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Gephardt's
Plan
April 29, 2003
By Patrick McIntyre
Editor's
Note:
Democratic Underground welcomes articles promoting individual
Democratic candidates for political office. Publication of
these articles does not imply endorsement of any candidate
by the editors of Democratic Underground. Congressman Dick Gephardt rolled out a proposal for universal
health coverage this week to a chorus of jeers from conservatives
who want to portray it as anti-business. But a closer look
at the plan shows that it will benefit businesses as well
as rich and poor alike.
Gephardt's plan to use the Bush tax cuts should be attractive
to rich and poor alike. The poor will get health coverage
at affordable rates, and the majority of the rich people will
still enjoy their tax cuts.
How can that be, you might ask? It's really very simple.
The people whose taxes would go back up to Clinton-era levels
are by and large either employees, investors or owners of
corporations who already offer health insurance benefits to
their workers. The revenue generated by reinstatement of the
old income tax rates would go to doubling the tax credit such
companies receive for providing coverage, which would result
in lower health care costs for those businesses; this would
result in a larger profit margin whereby salaries and dividends
would most likely increase accordingly. For companies who
don't currently offer insurance to their employees, they might
see the wisdom of providing coverage so they could get in
on that same 60% tax credit to recoup what they might feel
they lost from the reinstatement of the old tax rate.
Insurance companies would be wise to support Gephardt's
proposal, as it doesn't put any restrictions on them that
aren't already in place. Add to that the fact that with more
people covered, the cost of care can be spread over a larger
pool of policyholders which should reduce their average annual
per capita cost of care. More premium revenues with lower
costs should sound like the sweetest tune ever played on an
actuarial table!
Gephardt's proposal is one I would imagine any state governor,
regardless of his party, should welcome with open arms. State
and municipal governments would be reimbursed for 60% of the
cost of covering their employees, which could save states
a total of $172 billion dollars over the first three years.
This money could go a long way towards restoring services
which they have been forced to cut because of the 2001 tax
cuts.
Mr. Gephardt has set the cost of the first three years of
this program at $700 billion,but the actual cost is much less.
Over $100 billion per year would go directly to employers
in the form of insurance premium tax credits, as much as $62
billion would reimburse states for coverage costs for their
employees and up to $70 billion to subsidize coverage for
the unemployed and others with no access to traditional coverage.
This results in about $233 billion in yearly costs, with a
similar amount of savings to taxpayers in various forms.
This is as close as I have seen anyone come to a delivering
the Holy Grail of a revenue-neutral plan to provide universal
coverage. What taxpayers don't get back from the federal government
in tax credits they will get back from state and local governments
in the form of either further tax cuts or expanded services.
For most businessmen any increase in taxes will be offset
by tax credits for doing things he's already spending money
to do.
As I believe most working Americans are already in favor
of some form of universal coverage, Mr. Gephardt should focus
the main thrust of his sales pitch for this plan on businesses
who may not realize how advantageous this plan will be for
them as well.
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