Tom Campbell

Problems beyond a public option Dec 11th

As the Senate debate continued on a health care bill, the dimensions of the final compromise were beginning to emerge. The public option – a government-run plan – appeared in trouble.

While the Democrats in the House have strongly maintained there would be no federal subsidy for a public option, many citizens found that hard to believe. As a former congressman, I was among the skeptical. It’s almost a law of nature that a government benefit program over time will be expanded, not contracted, and that zero federal subsidy will give way to just a little federal subsidy and, eventually, be as largely subsidized as Medicaid and Medicare are today.

It is this likely growth of a public option, both in the amount subsidized and its enrollment reach, that causes many to see it as the first step towards “single payer” health care: a government monopoly. Indeed, some Democrats, notably Rep. Barney Frank, have stated they favor the public option precisely because they want single-payer, and the public option was the likeliest way of getting it.

Even without a public option, however, very serious problems remain. I’ll focus on two: How a plan will be paid for and how will it take away our freedom to choose health care that is best for each of us, individually.

The Senate bill proposes a one-half percent tax on income above $250,000 for couples filing jointly. It proposed a 40 percent tax on premiums for health insurance policies above $8,500 for an individual (the “Cadillac” plans). Any individual without health insurance would be fined $750. There is also a fine (amount unspecified) for any company with more than 50 employees that does not provide insurance. Elective cosmetic surgery would be taxed at 5 percent.

The House bill proposes a 5.4 percent surtax on the income tax paid on adjusted gross income of more than $500,000. A 2.5 percent tax would be imposed on the sale of medical devices. If a company did not offer health care to its employees, and paid out more than $500,000 annually in total to its employees, it would have to pay an amount equal to 8 percent of that payroll to the government.

It is bad economics to raise taxes in a recession, especially taxes on employing people. Both House and Senate bills do just that, with the threat of taxing employers who do not provide health care. Taxing income is next-worst (after taxing the act of employing people), because production of income is what we wish to encourage in a rebounding economy.

Indeed, the taxes in these bills are so obviously bad medicine for the economy that one wonders why President Barack Obama has gone ahead with so ambitious a plan given the recession. His answer is that he intends to lower the cost of health care, and that will help create jobs, but it almost defies logic to see how we can lower the cost of health care by putting more money into it. Rather, I infer that President Obama, and several of his party’s more liberal members, have long desired that health care be made a standardized commodity, with no one person having more than any other. That objective is, indeed, advanced by the Senate and the House bills.

Both bills also limit our freedom. In order to avoid fines, an individual must carry, and an employer above a certain size must offer, a health care policy that covers many things that not everyone would need or want to pay for, i.e., in vitro fertilization, substance abuse coverage or podiatry. Indeed, some may prefer a simple policy that covers only catastrophic costs, with a high deductible for other medical expenses.

If one believes, as I do, fervently, in the importance of individual freedom, this aspect of the health care bills remains the most troubling – even more than a public option. We should be allowed to choose what is best for our own situation in life. The role of government should be limited, not expanded. What is in these bills runs counter to those principles.

This Op-ed is also in the Orange County Register