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Ironies of healthcare reform

A consensus seems to have emerged in the Senate that taxing “Cadillac” healthcare benefits is wise public policy. In part, that consensus rests on the belief that taxing benefits will “bend the cost curve” by forcing consumers to be more aware of, and less cavalier about, costs.

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In fact, most people have little control over the cost of their healthcare plan. Employers decide which plans are available to employees. Moreover, the cost of those plans is not solely a function of the generosity of the benefits. Small groups, composed of older and sicker employees, get charged considerably more than younger and healthier groups. Forcing older and sicker individuals to pay a tax on their insurance increases their healthcare costs; it does not reduce it.

Senators also bought into Chuck Grassley’s (R-Iowa) notion that healthcare reform ought to be paid for only with healthcare dollars. While that sounds reasonable at first blush, upon reflection it lacks any reasonable logic. We do not pay for war with “military money,” nor do we pay to reform education with “education money.”

Why should healthcare reform be restricted to healthcare money?

While senators do not seem to find taxes on healthcare benefits controversial, voters do. Indeed, no element of healthcare reform currently under consideration is more widely opposed. A USA Today/Gallup poll found “imposing a tax on insurance plans that have the most expensive benefits packages” opposed by nearly two to one. Moreover, this strong opposition seems impervious to argumentation. An ABC/Washington Post poll offering arguments on both sides yielded nearly identical results — 61 percent opposed to 35 percent in favor.

By contrast, the “public option” has been at the heart of the controversy over reform on Capitol Hill. In passing its bill, the Senate Finance Committee rejected two amendments creating a public option on votes of 15-8 and 13-10. Controversy has raged over this measure in the House as well.

Supporters argue a public plan will provide Americans with coverage when other options are unavailable, while putting market pressure on private insurers to hold down rates. Opponents maintain that a public plan will drive private insurance companies out of business, leaving only a “government-run” system.

Voters reject the notion that a public plan will bankrupt private insurers. Insurance company executives seem to be about the only people who believe the government will out-compete them on cost and quality — an implicit confession of ineptitude on the part of insurers, which should be cause for grave concern among their customers.

Despite the swirling controversy on Capitol Hill, the public option enjoys wide public support, as it has since the concept was introduced. During the last two months, at least 12 public polls asked about a public option. All but one showed a majority in favor. Of course, different questions produce different answers.

However, the consistent support for a public option — ranging from 50 to 65 percent and averaging 58 percent — despite the diversity of questions testifies to the strength of the support.

The one question that found more opposing than supporting a public plan gave opponents just a two-point margin and has been the subject of great controversy.

Oddly enough, where voters are agreed, Congress is divided, and where Congress is united, voters are opposed. It will be instructive to see just whether public policy ends up reflecting or rejecting public opinion.

Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the majority leaders of both the House and Senate.

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