Americans embroiled in the national healthcare debate might be surprised to learn there's an alternative plan that already offers inexpensive, portable insurance to everyone – one that improves, rather than aggravates, the federal deficit.
Called the Healthy Americans Act (HAA), it does have one significant drawback: It's so unpopular with the bases of both parties that it's considered a long shot to ever become law.
Two senators – Ron Wyden, a Democrat from Oregon, and Robert Bennett, a Republican from Utah – have been championing the idea for years. In a nutshell, the bill would require all Americans to buy healthcare insurance, would establish state-administered exchanges for all Americans, and would modify the tax laws to facilitate IRS collection of premiums.
The bill's co-sponsors include six Republican senators, six Democratic senators, as well as Sen. Joseph Lieberman, the Connecticut Independent who caucuses with Democrats. Former GOP Sen. Norm Coleman of Minnesota also supported the legislation when he held office.
Wyden and Bennett first submitted the bill in January 2007, and resubmitted it this year as the healthcare debate geared up in February.
As with the other reform bills, HAA doesn't satisfy everyone. Business groups complain it would leave workers less dependent on their companies for benefits. Those on the left complain about its lack of a federally subsidized public option – although it does allow states to adopt their own public option plans, if they wish to do so.
Regardless of its political viability, voters still hoping for some healthcare reform short of a federal public option may find the HAA's advantages intriguing at the very least. Among its features: Your policy belongs to you. For the first time, health-insurance companies would sell their wares to individual consumers, rather than to businesses. Currently, employers rather than employees buy health insurance plans: Workers generally accept whatever plan an employer offers.
"Right now," Bennett said in a recent Senate speech, "healthcare is the only part of the economy where the individual receiving the goods or services does not control the money that pays for the goods or services. So it is obvious that you will not have market forces available in that circumstance. If the individual who is receiving the goods or services controls the money that pays for the goods or services, he or she will make a different choice than if someone else is controlling the money."
Under HAA, each state would be required to establish an "exchange;" that is, a menu of plans offered by different providers. All consumers – not just those who are indigent or out of work – would then be free to choose the plan that best suits their needs.
States could opt to offer a public option that would be administered on the statewide level, which understandably worries big business. The National Coalition on Benefits, a group of over 150 employers including the U.S. Chamber of Commerce, comments: "We expect that the source of most health coverage would soon be under the new system of state-sponsored health insurance choices, not through employers."
On the other hand, if you lose or change your job, your coverage would not change. And if you wanted to change providers, you'd be free to do so. State rather than federal control. Under the HAA, state governments would establish and administer the exchanges. Federal payments would subsidize them to keep the costs low. Mandatory coverage. Virtually all Americans would be required to carry health insurance. Those living below the poverty line would have fully subsidized premiums. Those earning between 100 percent and 400 percent of the federal poverty line would have their premiums subsidized according to a sliding scale.
Ink that flows black, not red. The same agency lobbed a monkey wrench into Obamacare by projecting a deficit of more than $1 trillion over 10 years, the Congressional Budget Office (CBO), has issued a preliminary analysis stating that HHA would break even within its first year of operation. The Lewin Group, a management consulting firm owned by a subsidiary of the UnitedHealth Group, has projected the plan will actually reduce the federal deficit by $343.1 billion over 10 years. Who pays? Ah, at last we arrive at the bottom line. Currently, the employer's contribution to the cost of healthcare insurance is a benefit, but employees pay no income taxes on it. Under the HAA, that would change. The current exemption would become a tax deduction. It would be worth $6,025 for individuals, and $12,050 for couples without children. The tax deduction would gradually be reduced as you earn more, and would disappear altogether for individuals earning $125,000, or $250,000 for couples filing jointly, according to the CBO.
Essentially, the Wyden-Bennett plan creates a federal system for collecting premiums via the U.S. income tax system. It would also distribute corresponding subsidies to help people buy insurance who otherwise might not be able to afford it.
Of course, employers would be expected to kick in money as well. This would occur according to a sliding scale based on two factors: the number of employees, and the amount of revenue per employee. The CBO says the employer tax would be "between 3 percent and 26 percent of the national average premium for the minimum benefits package for each employee."
So here's the CBO's bottom line: Individuals collectively would pay between $650 billion and $800 billion annually in total premiums through their tax returns. Eliminating the current tax exclusion for health insurance premiums, along with employers' tax payments, would raise between $400 and $500 billion.
Along with various cost savings generated by the plan, this would mean the federal outlays for health insurance premiums – expected to reach $1.3 trillion to $1.4 trillion by 2014 – would be roughly offset by new revenues and savings.
So why hasn't HAA received more attention, given its fiscal soundness? In part, it's because it appears to be a political non-starter.
President Barack Obama helped sound its political death knell in July. In classic Obama doublespeak, the president told the editors of the Portland Oregonian that he agreed with about "90 percent" of Wyden's thinking on healthcare reform, calling him a "real thought leader" on the topic.
Obama went on to say Wyden's plan would require "radical restructuring." Wyden-Bennett was "too radical" he said, and would inevitably encounter "significant political resistance."
In other words, Obama likes the plan a lot except for one thing: he's dead set against it.
Like anyone daring to carve out a middle ground in the healthcare debate these days, Wyden is taking fire from both sides.
Conservatives don't like its state-level public option. But the heaviest salvos have been launched from within Wyden's own party. Union leaders object to any taxation of health-insurance benefits, even though the impact would fall on the relatively wealthy.
"Stop Ron Wyden's tax break," urges StopWydensHealthTax.com, a Web site set up by unions. "…[It] taxes our benefits and leaves us at the mercy of the insurance companies."
The union's reaction reflects the left's determination to steamroll anyone who stands in their way on healthcare reform. Wyden has a liberal voting record and is considered a friend of the unions. Yet big labor produced and ran radio ads in his home state lambasting his plan.
That Wyden remains silent on that holy grail of progressives' healthcare dreams, a federally run and funded public option, hasn't helped HAA either. He says merely that he is "open" to the public option concept, and like Obama refuses to identify it as the sine qua non of healthcare reform. Predictably, this has outraged his erstwhile allies on the left.
So once again, the healthcare battle lines are drawn over the public option.
Before the summer recess, HAA co-sponsor Bennett gave an impassioned speech on the Senate floor, warning that if Democrats put a full-fledged public option into HAA, he will vote against his own bill.
"The sticking point in this entire debate," Bennett said, "is the demand on the part of the Obama administration that the final product have within it a government plan as one of the options. And if that happens, I vote against my own bill. If that happens, I do everything I can to say no. Because I am convinced if that happens, we end up with a situation where there is only one option that survives."
The public option, Bennett says, is like putting an elephant into a room full of mice. "And as the elephant walks around the room, pretty soon there aren't any mice left. A government plan is the elephant in the room," he tells colleagues.
That contrasts sharply with the views of progressives, who have raised the establishment of a national, government-subsidized private option to the level of a national moral imperative.
In fact, Obama on Wednesday told religious leaders it is a “core ethical and moral obligation."
Perhaps sensing that HHA would never pass political muster in the current climate, Wyden submitted a modified initiative last month called the Free Choice Proposal.
Like HAA, the Free Choice Proposal would open up the president's proposed insurance exchanges to all employees, not just those who are self-employed or between jobs.
So you could leave the plan currently offered by your employer. Your employer would be required to issue you a voucher defraying about 70 percent of your premiums from the new insurer you selected via the insurance exchange.
Even that proposal may be prove too threatening, however, given the traditional U.S. system of employer-based healthcare that Obama has strongly endorsed.
Wyden is hoping his Free Choice Proposal will be grafted on to whichever proposal eventually emerges from the legislative meat grinder of Congress.
And with every day that passes, the price of healthcare – to employers, to workers, to the government – grows more costly.
"We can't forget that we are working on life-and-death issues facing our constituents, our families, our friends, and our neighbors," Wyden and Bennett recently wrote in a Washington Post op-ed. "It's time to stop trying to figure out what pollsters say the country wants to hear from us, and focus on what the country needs from us. The American people can't afford for Congress to fail again."
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