Big-Biz Bailout
October 12, 2004

By Robert Goldberg

JOHN Kerry claims that President Bush has "chosen to help his special-in terest friends instead of cutting the health-care costs of ordinary Americans." In fact, it's the Kerry health plan that boosts big business (and big government) at the expense of the average working fellow.

First off, Kerry's plan is based on creating a new subsidy for health insurance that's now paid for by employers. Under Kerry's plan, the federal government (read: the taxpayers) would pay employers 75 percent of all medical costs incurred above a catastrophic spending threshold. That's a huge windfall for corporations that already insure their employees — more than $700 billion over 10 years, according to a recent study by the Lewin Group, the leading health-care analysts in the country.

For one example, the numbers average out to a $1 billion-a-year subsidy to General Motors for the health coverage the company already provides — mostly because its contracts with its unions oblige it to do so.

Kerry's plan is also a boon to the biggest insurance companies, who dominate the high-end market: Employers are much more likely to stick with or opt for the most generous coverage, and so please their employees, when the government's picking up the tab.

Bush, by contrast, seeks to cut health-care costs by increasing competition: His reforms, such as the new health savings accounts (HSAs allow people to save up to $5,000 tax-free each year for medical expenses), give each consumer more power and leverage to make his or her own health-care choices. And the low-cost health policies that accompany HSAs are largely sold by smaller insurers.

Kerry, meanwhile, would outlaw HSAs, calling them tax shelters for the rich and healthy. Again, the facts contradict him: New studies conducted by ehealth.com, the online health-insurance broker, show that 77 percent of those using HSAs are families with children, and half have incomes of $50,000 a year or less.

Even as he promises to bail out large corporations, Kerry opposes a health reform strongly backed by the small-business community: "Association health plans" would let churches, business groups, PTAs and professional associations offer health insurance at group rates. This could save self-employed and uninsured consumers up to 40 percent of what they pay as individuals.

Bush backs that, and wants tax credits for small businesses that establish and fund HSAs for their employees, and individual income-tax credits for people to purchase their own HSAs.

Kerry's alternative? Tax credits to small businesses and individuals to pay for insurance — as long as they buy insurance through a new government-run pool, the Congressional Health Plan (CHP). And he'd ban HSAs and competition from smaller voluntary purchasing pools — handing the big insurance companies a huge guaranteed market on a silver platter.

Thanks to this, the average cost of insurance under Kerry's plan is about $9,000 a year, vs. $4,000 for Bush. (Though people spend more out of pocket under the Bush plan, what they spend is tax free.) No wonder Kerry has to give businesses another $120 billion in subsidies to help their workers buy insurance from the CHP.

Despite all those subsidies, most of the people that Kerry promises to insure — 22 million of 25 million — would just get dumped directly into government-run health plans, Medicaid or the Children's Health Insurance Program, which is all HMOs, with restrictions on doctors, drugs and specialized care.

Finally, Americans would have to pay for the privilege of moving into Medicaid and the corporate "healthfare" with higher taxes. At $1.3 trillion over the decade, that's $1,100 for each taxpaying household. Meanwhile, the vast majority of benefits under the Kerry plan go to big corporations, upper-income people and expanding government entitlements.

Who wins under Kerry's plan? Not the taxpayers, who would have to pony up an average of $1,100 per household. But big insurers will love it, as they will avoid the competition that the president's plan would impose and find their expensive products subsidized by government.

Kerry's health-care plan writes a huge check to some of the biggest interests in America. Bush's plan provides the most help to those in the greatest need. Who's the real liberal on health care?

Robert M. Goldberg is director of the Manhattan Institute's Center for Medical Progress.

©2004 New York Post

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