Who spoke most recently of the need to ensure that “health care is more available and affordable for millions of Americans, especially working Americans who are uninsured”?
It’s not President Clinton repackaging his health plan, nor is it Sen. Edward M. Kennedy who has been trying to pass national health insurance for three decades. The new health-care warrior is Rep. Bill Archer (R-Texas), the solidly conservative chairman of the House Ways and Means Committee. If Bill Archer says it’s urgent to expand health coverage, nobody can say that the problems of the uninsured are an invention of advocates of big government programs. The problem is real, and growing.
But before Archer is driven to distraction by comparisons with Ted Kennedy, it must be noted that he’s pushing only one approach to the problem: “health care tax cuts.” What’s Archer up to? He speaks for many Republicans in Congress, who care about two things: passing tax cuts and appearing to address popular issues without proposing new programs.
Marry these two concerns, and you get creative packaging.
Archer makes clear in a letter to his colleagues that tax cuts are, indeed, at the top of his mind. He’s preparing for any tobacco settlement that pours new money into federal coffers. Big tobacco companies may have declared the tobacco settlement dead April 8, but many legislators think that a deal, or at least new tobacco taxes, will eventually materialize. Archer says he believes “we must dedicate revenues that result from tobacco-related legislative action to tax relief for the American people, especially tax relief for health care.”
This is shrewd. It would be politically difficult to take the tobacco money and spend it on, say, more capital gains tax cuts. By linking his tax cuts to health care, Archer creates a pleasing rationale to get what he wants.
To say this is not to dismiss Archer’s ideas out of hand. He’s right that there are inequities in the tax treatment of health-care costs. If your company pays for your health insurance, your employer gets to deduct the costs and you do not have to pay any taxes on what he spends to buy you coverage. But if you work for a company that doesn’t offer health insurance and you buy it yourself instead, you generally don’t get any tax break. And if you’re self-employed, you can only deduct 45 percent of what your policy costs you.
Archer wants to give individuals who buy their own insurance the full tax break, speed the changes that will help the self-employed, create new incentives for small businesses to provide health insurance and allow more generous deductions for health expenses. For good measure, he also wants new tax breaks for medical research.
Some of these changes might make sense as part of a comprehensive approach to expanding coverage. The problem is that tax breaks are an inefficient way to expand access to health insurance. These tax breaks would be especially helpful to well-off people who already have health insurance. But they would not be big enough to help lower-middle-income people afford a policy.
Why? Tax deductions disproportionately benefit the well-to-do because their income tax rates are higher. If you’re in the 39 percent tax bracket, a deduction is worth much more to you than to someone in the 15 percent bracket.
A recent study by Consumers Union reported that 30 percent of workers earning less than $10,000 a year are uninsured, compared with 18 percent of the total work force and only 4 percent of workers earning more than $50,000 a year. Gail Shearer, director of health policy analysis at Consumers Union, speaks a difficult truth: Health insurance has become so expensive that for people of modest incomes to afford it, “we’re going to need some targeted subsidies.”
But Archer’s proposals at least offer an opportunity to expand the debate over how to get coverage to the 41 million uninsured. His tax cuts and Clinton’s ideas to expand Medicare remind us yet again that Congress will be plagued with the issue of guaranteeing access to health care until it finally decides to solve the problem.
