly, education overall is no longer as good, despite being among the world's most expensive.

Posted by: whoisjohngaltcom | July 9, 2009 10:58 AM | Report abuse

There is NO Healthcare CRISIS.
Mankind has thrived for 4 million years
WITHOUT health insurance.
with some other poor slob- your fellow tapayer- picking up the tab.
Hence all the political shenaningans trying to rearrange the basic laws of economics.
Forbearance , is a lost word in modern America. Demand for the very best care for all ,is unrealistic.
American egalitarianism in healthcare is ECONOMICALLY IMPOSSIBLE.
TIERED care - your $300 /mo premium buys you access to a Nurse at Walmart, or an HMO Doctor; if you are in line for a $100,000 heart transplant accept you are going to pay a lot, lot more.

Posted by: wilfredknightex-brit | July 9, 2009 11:22 AM | Report abuse

All the issues with funding, money, are very real. But, the major problem is our health care is not worth what we are paying for it now. why should we just include more people in substandard, overpriced health care? Something needs to be done to force the health care industry to provide quality health care for the dollars. Start there, then maybe the population won't be so negative.

Posted by: linda_521 | July 9, 2009 11:28 AM | Report abuse

This is probably naive, but . . . Couldn't health care reform be framed as (a) you can keep what you have if you want, but (b) there could be better options available to you? That argument would appeal both to people's fear of change and to their frustration with the current system.

Now to make this concrete, there has to be some upside possibility. The public plan could be that upside possibility. Maybe there's something else it could be. But otherwise, you're right, there's no reason for the median taxpayer/voter to want to pay just to increase coverage for the uninsured.

Posted by: jamesykwak | July 9, 2009 11:50 AM | Report abuse

I am confused by your words. Are you talking reform or expansion? Reform does not cost more, it changes the system to get more for the same money - that must be the basic tenet. I am fine pumping those savings back into the system to cover more people. I am fine taking the money we spend now and moving that to fund a single payer system.

I am not in favor of adding money. Reform must be taking the money we spend now and spending it more wisely to get more from the system and cover more people.

Posted by: sailor0245 | July 9, 2009 12:19 PM | Report abuse

We do not yet know what the bill will be.
If it includes the following items and they are well - known, it will poll high.

1. Your health ins will be good anywhere in the nation so you can move or travel without a thought for health ins.

2. It does not have to be tied to employment. So you can change or quit a job with a thought or health ins.

3. If you get seriously sick and cannot work, a program to subsidize the monthly health ins premiums will kick in.

Also, If I could buy into a Gov't plan for say $500.00 a month, my employer who would then be able to stop paying $1000.00 a month to insure me and my family - might then put more of my employment package into salary.

And of course, if health reform winds up costing me money and offers me nothing in return why would I be for it? It has to be a simple as social security and medicare.

Giving people the option to buy into existing programs - medicare, VA gov't employee plans would be fabulous.

Posted by: csullivan302 | July 9, 2009 12:46 PM | Report abuse

"but the major problem our health care isnt worth what we are paying for it now."

i absolutely dont know how someone can say that.
and i say that, paying over a thousand dollars a month for my health care, and struggling to do it.
if you want to say that we have many uninsured people, that there need to be changes, but to say that the amount of care we receive is not worth what we pay, i dont understand that.

our hospitals, nursing homes and medical centers are so jammed with people that you cant even find a parking spot in the lots or seats in the waiting rooms.
everyone is getting care...seeing specialists, getting tests, and i think, getting good to excellent medical care.

when i am sick, i get care that keeps me alive, and i see excellent doctors, who are concerned and take the best care of me. i dont think i am the exception to that rule.
many people i know have various health issues...and they have all different kinds of plans. i dont know one who doesnt receive the care that they need.

i think we are very lucky.

also, i think that there is a great deal of illness caused by the foods we eat and the bad things we do to ourselves.
i know so many people being treated for diabetes, high blood pressure, high cholestrol...people still staying out in the sun when they shouldnt, people not getting screened for tests when they are supposed to, people not taking care of problems when they know they should.
there are changes that are neccessary, of course.
but by and large, we get excellent care in this country when we go to see the doctor.
i wish it would cost less, but the quality of care, by and large, in this country, is worth every penny.

Posted by: jkaren | July 9, 2009 1:20 PM | Report abuse

Anne3 asks: do employers see any tax benefits from paying out the health care premiums for employees? Can they claim a tax break for this investment in the health of their workers or is it post-tax income that pays for health care at large companies?

Today, employers take a deduction from income (it is a business expense, like any other) for the health insurance premiums they pay out. So if the the biz is profitable, they pay out a smaller amount of federal taxes. If it is unprofitable overall, the biz carries over the loss to a future tax year (like any loss).

There is no net tax cost to the company, but theoretically (and practically, in many instances) if the company didn't pay health insurance, then more money would flow to the taxable income line and the company would pay more taxes. Practically however, then the employers might have to pay higher salaries because their wailing about the cost of benefits as a way of holding down total employment costs would go away - assuming a nearly full employment situation. With more workers than jobs (unlikely for some time to come, and a long while in the past), then employers would reap an overall increase in profitability if they didn't pay health insurance. They do get a significant retention benefit however from paying the insurance, since workers worry about losing health insurance if they change jobs - particularly with preexisting conditions that they may not be aware of but could lead to denial of benefits in a new job with insurance.

There is also a special case income and tax benefit in the Medicare Part D (Drugs) for companies that pay part of the premiums of retired employeees. If the company retains the insurance on the retiree (overall coverage), then the Fed government pays the employer a special add-on fee above the cost of the Part D premiums. This was intended to not provide any reason for employers to halt coverage of retiree health insurnace once Part D began - and the costs of Part D were unknown, and it seems to work, but with unknown costs and unknown results. There are indicators that Part D actually costs less than forecast to the Fed. gov't, but data isn't widely discussed in the media - including by Ezra. The current total cost to the taxpayer of the retiree cost-plus-incentive payment to employers for Part D, or other retiree coverage (supplements to Part A and B) isn't a number I've ever seen.

Posted by: JimPortlandOR | July 9, 2009 1:27 PM | Report abuse

I strongly disagree with your claim that people will not support major change. You can be satisfied with what you have but still support something better.

Here is a question from a Washington Post - ABC poll:
"Which would you prefer: the current health insurance system in the United States, in which most people get their health insurance from private employers, but some people have no insurance, OR, a universal health insurance program, in which everyone is covered under a program like Medicare that's run by the government and financed by taxpayers?"

62% favored Medicare for All; 33% were opposed. That's pretty decisive. And this is with the facts suppressed. Other questions in the poll show that the 62% supporting the universal program mostly believe it will cost more when it will cost less. They believe they won't be able to pick their doctor when Medicare allows much more freedom than most private plans. They believe there will be long waiting times when this is a myth. And still they support a universal plan like Medicare for All by 2 to 1.

Now you may say that was in 2003, but they haven't asked it again. I would love to see it asked again by any poll other than Rassmusen.

Posted by: lensch | July 9, 2009 2:32 PM | Report abuse

Ezra, I have kept up, but obviously not like you. So I'm curious. Is there a provision in any of the markups for employers to pay the costs of each employee that signs up for the public option (assuming there is one)? And do you think that the overall effect of this provision would be positive or negative?

Posted by: KeninMS | July 9, 2009 3:41 PM | Report abuse

What plan? There are no details to approve or disapprove. We keep hearing this and that then the next day its a different set of options. With 3 different versions & provisions from different committees how can the average citizen make any sense of where this is going?!?! How can anyone be for something that right now is so vague and uncertain?

I think there is a real failure of leadership from Obama. Step and say what you want this to look like - TO THE PEOPLE OF THE USA and the bums in congress. People can't get behind anything because they are hearing too many conflicting stories. Democrats are all over the board with too many of them sounding like republicans. And republicans - NO is their entire idea. From the legislative track record so far, Obama is going to sign a watered down, lobbyist funded and gutted, monstrosity which won't solve the problems that need to be fixed if we are to make any serious headway out of the looming unaffordable_for_most_of_us medical system.

I hear they have quality affordable health care in Panama. That might have to be my reform option.

Posted by: motodude | July 9, 2009 7:56 PM | Report abuse

For those who say there is no health care problems, perhaps they can convince the thousands upon thousands who have had to file bankruptcy due to medical costs, those who have died because they are unable to afford medical care, and those who cannot afford health care insurance.
Our health care is the costliest in the world, yet we rank 30th in care and performance.
Health care has been run by insurance companies, drug companies, doctors and hospitals for years, and look at the crisis it has developed. Greed and power overtook the welfare of the people.
We will no longer allow or tolerate big business, lobbyists, special interests run our country and make crucial decisions for us.
Health Care Reform is a must, as is public option. Without government intervention nothing will be accomplished.

Posted by: kathlenec | July 11, 2009 2:58 PM | Report abuse

"Health care has been run by insurance companies, drug companies, doctors and hospitals for years,"

oh the horror, clearly it should be run by politicians. They never have any conflict of interest. Plus the like not only puppies but women and children as well, poor ones. Political overloads are such snuggley teddy bears.

Posted by: permagrin | July 13, 2009 9:08 AM | Report abuse

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