Flawed health-care plans

With health care shaping up to be the top domestic-policy issue in next year’s presidential election, the leading Republican candidates will have to offer far more substantive arguments than the throwaway lines they used during the debate one week ago. If the Democratic opponent is Hillary Clinton, it will not be enough to accuse her of resubmitting her 1993 plan. (She has not done so.) Nor will it be enough to accuse her of pursuing a purely socialistic health-care policy.

Three leading Republican candidates, Mitt Romney, Rudy Giuliani and John McCain, have put health-care plans on the table, but none of them has estimated the costs. Mrs. Clinton’s 1993 plan collapsed largely because it threatened the employer-based system that provides health insurance to 63 percent of Americans under the age of 65, including 71 percent of households in the middle quintile of the income stream, 82 percent of the households in the fourth quintile and 86 percent of households in the highest quintile.

Ironically, all three Republican candidates today are offering health plans that would seek to gradually shift the burden from employer-provided health insurance to a system that would require families to use tax incentives to obtain health insurance from the private market. Meanwhile, having learned from the many mistakes she committed in 1993-1994, Mrs. Clinton has emphatically told Americans that her new plan will allow them to keep their employer-provided health insurance. “You can keep the doctors you know and trust. You keep the insurance you have, if you like that,” Mrs. Clinton said in September when she unveiled her plan.

With the average annual family premium for employer-provided health care approaching $13,000, it is not clear how a $15,000-$20,000 tax deduction (the general range offered by Messrs. Romney and Giuliani) for a family earning the median family income (about $62,000 today) is going to be sufficient to purchase a comparable policy in the private market, where insurance premiums for individual families are higher than employer-paid premiums. A tax deduction totaling $17,000 would increase after-tax income by $2,550 for a two-parent/two-child family earning the median income. How much health insurance will that buy? Mr. McCain offers a refundable tax credit of $5,000 per family, which is twice as generous as Romney-Giuliani but still well below the cost of insurance. And how much would these tax deductions and credits cost the federal government?

It is not enough for Mr. Giuliani to blithely assert, as he did during Sunday’s debate, that “the price of health insurance would be cut more than half” if 50-60 million people bought their own health insurance compared to 17 million today. Worse, Mr. Romney wrongly asserted, “Medicaid and Medicare, we can solve those. I know that. We did it in our state.” He did not. Making it up as you go along is no way to run for president.