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Rather than taking on the serious challenges facing the nation's health system, the president's State of the Union address contained repackaged partisan policies that do more for higher-income Americans than average Americans, and pay off special interests at the expense of the uninsured. The only new policy would at least double the tax break given to higher-income Americans to purchase high-deductible health insurance. Virtually no uninsured Americans will be helped by this policy. And, in the only mention of the word "veto" in the speech, the president vowed to protect Medicare "choices" – code word for HMO and drug industry subsidies. This agenda falls far short of addressing health care cost and coverage problems which have risen to be a major domestic policy concern.

  • The president's proposals seek to address rising health costs by raising costs for average families. The president's proposals to reduce health costs have little potential for doing so, and could actually shift costs to middle-income and sicker Americans. There is no evidence that medical malpractice changes will reduce health costs. Computerizing medical records will improve quality but will likely have a small cost impact – and, done poorly, could threaten the privacy of personal health information. And, typical Americans who are not healthy or wealthy could find themselves paying more for less health coverage under all of the major proposals: Health Savings Accounts, the tax credit for individual health insurance, and Association Health Plans. The message in all of these "health coverage for ‘individual needs'" policies is that you are on your own in dealing with spiraling health costs and finding affordable insurance.
  • Health Savings Accounts proposal provides another tax break for high-income Americans at the expense of lower-income, less healthy people. Health Savings Accounts (HSAs) promote high-deductible health plans and tax deductible accounts that attract younger, healthier and wealthier Americans. The government subsidy actually increases with income – and the proposal announced by the president would make an already regressive policy worse. The new policy to make the HSA premiums fully deductible would at least double the tax benefit to those who can afford the high deductibles and benefit from tax deductions. It would do virtually nothing to help the millions of low-income uninsured people who cannot afford such policies – and would get less of a tax break if they could.

The president and his congressional allies need to put the public interest ahead of the interests of HMOs, health insurers, and the drug industry. The president used the word "veto" once, associated with any changes to Medicare, but failed to mention the word "uninsured." Rather than threatening to veto reductions in overpayments to HMOs and veto policies to reduce drug prices for seniors, the president should have committed to revising the Medicare law to meet seniors' – not campaign contributors' – needs. In addition to adopting the Veterans Affairs' medical records system, the president should have advocated adopting its drug pricing system, which is among the best in the nation. Instead of promoting policies that shift costs rather than contain them, the president should have put forth a credible plan for covering the nation's 44 million uninsured.

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