September 29, 1988
"Health Care Plan Conceals Big-bucks Tax"
San Jose Mercury News
By Timothy Taylor
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MICHAEL Dukakis were to propose a tax increase of tens of billions of dollars
that fell solely on small businesses, start-ups, and lower-income wage-earners,
no matter how worthwhile the cause for which the money would be spent, he would
be beaten over the head with the proposal all the way down the campaign trail.
But rushing to the rescue of the 37 million Americans who don't have health insurance
is a compelling goal for a campaigning politician, so Dukakis has proposed a plan
which conceals a multibillion-dollar tax behind two gentle dodges.
First, the Dukakis plan is a "requirement to spend money," not a
"tax." The plan would require that companies which do not currently
purchase health insurance for all their employees should be required to do so
by federal law. These payments required by government under penalty of law are,
of course, not a tax. But you might forgive a company that has trouble finding
an operative difference.
The second evasion is in the cost estimates. The Dukakis people aren't providing
But according to the figures from some consulting firm that turned up in the
news stories reporting the Dukakis plan, standard health insurance coverage would
cost about 58 cents an hour: 46 cents for the company and 12 cents for each employee.
Who can be against pennies per hour?
Well, let's try a little multiplication. The Dukakis plan is aimed at the 37
million Americans who don't have health insurance, but it would cover only those
in families with jobs -- about 24 million of them. Of those 24 million, assume
for the sake of argument that half are workers and half are dependents.
If each of 12 million employees pays 12 cents an hour for 40 hours a week,
52 weeks a year, it works out to a $3 billion tax increase on those employees.
Since the employers would be paying about four times as much, their share works
out to about $12 billion. It doesn't add up to the defense budget, of course,
but billions of dollars are real money.
Also, remember that these increased costs are not spread over the entire economy.
Instead, they fall entirely on companies who do not offer health insurance and
their employees, which means primarily on small companies and start- ups, and
on lower-wage jobs.
By what is probably a complete non-coincidence, the cost figures reported in
the news stories are on the lower end of the estimates I've seen. From the very
Republican end of the partisan spectrum, for example, William F. Buckley estimates
in the most recent issue of the Atlantic that the program will cost as much as
$83 billion nationwide.
The true cost probably falls in between these estimates: $30 billion? $40 billion?
$50 billion? Dukakis assistants say they'll fill in the details of the proposal
after the election. It's safe to say that any details they are keeping hidden
won't make the program any cheaper.
Of course, George Bush hasn't exactly distinguished himself on this issue,
either. Bush's proposal for helping those who can't afford private insurance and
don't qualify for public programs, he explained in the Sunday night debate, was
to let them buy into public programs like Medicaid and use the existing laws and
private programs. But if the uninsured can't afford insurance now, how will they
be able to afford buying into Medicaid? And if existing programs can cover all
of those in need, then why are 37 million Americans still in need?
I know that politicians are skilled by profession in promising something for
nothing, but this is ridiculous.
Time for a hard fact: Expenditures for medical care in the U.S. were about
$1,800 per person in 1986. If a program is instituted to spend only $900 on each
of the 37 million Americans with no health insurance, it will cost about $33 billion
a year. Most Americans without health insurance are not terribly far from the
poverty line. So I would prefer not to see them socked for the bulk of that money,
even if the socking is to happen indirectly, Dukakis-style, through their employers.
Let me suggest two ways of raising the money that have an element of poetic
First, the federal excise tax on cigarettes and alcohol could be increased.
Those two products cause billions of dollars of hospital bills and hundreds of
thousands of deaths every year.
Second, the health insurance benefits that many companies give their employees
could be taxed. This proposal would not be popular, but at least it spreads the
cost of expanded health coverage over the insurance haves, rather than the insurance
Added together, these two revenue raisers could bring in most or all of the
money needed to help the uninsured. But either would make the seemingly impossible
demand that Dukakis or Bush admit the obvious: health insurance for 37 million
people will cost tens of billions of dollars.
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