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Another Shot at the Safety Net

By Dan Froomkin
Special to washingtonpost.com
Wednesday, January 25, 2006; 12:48 PM

President Bush's last attempt to reengineer the country's social safety net didn't go so well. No amount of presidential razzle-dazzle could persuade the public to abandon Social Security as they knew it.

But now signs are that in his State of the Union address next week, Bush will be back with some more ideas. These at least initially sound much more innocuous -- what's not to like about Health Savings Accounts? -- but on closer examination they bear many of the same hallmarks of his failed Social Security bid.

Much like private Social Security accounts, Bush's health-care proposals emerge from his radical vision of what he calls an "ownership society."

"To each his (or her) own" could be the motto of that ownership society. But what is on the one hand individual empowerment is on the other an attack on collective values that are key to a society's ability to protect its weakest and most vulnerable members.

In the case of health savings accounts, in particular, the endangered principle is that of pooling risk. Expect to hear a lot more about that not-too-sexy sounding topic in the coming weeks.

Bush's Proposals

Peter G. Gosselin wrote in Monday's Los Angeles Times: "President Bush is preparing to unveil a series of proposals intended to make the nation's healthcare system more efficient, but he is likely to revive a bitter debate -- begun last year over Social Security -- about how much of life's biggest risks Americans should bear on their own.

"Although many of the proposals, such as limits on medical malpractice lawsuits, are ones the president has failed to get through Congress, he plans to unveil new initiatives as part of his vision for reshaping U.S. healthcare policy, aides and advisors said.

"Among the possible initiatives: offering additional tax breaks for the use of Health Savings Accounts, and making most out-of-pocket medical spending by individuals tax-deductible. Currently, individuals must spend 7.5% of their annual incomes on healthcare before they qualify for an income tax deduction.

"Bush's supporters say that the changes would help tame rocketing medical costs by encouraging people to buy their own healthcare insurance and become smarter shoppers, rather than relying on employers or government programs such as Medicare and Medicaid to cover their health costs."

But the plan has drawn criticism.

" 'We may be looking at the start of a fundamental shift in what we mean by health insurance, from a system where we share risks to one where it's up to individuals to make their own deals and bear their own risks,' said Drew E. Altman, president of the nonpartisan California-based Kaiser Family Foundation.

Another part of the Bush proposal: tax breaks for out-of-pocket medical expenses.

Amy Goldstein writes in today's Washington Post: "President Bush will propose that Americans be allowed to take tax deductions on more of their out-of pocket medical expenses, as part of an initiative the White House believes will rein in soaring health costs by shifting responsibility toward individuals, according to congressional and other sources familiar with the administration's thinking."

But: "Even before most people on Capitol Hill learn of the proposals, several senior congressional aides and health policy experts predicted yesterday that Bush may have a difficult time winning support. They said that fiscal conservatives may balk at the expense, and that many Democrats will argue the changes are inadequate for poor people, who are most likely to be uninsured."

Goldstein writes: "The idea of tax breaks for out-of-pocket medical expenses is borrowed from a recent book by three academics, including two with whom [White House National Economic Council Director Allan B.] Hubbard has close ties: R. Glenn Hubbard, a former chairman under Bush of the White House Council of Economic Advisers, and John F. Cogan, a White House economic adviser when Ronald Reagan was president. Their book, Healthy, Wealthy & Wise , calls for all such spending to become tax-deductible. The authors estimate that the revision in tax law would cost $28 billion a year when phased in completely, although they predict much of that lost revenue would be regained through ripple effects the change would create in the health care system."

David Jackson writes in USA Today about Allan Hubbard's visit to the newspaper's offices.

"People are very, very frustrated about the cost of health care," Hubbard said.

But Jackson writes: "Hubbard said Bush will also devote part of Tuesday's speech to higher energy prices and the rising costs of entitlement programs such as Medicare and Social Security.

" 'Tax reform is not off the table,' Hubbard said. 'At the same time, it doesn't have the priority that health care does right now.' "

More about HSAs

On NiemanWatchdog.org, Harvard Medical School professor emeritus Rashi Fein writes: "One of the strengths of large employer-provided health insurance (and of Medicare) is the sharing of risk across large numbers of individuals. If the pool is fragmented and each of us has his or her individual insurance and savings account, premiums will increase for those who are sicker or older as they fall for those who are healthier or younger. This cannot be justified as a matter of social policy. For instance, it would exacerbate the present situation in which almost 20 percent of African Americans and one-third of Hispanics are uninsured.

"Furthermore, the tax-free characteristics of the savings account provide an incentive to postpone preventive care services and early diagnoses -- if I wait perhaps it will go away and I get to keep the money in the savings account. Yet in some cases such postponements lead to bad health outcomes and even higher long run costs. Thus the savings account approach is not only bad social policy, but -- because it negates the current emphasis on health promotion and disease prevention -- it represents bad medical policy."

Columbia University researchers Sherry Glied and Dahlia Remler recently found that HSAs are not likely to be an important contributor to expanding coverage among uninsured people because most of them do not face high-enough marginal tax rates to benefit substantially from the tax deductibility of HSA contributions.

Leonard E. Burman and Linda J. Blumberg of the Urban Institute call HSAs a "tax cut for rich people."

Ezra Klein writes in the American Prospect that "what HSA's really do is separate the young from the old, the well from the sick. Currently, insurance operates off of the concept of risk pooling. Since health costs tend to be unpredictable and illness isn't thought a moral failing, we all pay a bit more than we expect to use in order to subsidize those who end up needing much more than they ever thought possible. The well subsidize the sick, the young subsidize the old, and we all accept the arrangement because one day we will be old, and one day we will be sick, and no one wants to shoulder that alone.

"But HSA's slice right through this intergenerational, redistributionist arrangement: they're a great deal for young, healthy folks because they don't force subsidization. Just don't get sick."

By contrast, the White House insists that "New health insurance deductions will make coverage more affordable to millions of Americans whose employers don't provide health benefits."

And the Cato Institute argues: "Patients will curb their consumption and thus help contain medical inflation. Because consumers have built-in incentives to make wise choices, many of the restrictions that insurers have placed on patients will begin to disappear. Because patients own their health savings accounts, they will have some self-insurance coverage when they switch jobs and be better able to afford catastrophic coverage on their own."

What Bush Said

Bush touched on the issue of health care last Friday during his visit to a moving company in Virginia.

"An interesting product available is called health savings accounts. . . . It provides for a high deductible catastrophic plan, coupled with tax-free contributions in the plan, basically gives the consumer control over his or her medical decisions. The plan can grow tax-free, which is an encouragement for people to make wise decisions about how they treat their body. If you have a catastrophic event, the insurance kicks in and covers it. It's portable. If you change jobs, you can take it with you. It's an interesting idea."

Later, in response to a question, Bush cast it more as a wealth-accumulation program than as part of the social safety net.

"Health savings account is an interesting opportunity for the young 22-year-old healthy person, who is able to put money aside, tax-free, and watch that money grow, tax-free, and take the money out of the health savings account, tax-free, coupled with a high deductible catastrophic health plan. In other words, this is a product that will say to those who choose, here's an opportunity for you. You start putting aside a thousand dollars a year -- in other words, you buy a high deductible policy with a thousand-dollar deductible, and you put the thousand dollars cash -- you do, or your employer does, or however you negotiate it -- that thousand dollar grows. And it can grow to be pretty substantial, particularly as you're a healthy person, over a period of time, tax-free. And all of a sudden, you've got quite a nest egg."

A Look at Promises Past

This won't be the first time Bush devotes part of his State of the Union message to the issue of health care.

In 2001 he promised: "Many working Americans do not have health care coverage, so we will help them buy their own insurance with refundable tax credits."

In 2002 : "Americans know economic security can vanish in an instant without health security. I ask Congress to join me this year to enact a patients' bill of rights to give uninsured workers credits to help buy health coverage, to approve an historic increase in spending for veterans' health, and to give seniors a sound and modern Medicare system that includes coverage for prescription drugs."

In 2003 : "We must work toward a system in which all Americans have a good insurance policy, choose their own doctors, and seniors and low-income Americans receive the help they need."

In 2004 : "Members of Congress, we must work together to help control [rising] costs and extend the benefits of modern medicine throughout our country.

"Meeting these goals requires bipartisan effort. And two months ago, you showed the way. By strengthening Medicare and adding a prescription drug benefit, you kept a basic commitment to our seniors: You are giving them the modern medicine they deserve."

In 2005 : "To make our economy stronger and more productive, we must make health care more affordable and give families greater access to good coverage and more control over their health decisions."

Speaking of Medicare

Bush's track record regarding health care consists of one big asterisk: The Medicare drug benefit.

As Kevin Freking writes for the Associated Press: "The program got off to such a difficult start that more than 20 states opted to provide emergency coverage for low-income residents who ran into difficulty. Some people did not show up in pharmacists' computers as being enrolled in a plan, and others were charged far more than they were supposed to pay."

So here's a question: Even if you think Bush's health-care ideas are good, can you trust him to execute them competently?

Harold Meyerson argues in his Washington Post opinion column today that incompetence "is this president's defining attribute."

Live Online

I'm Live Online today at 1 p.m. ET, happily taking your excellent questions and comments about the White House. I might even take a few questions about the joys of fatherhood, which are legion.

The Inaugural Address: One Year Later

Peter Baker writes in The Washington Post: "In the year since Bush redefined U.S. foreign policy in his second inaugural address to make the spread of democracy the nation's primary mission, the clarion-call language has resonated in the dungeons and desolate corners of the world. But soaring rhetoric has often clashed with geopolitical reality and competing U.S. priorities.

"While the administration has enjoyed notable success in promoting liberty in some places, it has applied the speech's principles inconsistently in others, according to analysts, activists, diplomats and officials. Beyond its focus on Iraq, Washington has stepped up pressure on repressive regimes in countries such as Belarus, Burma and Zimbabwe -- where the costs of a confrontation are minimal -- while still gingerly dealing with China, Pakistan, Russia and other countries with strategic and trade significance. . . .

"The broader question is the degree to which Bush's speech marked genuine change in policy rather than so much talk. In many parts of the government, democracy promotion seems still to take a back seat to other goals."

NSA Watch

Steven Thomma writes for Knight Ridder Newspapers: "President Bush will speak Wednesday at the National Security Agency to defend his order to the super-secret spy center to conduct warrantless eavesdropping on Americans.

"But the speech will be much more than a defense. It also will be the photo-op spearhead of a campaign to turn the controversy into a plus for Republicans by transforming the 2006 congressional elections into a referendum on the war on terrorism. . . .

Julie Hirschfeld Davis writes in the Baltimore Sun: "When President Bush addresses employees at the National Security Agency today, he will also be aiming his message at millions of independent voters who have not made up their minds about the agency's warrantless eavesdropping program, pollsters and strategists say."

Mike Allen writes for Time.com: "Even as the White House launches a media blitz to portray its controversial wiretapping program as a perfectly legal weapon in the war on terror, administration officials have begun dropping subtle hints -- without explicitly saying so -- that President Bush could go to Congress to seek more specific authority to listen in on U.S. citizens who are suspected of entanglement with terrorists. . . .

"No such move is imminent, a top aide stressed. But administration lawyers are said to be debating whether the President would be better off putting the monitoring on more solid footing, or whether seeking additional latitude would amount to admitting the government had not been following the law."

Setting Some Sort of Record

The White House issued another of its war-room style "Setting the Record Straight" memos yesterday, this one suggesting that it is wrong to call the NSA's domestic spying program "domestic."

It's like spin meets kindergarten:

"DEFINITION: Domestic Vs. International.

" * Domestic Calls are calls inside the United States. International Calls are calls either to or from the United States.

" * Domestic Flights are flights from one American city to another. International Flights are flights to or from the United States."

But hitherto, warrantless NSA spying has been limited to international-to-international communication. The big news is that now it's looking at phone calls -- and e-mail messages -- that include domestic starting or ending points.

So calling it international spying would be fundamentally dishonest.

Now You Know What It Feels Like

Senators are getting a little lesson in what it's like to be a White House correspondent.

Lara Jakes Jordan writes for the Associated Press: "The White House is crippling a Senate inquiry into the government's sluggish response to Hurricane Katrina by barring administration officials from answering questions and failing to hand over documents, senators leading the investigation said Tuesday.

"In some cases, staff at the White House and other federal agencies have refused to be interviewed by congressional investigators, said the top Republican and Democrat on the Senate Homeland Security and Governmental Affairs Committee. In addition, agency officials won't answer seemingly innocuous questions about times and dates of meetings and telephone calls with the White House, the senators said."

Eric Lipton writes in the New York Times: "In response to questions later from a reporter, the deputy White House spokesman, Trent Duffy, said the administration had declined requests to provide testimony by Andrew H. Card Jr., the White House chief of staff; Mr. Card's deputy, Joe Hagin; Frances Fragos Townsend, the homeland security adviser; and her deputy, Ken Rapuano."

Abramoff and the White House

The Think Progress blog spots Newsweek correspondent Michael Isikoff on MSNBC saying that it was disgraced Republican lobbyist Jack Abramoff himself who showed photographs of his White House visits to Washingtonian magazine.

The Washington Post editorial board wants the White House to end its Abramoff stonewall.

Pakistan Watch

Elisabeth Bumiller writes in the New York Times: "President Bush said Tuesday that he would travel to India and Pakistan in March, but made no public comment about the American airstrikes that killed 18 civilians, including women and children, in one of Pakistan's remote tribal areas earlier this month.

"With Pakistan's prime minister, Shaukat Aziz, at his side, Mr. Bush spoke about areas of agreement, like trade and fighting terrorism, in four minutes of public remarks in the Oval Office. The president called the countries' relationship 'vital' while Mr. Aziz called it 'multifaceted.'

"The two leaders took no questions, and afterward the White House spokesman, Scott McClellan, sidestepped queries about whether Mr. Bush had spoken in private to Mr. Aziz about the airstrikes."

Here's the text of their remarks.

Luckily, Aziz himself was more forthcoming after the meeting, telling the Associated Press : "We have conveyed our concerns and apprehensions, and we agreed that there's a need to coordinate and communicate better."

Impeachment Watch

Jim Puzzanghera writes for Knight Ridder Newspapers: "The word 'impeachment' is popping up increasingly these days and not just off the lips of liberal activists spouting predictable bumper-sticker slogans.

"After the unfounded claims about Iraq's weapons of mass destruction and recent news of domestic spying without warrants, mainstream politicians and ordinary voters are talking openly about the possibility that President Bush could be impeached. So is at least one powerful Republican senator, Sen. Arlen Specter, R-Pa., chairman of the Senate Judiciary Committee.

"So far, it's just talk. And with Republicans controlling Congress -- and memories still fresh of the bitter fight and national distraction inflamed by former President Clinton's 1998 impeachment -- even the launching of an official inquiry is a very long shot.

"But a poll released last week by Zogby International showed 52 percent of American adults thought Congress should consider impeaching Bush if he wiretapped U.S. citizens without court approval, including 59 percent of independents and 23 percent of Republicans. (The survey had a margin of error of 2.9 percentage points.)"

Isn't He Awesome?

Via Salon's Video Dog , the Rocketboom videoblog asks men and women on the street: "Why is President Bush so awesome?" It turns out that even the most loaded question doesn't always get the expected response. (Warning: Adult language.)

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