Obama and Health-Care Equity

Barack defends tax subsidies for the rich

For someone running as the tribune of "change," Barack Obama showed again in last night's debate that he sure is comfortable with the status quo on health care. He continued his recent assaults on John McCain's health reform even though it is precisely the kind of plan that someone of Mr. Obama's professed convictions ought to support.

The attacks include swing-state TV spots and Joe Biden's multiple distortions, though the most over-the-top come from the candidate himself. Over the weekend, Mr. Obama called the McCain plan "radical," "out of line with our basic values" and, in case he wasn't clear, "catastrophic for your health care." Since Mr. McCain offered only a once-over-lightly defense of his plan, allow us to give it a try.

Perhaps Mr. Obama is so agitated because Mr. McCain's proposal is highly progressive. The Republican wants to readjust the subsidies that Congress channels into health coverage for business so that lower- and middle-wage workers aren't shortchanged, as they are now. Currently, people who get insurance through their employers pay no income or payroll taxes on the value of the benefit. This is revenue the government forgoes to encourage certain behavior. If those losses were direct spending, the tax exemption would have cost more than $246 billion in 2007.

But all that money props up only employer-provided insurance. For reasons of historical accident and lobbying clout, individuals who buy policies get no tax benefits and pay with after-tax dollars. Mr. McCain is proposing to make the tax benefits available to everyone, regardless of how they purchase their insurance.

He would offer a refundable tax credit of $5,000 for families, $2,500 for individuals, and the benefit isn't dependent on where people work or what they earn. Some would stick with their current job-based coverage. Given the option, others -- especially the uninsured, armed with new health dollars -- would decide to buy coverage on their own. That in turn would stimulate a market for more affordable insurance.

Mr. Obama doesn't want to let people make this choice. He even claims it would amount to "taxing your health-care benefits for the first time in history," which is a wild distortion. His point seems to be that because companies wouldn't have to pay for health care, they could raise wages and thus taxes would also increase for workers on those higher incomes. But doesn't Mr. Obama want higher wages?

All in all, workers would come out ahead with the McCain plan. According to the left-leaning Tax Policy Center, the average taxpayer would see his tax bill drop by $1,241 in 2009. On average, lower-wage workers have more limited coverage as part of their compensation, mostly from small- or medium-size businesses. But the more generous the employer health plan, the more the tax subsidies increase. According to the Joint Committee on Taxation, the current employer benefit is only worth between $600 and $3,000 for people making under $100,000. The upper-income brackets save between $4,000 and $5,000.

The most affluent -- i.e., the top quintile of earners -- would be slightly worse off after 2013 under the McCain plan, though they'd still have plenty of options. Even as he routinely promises to raise taxes on "the rich," Mr. Obama is leaping to their unlikely defense here only to frighten everyone else. The McCain plan is fairer than the status quo, which subsidizes the most expensive employer (and union) insurance plans.

But don't take our word for it. Mr. Obama's chief economic adviser agrees with the McCain critique of the current system, or at least he once did. "This massive program of tax breaks is ineffective and regressive, wasting money on those who have health insurance while doing little for those who can barely afford it and nothing at all for those without it," wrote Jason Furman in 2006 in the journal Democracy. Before he joined the Obama campaign, Mr. Furman championed a health reform that relied on many of the same tax tools as Mr. McCain's.

In contrast to Mr. McCain, the Obama plan is all about expanding government health care. Mr. Obama is proposing a "public option" that is similar to Medicare but open to everyone of any age. With this new taxpayer-funded entitlement, private insurers would be crowded out as the government gradually paid all of the country's health-care costs.

Yet according to the Congressional Budget Office, federal spending on Medicare and Medicaid already takes up 4% of GDP today and will rise to an unsustainable 9% over the next two decades. Mr. Obama wants to add even more costs to this taxpayer balance sheet. The inevitable result as spending explodes would be price controls and rationing.

On choice, portability, quality and especially equity, the McCain health plan is far superior to Mr. Obama's. The Democrat is merely offering Canada on the installment plan.

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Shocking public hospital delays in one of Australia's major resort areas

A retiree facing a two-year wait for a surgical specialist's appointment at Cairns Base Hospital has switched to the Townsville Hospital group - and will be seen next week. Barry Wicks, 74, is on four painkillers a day for a trapped navel hernia but is still in constant pain and suffers from nausea when he eats. Doctors have said he needs surgery. But Cairns Base Hospital staff cannot fit him in for a pre-surgery specialist's appointment for another 18 months to two years because of a massive patient backlog.

"I thought I might die before I ended up under the knife," the fed-up 74-year-old said yesterday. "My life's on hold -I can' sit at my computer or in my car for too long, the only real relief is lying flat and I'vbeen told it could get much more serious if my bowel becomes trapped in the hernia."

Mr Wicks went back to his doctor, in the small town of Cardwell south of Tully, and was transferred to the Townsville Hospital group. He will see a visiting surgical specialist at nearby Ingham Hospital next Wednesday and has been told to pack a bag in case the operation goes ahead hours later. The long-suffering retiree said he was relieved to have escaped a "two-year sentence". "I really don't know how I could have held out that long . it' scandalous," he said of the Cairns Base Hospital's surgery backlog.

A Townsville Hospital spokesperson yesterday said no category two patient had waited longer than the recommended 90 days for their "non-urgent elective surgery" in the June quarter.

But a Cairns Base Hospital spokesman confirmed two-year waits for a surgical specialist appointment were "the norm" for category two patients, with a wait of up to three extra months for surgery. "We are very, very busy," the spokesman said, adding the hospital was trying to recruit a new full-time surgical specialist. Category one patients could wait up to two months for a specialist's appointment, while less urgent category three patients were in for a two to three-year wait, he said.

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