Let Them Eat Gold-Plated Cake

Following up the SOTU preview post on President Bush’s health care plan — Paul Krugman explains the obvious

On the radio, Mr. Bush suggested that we should “treat health insurance more like home ownership.” He went on to say that “the current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance.”

Wow. Those are the words of someone with no sense of what it’s like to be uninsured.

Going without health insurance isn’t like deciding to rent an apartment instead of buying a house. It’s a terrifying experience, which most people endure only if they have no alternative. The uninsured don’t need an “incentive” to buy insurance; they need something that makes getting insurance possible.

Most people without health insurance have low incomes, and just can’t afford the premiums. And making premiums tax-deductible is almost worthless to workers whose income puts them in a low tax bracket.

Whenever some wingnut proposes to solve X problem by offering tax deductions to make something more “affordable” I want to tear my hair and scream. For people in low tax brackets this really is the same thing as “Let them eat cake.”

Even if we took Bush’s comparisons to mortgage interest deductions seriously — the mortgage interest deduction doesn’t exactly make it possible for everyone to own his own home, does it? It’s a great benefit for people with average and above incomes, but owning a home is still way out of reach for people with lower incomes.

Of those uninsured who aren’t low-income, many can’t get coverage because of pre-existing conditions — everything from diabetes to a long-ago case of jock itch. Again, tax deductions won’t solve their problem.

Indeed. Bush’s plan “is tied to the average cost of family health coverage, which is currently $11,500 a year,” according to this article. I don’t have data handy, but I strongly suspect that if the insurance companies were not allowed to reject “undesirable” (i.e., sick) customers, that cost would be even higher.

While proposing this high-end tax break, Mr. Bush is also proposing a tax increase — not on the wealthy, but on workers who, he thinks, have too much health insurance. The tax code, he said, “unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need.”

Again, wow. No economic analysis I’m aware of says that when Peter chooses a good health plan, he raises Paul’s premiums. And look at the condescension. Will all those who think they have “gold plated” health coverage please raise their hands?

Krugman writes that what’s behind this nonsense is a theory currently popular in wingnut think tank circles — that too many people have been spoiled by their health insurance, and if they had to pay for more of their health care costs out of their own pockets they’d be more frugal and do without luxury items. (Such as … ?)

In the real world I ‘spect not a whole lot of people demand medical procedures unless doctors tell them they should have them, and insurance companies can always refuse to pay for procedures they deem unnecessary, anyway. In my experience if you press a wingnut to explain what these luxury procedures are, usually the first item they list is “unnecessary tests.” Doctors are supposed to do a better job of guessing what’s wrong with you and not rely so much on the “luxury” of medical technology, in other words.

I realize there are people who demand tests for ailments that doctors know they don’t have. These people are called “hypochondriacs,” and most of ’em would benefit from seeing a shrink. But the wingnuts don’t want to pay for that, either.

What’s really striking about Mr. Bush’s remarks, however, is the tone. The stuff about providing “incentives” to buy insurance, the sneering description of good coverage as “gold plated,” is right-wing think-tank jargon. In the past Mr. Bush’s speechwriters might have found less offensive language; now, they’re not even trying to hide his fundamental indifference to the plight of less-fortunate Americans.

As I wrote here — once upon a time the British government chose not to provide food aid during the Irish potato famine because (they believed) the Irish were lazy and backward and too accustomed to being impoverished farm laborers, and a little hunger might make them more ambitious. Beside, importing cheap food undercut food prices (bad for business), and if the Irish were given food without working for it they’d become dependent on government handouts.

So, more than a million Irish starved to death. If only they’d had more of those gold-plated potatoes.

17 thoughts on “Let Them Eat Gold-Plated Cake

  1. Health care is a touchy subject at our house. I’ve only worked for small businesses and I’ve never had good coverage. My husband had decent family coverage when he worked for a small local cable council, but our son was diagnosed with leukemia when he was three and it drained our resouces and our coverage. His boss told us in so many words that our insurance costs were driving up the rates for the rest of the employees and that my husband needed to “Look for another job.” And our son, who is now 19, still can’t get insurance for himself. It’s criminal.

    Here’s what it’s like to be without good coverage: you do whatever you can on your own when you get sick. You don’t get annual exams and you don’t get new eyeglasses every year. You ignore the toothache and you ignore the aches and pains you assume are arthritis. It’s easier not knowing what ails you because you know it will be expensive to get treated for.

    It would be so much better if everyone could get decent coverage. I know that minor health issues become major ones and then it’s really expensive to treat and cure. Until we get rid our our elitist administration, we won’t be able to get that type of care. How can the people who earn large salaries and get their health care automatically even begin to understand?

  2. I alluded to Krugman’s point earlier, although I’ll readily grant that Krugman is a more elegant writer.

    Years ago I remember trying to explain to a friend how making school-tuition tax-deductible and increasing the amount of federal loans a student can accrue per yer(as opposed to increasing funding for grants and direct funding to the schools themselves) were steps that would accelerate the inflation in tuition costs(this was circa ’94 or so), but I felt like I was banging my head against a wall.

    I don’t think most Americans really understand how tax-deductions affect the economy politically, insofar as the reduced revenue from thing x might result in reducing the direct funding for thing y, and frequently y will be something related to x because the decision-makers will conclude that the “incentive” created by deduction x will reduce the need for them to continue to fund y at the previous level.

  3. “How can the people who earn large salaries and get their health care automatically even begin to understand?”

    I would hope that if they’re smart enough to earn a high salary, they can also understand this: “Your company currently pays out huge sums to the health insurance provider that could otherwise be spent on further inflating your salary.”

  4. I have either good or excellant health care. I took a low wage job with good bennies (career U.S. Navy) when me peers made fun of me and got out for a good paying job at Continental air lines or U.S. Steel.

    But I do have a tremendous amont of sympathy for those millions of my fellow citizens who played by the rules and got screwed and are now with out health care.

    We need to take the best parts of the French model, the Canadian model, the Brit model and whatever else is out there and put together a world class health-care system.

    But, a politicians first concern is getting re-elected and big Pharma has a lot of clout (money). So, until there is a veto proof majority in the Senate, I would be happy with half a loaf, so to speak.

  5. Maha—I have to take issue that people have not been “spoiled” by their health care coverage. Having worked as a RN, I have seen the inside workings. Yes, it’s true, some people demand tests they don’t need just as they demand antibiotics every time they get a runny nose. Some doctors will give in to them to keep them happy because health care is seen as a business and the customer is always right. They do not want to lose a patient to another, more accomodating MD. In addition, doctors will order every test in the book not knowing or caring what it costs just to cover their ass and keep from getting sued for malpractice.
    I have known people who will agree to anything the doctor says as long as the insurance is paying for it. They feel they deserve the best and are getting quality health care. In this sense, if they had to pay for it themselves, they might take more responsibility by taking care of their health and doing some research on what is really necessary.
    As it is now with HMOs and preferred providers, etc., insurance companies are making medical decisions that should be left to the MDs. The insurance company’s main concern is money not the patients’s health.
    The bottom line is that people want free or cheap health care so that they can spend their money on luxuries. That said, I do not believe Bush’s plan is the answer. It does nothing for people who don’t have insurance.

  6. grannyeagle — HMOs put a lot of pressure on their doctors to not order anything expensive. Also the insurance companies are more and more vigilent about second-guessing the doctors and refusing to pay for something they decide wasn’t necessary. These days it’s more likely you won’t get something you ought to have than it is you’ll get something you didn’t need.

    Doctors are supposed to have stopped prescribing antibiotics for viral infections; there’s a lot of evidence that such prescriptions have resulted in “super bacteria” that are resistant to antibiotics. It isn’t the harmless way to make the patient happy it was once thought to have been.

  7. grannyeagle — I have to take issue with your use of the word “luxuries” in your last paragraph. First of all, in this country, people don’t generally get “free or cheap” healthcare. It costs, a lot. Even when you get it through your work, it costs, a LOT. The best people actually get is expensive health care where they don’t have to pay a lot of out-of-pocket over and above the monthly price. And they want that so they can spend the money on other things … like food, shelter, clothing, etc. And perhaps luxuries, for those as can afford it. But those as can afford it are not the one’s as needs help.


  8. IMHO we need to recognize the Buah Health Care Proposal for what it is – an attempt to change the subject. I can’t believe that the Dems will sign on to a deal that taxes the middle class to supply Health Care for the uninsured. The number of uninsured is too great; the tax would be so high, the Dems would get lynched.

    A practical proposal is to provide disincentives for employers who do not offer and pay a significant portion of health insurance – use THAT money to pay for coverage of the uninsured. But I have gotten distracted from my theme, which is SO EASY to do when the topic is so critical as Health Insurance.

    To return to my theme – the Bush Proposal is NOT serious, and the chaotic debate he hopes to stir up wil take our attention off the escalation. Dems need to reject the plan as unworkable and promise they will develop a SERIOUS plan in 1 year (more or less). And go back to the issues Bush does not want to talk about. Like 20 dead GIs over the weekend and an average 100 civilians per day, per the UN estimate.

  9. I think I might understand the “reasoning” – I’m sorry, I can’t think of a weaker word for it – behind the “gold-plated plans” bit.

    If you buy a plan that covers, say, new drugs for a $5 copay, then you have no incentive to buy cheaper drugs and cut down “health care costs”.

    These really good plans *do* distort market forces, so market forces can’t regulate health care.

    The trouble is, the average consumer *can’t* use market forces to regulate health care in any large sense. I mean, I know “high LDL cholesterol is bad”; I can’t say whether that means I’m okay taking X cholesterol drug, or if I really need Y. If Y costs me $100 a month, that’s huge… unless it cuts my risk of heart attack or heart disease by such a huge amount that it’s worth my life. Multiply this out a hundred different times in a hundred different ways, and you see the problem.

    We need universal health care, somehow. And we need to make sure it’s affordable for everyone.

  10. Sinead O’Connor – who I don’t trust as a primary source – claims that the Irish were growing plenty of food during the potato famine. It’s just, that food was for export.

    They took the food away from the starving, she says.

    If so… well, there just aren’t any words angry enough for that.

  11. If you buy a plan that covers, say, new drugs for a $5 copay, then you have no incentive to buy cheaper drugs and cut down “health care costs”.

    I believe most health care plans stipulate that prescriptions have to be filled with the generic drug if there is one. If costs like this really are having an impact on health care costs, then you’d think the “market forces” that affect health insurance companies would take care of it.

    Truly, the more you learn about our bleeped up health care system, the more weary you become of these gimmicks and band aids.

    Regarding the Irish famine — Sinead O’Connor is right. The Irish were growing plenty of food, and it was being exported while the Irish starved. Most Irish were either subsistence farmers or were farm workers for wealthy landowners. The workers lived in little huts on the landowner’s property and grew their own food on little plots. And mostly what they grew was potatoes, because in good years potatoes grew abundantly on a little bit of land, and potatoes keep in a root cellar through the winter. So when potato crops failed, the workers starved.

  12. It’s pretty obvious that Bush and his puppeteers are frantically trying to change the subject away from the continuing fiasco and tragedy in the Middle East. Pay no attention to the man behind that curtain. He had such great success with his social security reform that perhaps we’ll soon see a bamboozlepalooza tour 2… for health care reform. LOL. Nothing will change until all of these uninsured Americans stand up along with progressives from coast to coast and demand a national health care plan. The USA is (still) the richest country in the world. The USA can afford national health care. Bush and his enablers are lower than a snake’s belly. They have lost the trust of a majority of the electorate. They are vulnerable. If the Democrats won’t impeach then they must force accountability for the mess created or made worse through willful inaction and incompetence. This shouldn’t be rocket science. (Almost) everything that Bush has touched in the past 6 years has turned to lead unless you count your self in the top 1% of earners who benefited from his tax cuts.

  13. Maha and Ian — I was speaking from my experience. I know doctors are not supposed to order antibiotics for viral infections anymore. What I am saying is that “some” still do it. I have had doctors say to my face that they have to give the patient what they want or they will lose them. This is irresponsible but it happens.
    As far as people not getting needed tests because the insurance company won’t authorize them, this may be true but that is scary.
    I have had health coverage through my work and yes it is expensive because an employee could get paid more if it was not added in as a benefit. However, most people don’t realize this. Perhaps I was being unfair in saying they wanted the money for luxuries but it is not uncommon for everyone to have a TV, computer, DVD, etc. They may be paying $300-$400/mo. for a car and $60/mo or more for a cell phone. I come from a simpler time and I consider these luxuries. To me, food, clothing, shelter are priorities. As I said, I am speaking from my experience and I saw these people come in to the hospital for treatment over and over again.

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  15. I believe most health care plans stipulate that prescriptions have to be filled with the generic drug if there is one. If costs like this really are having an impact on health care costs, then you’d think the “market forces” that affect health insurance companies would take care of it.

    Oh, I don’t think it’s having much of an effect. Herm.

    Bush was talking about India. He was saying “they’re making lots of money, and they want to spend that money on Domino’s Pizza and Maytag washers”.

    That means money for America, right?

    Uh… who’s making those pizzas? Not Americans. And the washers? I assume it’s not Americans there, as well.

    In short, corporations are making more money, but American workers aren’t.

    But it’s okay, because, hey, if you lose your job to outsourcing, it’s still making money for America!

    Well, I was making a similar commentary re: the health care plans. Some really nice plans do distort the ability of the market to regulate health care costs. Yes, the amount of distortion is *tiny*… it’s probably meaningless.

    But, “it helps the free market regulate health care costs”, just like “outsourcing means more money for America”.

    I commented on that because, boy, I couldn’t even imagine how *anyone* could think that was a good idea… oh, wait, I *could* imagine how someone could be that stupid.”

    Bush is living proof that “A little learning is a dangerous thing; drink deep, or taste not the Pierian spring”

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