Last week a phony grand compromise on health insurance coverage was announced, led by the for profit insurance industry, but ostensibly including some good-guy organization such as Families USA. A major component of this so called compromise was tax credits to buy private insurance. A few days later, this past Saturday, Bush announced "his" plan to help things along by treating health insurance more like home ownership and mortgages, by providing... surprise... tax credits to buy private insurance.

Hooray for compromise when only one side gives up something. Hooray for compromise at the beginning of a negotiation. Hooray for compromise to get a seat at the table and then be ignored. Hooray for ignoring the plan that provides universal high quality care and cost control.

The Bush plan according to Reuters would:

for the first time allow people to take a tax deduction -- similar to the one used by homeowners for their mortgage costs -- when they buy health coverage on their own instead of through an employer. Currently, employees who receive health coverage through their jobs do not pay taxes on the benefit. Bush would cap the amount of coverage that would be considered tax-free. Anything above that would be taxed as income. The limit for deductions would be $15,000 for families and $7,500 for individuals. The average cost of family health coverage is $11,500. While some people would get hit with higher taxes, there would be a windfall for those who opted for low-cost plans. For example, a family who bought a $10,000 plan could still take the full $15,000 deduction and pocket the extra money.

But it is, as Princeton economist and single payer advocate Paul Krugman comments today from behind the NY Times select firewall just "gold-plated indifference":

Going without health insurance isn’t like deciding to rent an apartment instead of buying a house. The uninsured don’t need an "incentive" to buy insurance; they need something that makes getting insurance possible. Most people without health insurance have low incomes, and just can’t afford the premiums. And making premiums tax-deductible is almost worthless to workers whose income puts them in a low tax bracket. Of those uninsured who aren’t low-income, many can’t get coverage because of pre-existing conditions... Again, tax deductions won’t solve their problem. The only people the Bush plan might move out of the ranks of the uninsured are the people we’re least concerned about — affluent, healthy Americans who choose voluntarily not to be insured. At most, the Bush plan might induce some of those people to buy insurance, while in the process — whaddya know — giving many other high-income individuals yet another tax break. While proposing this high-end tax break, Mr. Bush is also proposing a tax increase — not on the wealthy, but on workers who, he thinks, have too much health insurance. The tax code, he said, "unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need." No economic analysis I’m aware of says that when Peter chooses a good health plan, he raises Paul’s premiums. And look at the condescension. Will all those who think they have "gold plated" health coverage please raise their hands? According to press reports, the actual plan is to penalize workers with relatively generous insurance coverage. Just to be clear, we’re not talking about the wealthy; we’re talking about ordinary workers who have managed to negotiate better-than-average health plans.

That means this is an attack on the few remaining strong labor unions. Gee another surprise.

What’s driving all this is the theory, popular in conservative circles but utterly at odds with the evidence, that the big problem with U.S. health care is that people have too much insurance — that there would be large cost savings if people were forced to pay more of their medical expenses out of pocket.

Let see... ideologically driven but fact-free phony-academic conservative think tank plans... where have we heard this before?

The administration also believes, for some reason, that people should be pushed out of employment-based health insurance — admittedly a deeply flawed system — into the individual insurance market, which is a disaster on all fronts. Insurance companies try to avoid selling policies to people who are likely to use them, so a large fraction of premiums in the individual market goes not to paying medical bills but to bureaucracies dedicated to weeding out "high risk" applicants — and keeping them uninsured.

Once again, like the health saving accounts idea, this is the opposite of what the underlying princile of what insurance is supposed to do. Instead of spreading and sharing risk to largest pool, it would create millions of one-person insurance pools.

Mr. Bush, on the other hand, is still peddling the fantasy that the free market, with a little help from tax cuts, solves all problems.

Every independent analysis has shown that tax credits don't work. I will go into greater detail in a separate diary, but briefly tax credits simply launder public money through wasteful private insurance system that takes a one-third cut of every dollar. With the cost of private insurance policies skyrocketing ($10,000+ for family coverage), the size of tax credits would have to be substantial to help the uninsured get coverage. Moreover, studies have shown that offering these credits barely makes a dent in the number of uninsured because it gives employers the incentive to drop coverage for their employees.

Now does anybody in the real world think that the White House and AHIP did not coordinate on this before hand?

Families USA says that they are "a national nonprofit, non-partisan organization dedicated to the achievement of high-quality, affordable health care for all Americans." and that they "have earned a national reputation as an effective voice for health care consumers for over 20 years."

But their signing onto this one sided "compromise" that achieves nothing smacks at worst of inside the beltway staff and lobbyists getting together for a groupthink projecct against the wishes and interests of their constituents; or at best an overly pessimistic (circa 1994) view of what is doable and a need to capitulate to have a seat at the table. With friends like these...

Even if one wants to compromise this early in the game, and give up on the single-payer, there are already somewhat more serious compromises, still mediocre with severe drawbacks, that at least offer some potential of universality such as from the Economic Policy Institute recent forum (Hacker-care). That folks like Families USA (and AARP, APHA, AAFP) chose not to sign on to EPI's plan as their already mediocre compromise is pathetic... both as policy and as strategy. No, they had to go for less than EPI-Hacker, for less than Senator Wyden's least awful version of Mandated care. Nice opening move. Would not want them to endorse anything like Conyers/Kennedy HR-676 ((however you can!)... after any plan sponsored by senior committee-chair congressmen is too far out there.

Here is an action we can take: Families USA are having their annual national grassroote meeting, Health Action 2007, conference in Washington DC this week, January 25-27.

Maybe we should ask them to denounce the Bush plan and to repudiate the AHIP phony compromise, and get back to advocating for real universal coverage for the people. I suggest contacting Families USA now, before the meeting at their E-Mail: info@familiesusa.org or Tel: 202-628-3030 or Fax: 202-347-2417

Meanwhile, my starting point is not a phony compromise or a plan that inherently does not work... I am holding out for the only plan that acutally make conservative economic sense conservative economic sense and provides high quality health care for all.

Update from Don McCanne's quote of the day listserv: