Bush's Health Care Plan: Sick On Arrival?

His tax-credit-based proposal has already been found wanting

George W. Bush went heavy on the symbols on Apr. 11 when he traveled to a Democratic stronghold in Cleveland to release his long-awaited health-care plan. Speaking at the El Barrio job-training center, the presumptive GOP Presidential nominee unveiled the centerpiece of his $41 billion "prosperity" plan--a $35 billion tax credit he says could help up to 18 million Americans buy private health coverage.

The new Bush plan to help bottom-rung workers obtain a classic middle-class benefit is sure to appeal to Hispanics and other minorities, who make up the bulk of the uninsured. It targets low- and middle-income workers whose employers don't offer health benefits. Conservatives like the market-based approach, which encourages private insurers to create new, affordable policies for the working poor. "We will promote individual choice. We will rely on private insurance," Bush told the ethnically diverse crowd in Cleveland.

Rhetoric aside, will Bush-Care work? Many Washington lawmakers think so, but some experts harbor doubts. Tax credits have been tried--and abandoned--before. Most economists say tax credits big enough to be effective would cost too much. Even health insurers are skeptical, fearing a plan skewed toward individual policies would undermine the current workplace-based system, which keeps costs low by pooling low- and high-risk workers in a single policy.

Yet tax credits are the Hill prescription du jour when it comes to helping what the Census Bureau estimates are 44.3 million uninsured workers. Lawmakers from the left and the right have floated more than a dozen proposals that use tax subsidies to attack the problem--a far more attractive approach politically than a new spending program. Bush's plan closely mirrors legislation offered last month by Senators James M. Jeffords (R-Vt.) and John B. Breaux (D-La.). John C. Goodman, president of the National Center for Policy Analysis and a Bush health adviser, says tax credits are a first step toward reforming the whole medical delivery system. "This is a bold plan," Goodman crows. "It's shifting money and power from bureaucracies to people."

Even Vice-President Al Gore has jumped on the bandwagon with a plan that offers a 25% tax credit for people who buy their own policies. But the bulk of Gore's $146 billion, 10-year program would simply expand the existing Children's Health Insurance Program to more families. Critics deride this option as a Big Government handout.

Despite the popularity of tax-credit plans, however, no one has designed one that works as intended. Bush's proposal would provide a write-off of up to $2,000 for families earning $30,000 or less, or $1,000 for individuals earning $15,000 or less. Those who pay no taxes would get a check when premiums come due.

But even Bush advisers estimate that the plan would trim only about 4 million people from the ranks of the uninsured. Many of the 18 million who could take advantage of the plan already pay for coverage. In addition, a typical midrange policy that pays for doctors' visits, prescription drugs, and outpatient care can cost between $4,000 and $6,000 in annual premiums--far above the $1,000 individual credit.

SCAM ENABLER. Bush supporters counter that his credits will stoke demand for low-cost policies. Insurers "see all these people as potential clients," says Roberto de Posada, executive director of the Hispanic Business Roundtable. "They're going to design a health-care plan to fit those budgets."

Trouble is, it's been tried before--and the nostrum turned out to be snake oil. In 1993, a House investigation found that a $500 tax credit for individual health insurance--the brainchild of former Senator Lloyd M. Bentsen Jr. (D-Tex.)--had drawn few takers, yet had spawned hundreds of scam artists touting cheap policies that failed to deliver on their promises. As a result, Congress repealed the program. Bush aides say their plan will work better because the credit is larger, but independent experts say it must be 50% larger than Bush's to work. All of which raises a troubling prospect: Bush's "compassionate" medical plan for the poor could turn out to be little more than a placebo.