Giuliani Plays Offense On Health Care

[Ron Burgundy]

CQPolitics.com - By John Reichard, CQ HealthBeat Editor

Don’t look for Rudy Giuliani to go from brash to bashful when the 2008 presidential election campaign turns from terrorism and national defense to health care.

Market forces clearly haven’t worked in bringing coverage to the nation’s 45 million uninsured, but that doesn’t mean Republicans have to feel defensive about their free market philosophy on the health care issue, the former New York mayor and GOP presidential candidate clarified when he announced his plan this week. Giuliani called his plan “a free market cure” for what ails U.S. health care, in contrast to plans advocated by Democratic presidential candidates that espouse “a government-mandated model that looks for inspiration to the socialized medical systems of Europe, Canada and Cuba,” he said.

“I believe we can reduce costs and improve the quality of care by increasing competition,” Giuliani said Friday in a Boston Globe op-ed piece. “But the health care system is being dragged down by decades of government-imposed mandates, wasteful bureaucracy and massive distortions in the U.S. tax code that punish self-employed and low-income workers.”

Giuliani’s plan falls short of calling for universal coverage, but is likely to help build the case for tax revisions as a leading alternative to Democratic proposals to expand public programs. The proposal says that Americans who buy coverage on their own are treated unfairly because they get no tax breaks when they buy it. By contrast, workers whose compensation partly takes the form of health coverage get those benefits tax-free. A tax deduction of up to $15,000 given to Americans without employment-based coverage to buy coverage would level the playing field, he said.

The proposal, posted by Giuliani on his campaign Web site, appears to be more strategy than a detailed plan. But a growing number of Republicans, along with some Democrats, take seriously the idea that tweaking the tax code as advocated by Giuliani can not only unlock market forces but also free up many billions of dollars to subsidize the purchase of insurance by millions of Americans who lack health benefits.

Attempts by the White House during the current debate over expanding the State Children’s Health Insurance Program (SCHIP) fell flat when it tried to spotlight tax code changes as the better approach to widening coverage. Despite a White House veto threat, Democrats and more than a few Republicans were clearly energized by their success in passing legislation in the Senate and House this week that would bring health coverage to several million more uninsured children by expanding SCHIP.

But the debate offered some lawmakers a chance to extol tax code changes as a more fundamental approach to fixing health care, and to promise broader efforts to do so in the future. Tennessee Sen. Bob Corker, one of 17 Republicans who voted for the Senate bill expanding SCHIP, said on the Senate floor Thursday evening that “We can continue to have these short-term fixes — we now have a fix that takes us through 2012 on this program — or we can have reform that really works.”

Utah Republican Sen Robert F. Bennett expressed similar enthusiasm for tax revisions in his floor remarks. Bennett said there is a growing realization among Republicans that the costs of postponing care for the uninsured until they are so sick they have to go to emergency rooms drives up premium costs for everyone, and that broader coverage would allow earlier and ultimately less costly care. “Universal coverage used to be a code word for a single-payer, government-run system, which Republicans opposed,” he said. “We now understand that everyone in the country should have access to health care so that the cost shifting” can stop, he said. “It can be done if we change the tax laws in an intelligent way.”

Under the Giuliani plan, “any amount a family pays less than $15,000 — for individuals, less than $7,500 — could be put tax-free into a Health Savings Account” that would be used to pay premiums and other health expenses. “This would create a powerful incentive for more Americans to own their private health insurance — making it portable instead of dependent on an employer,” according to Giuliani’s plan.

“If millions of people go into the marketplace looking for less expensive health insurance, it will drive the insurance companies to create less expensive products than meet individual needs instead of government mandates,” he said.

Lower-income Americans who wouldn’t benefit from a deduction would instead get a tax credit that, combined with other revenue sources, such as Medicaid and employer contributions, could help them buy coverage. Giuliani’s plan speaks in general terms of other revisions as well, such as overhauling the medical liability system, investments in health information technology, and grants to states to find ways to more care better and more affordable.

Giuliani aims to portray his reforms as much better fit for America than plans advocated by Democratic rivals, which he views as socialized medicine. “Instead of being more like Europe, we need to be more like America,” he said in the Globe op-ed piece. But his plan, too, could encounter the kind of unease about moving into a fundamentally different system that many analysts say doomed the Clinton plan. The plan appears to seek an eventual end to the employment-based system of health care, a change many Americans may be uneasy about making. And tax code changes to free up funding for lower-income Americans to buy health care would in effect mean imposing a tax on more generous benefits, another potentially politically controversial change.

This story originally appeared in CQ Health Beat.

source: http://news.yahoo.com/s/cq/20070804/pl_cq_politics/giulianiplaysoffenseonhealthcare [link]