Will Health Care Defeat Republicans in 1996?
The defeat of Clinton’s Health Care bill last year was a big victory for Republicans and played a major role in-the election of a Republican Majority in Congress. Unfortunately, some Republicans seem to think that this disposed of the problem. They are wrong. Health care is a front-burner issue and, if the Republicans don’t deal with it soon, it will become Clinton’s issue to use against them in the 1996 elections. Republicans also need to realize that big business is still their enemy on health care reform. In 1993 and ’94, big business supported Clinton’s big government takeover of the health care industry. Fortunately, Republicans disassociated themselves from the U.S. Chamber of Commerce and went all- out to defeat Clinton’s bill.
Now, big business wants Congress to do nothing at all about health care reform. This policy is just as bad for Americans and for Republicans as last year’s pro-Clinton strategy. Most big companies are herding their employees into low-cost managed-care groups such as HMOs, but some are keeping high-cost fee-for-service health care for top executives. As Sean Sullivan, president of the National Business Coalition on Health says, “We don’t want public policy to impede what we are doing.” Other business lobbyists have been even blunter in saying they don’t want Congress to allow Medical Savings Accounts (MSAs) because this would “set individuals loose” and “segment the market.” Freedom for the individual worker to control his own health care and spend his own money is not a priority with business lobbyists! Group purchasing of health insurance is fine, but it’s wrong that only employers are allowed to do this in a tax-advantaged way. Why not buy your health insurance from your college alumni association or your church?
With layoffs now all too common (even in corporations that are making record profits), wouldn’t it make a lot more sense to buy your health insurance through a group that is not likely to kick you out? If you could choose your own group, you wouldn’t have to scramble for new health insurance every few years, trying to cover the various medical conditions that most of us acquire during the course of our lifetime. Business managers may do a decent job of purchasing health insurance for their employees, but the problem is that the employer can toss the employee overboard anytime it wishes — for example, when it wants to move a factory to Mexico to take advantage of NAFTA/GATT. Once the employee is gone, the employer is not the least bit interested in helping him find and keep health insurance.
At the same time that business executives are wining and dining Republicans and telling them how wonderful HMOs are for their employees, these same business executives are secretly treating themselves to special tax-deductible health insurance that allows them to go to the front of the line for health care treatment. A recent article in Nation’s Business, the publication of the U.S. Chamber of Commerce, touts the latest tax-free benefit for executives: “executive health insurance.” It covers pre-existing conditions and allows the executives to see any doctor they want. Of course, this perk is limited to the president and vice presidents. Ordinary employees get the standard HMO plan, where gatekeepers limit your choice of doctor; but executives get to see any doctor they want, and it’s all tax-free because employer-paid health insurance is tax-deductible.
Times have changed, and the old implied contract between the big companies and their workers is dead. In 1994, corporate profits rose 11 percent, while at the same time corporations eliminated a half million jobs. The layoffs in profitable years are even greater than in previous recession years. Xerox Corp. posted net income last year of $794 million while eliminating 9,500 jobs. Mobil reported a profit of $636 million and the next week announced cuts of 9.3 percent of its work force. Other profitable companies now in the midst of layoffs include Procter & Gamble Co., American Home Products Corp., Sara Lee Corp., and Banc One Corp. “We must slim down to stay competitive,” they say. To the typical laid-off American worker (and to the workers who are worried about being the next victims of their company’s “restructuring”), guaranteed universal health insurance of the type proposed by Clinton looks awfully good on paper. Republicans are kidding themselves if they think President Clinton won’t use the health care issue against them in 1996.
The Republican Congress should seize the initiative by enacting two reforms: (a) allow everyone (not just employers) the opportunity to purchase health insurance with pre-tax dollars, and (b) authorize all Americans to establish tax-protected Medical Savings Accounts. With these two simple changes in federal tax law, employees would own their own health insurance plus MSAs, which cannot be taken away if they are laid off, change jobs, or leave the labor force.
Medicare Is the Cutting-Edge Issue
The Republicans are missing the boat on Medicare. They have retreated to the typical “moderate” Republican posture of endorsing an expensive liberal social program while asserting that they just don’t want to spend quite as much on it as the more “compassionate” Democrats. This is the same defensive strategy that kept Republicans the minority party from Herbert Hoover until the elections of 1994. If both sides accept the same premises, the more consistent side wins any debate. If both Republicans and Democrats accept the proposition that Medicare should exist as an entitlement to health care for the elderly, regardless of wealth and income, then the Democrats will win the political debate because they favor a bigger, more expensive program than the Republicans.
After some early noises from Speaker Newt Gingrich about taking a fresh look at the entire Medicare program, Republicans are now presenting more of the same, with just smaller rates of increase in Medicare spending. The wolves have been waiting to pounce, and there will be plenty of pouncing by the Democrats, AARP, and hospital lobbyists. What a missed opportunity for bold proposals on health care, and on the chance to educate the public about the root causes of the problem! Republican timidity on health care in 1995 will squander their tremendous 1994 election victory and lead to defeat in 1996. Republicans should face the Medicare battle head on and ally themselves with working Americans who properly resent paying payroll taxes to support Medicare Part A. Republicans should say: Americans, we got stuck with the Medicare program because of our lousy system of employer-based health insurance. Your employer owns your health insurance, but there’s no more reason for this than for your boss to own your auto or homeowner’s insurance. At the end of World War II, Congress failed to repeal wage and price controls promptly, and employers began to attract workers by offering employer-paid health insurance as a tax-free benefit. Because income and payroll taxes increased so much over the years, most Americans are now able to obtain private health insurance only as a benefit of employment. When workers retired, some had a retirement health plan from their employer, but many workers discovered that quitting their job meant quitting their health insurance. By the 1960s, the liberals convinced Congress to solve the problem with national health insurance for the elderly, that is, Medicare.
It’s time for Republicans to talk straight American and say that our employer-based system of health insurance is fundamentally flawed and has got to go. It’s propped up by the unjust provisions of the tax code which permit health insurance to be bought with pre-tax dollars only by employers, and which allow this tax- free benefit to be enjoyed only by employees of companies that have a health plan. The Medicare crisis can be solved only by privatizing retirement health insurance for the middle and upper classes, and leaving the taxpayers as the insurer of last resort for the poor. In order to privatize retirement health insurance, we must sever the link between employment and health insurance so employees can keep their health insurance regardless of which, if any, employer they work for, or even if they quit working, are laid off, or retire.
This means we must have tax fairness in the purchase of health insurance, allowing individuals or any group of persons to buy health insurance with pre-tax dollars, and also allowing us to save for the health expenses of retirement in tax-sheltered Medical Savings Accounts (MSAs). Apparently, the Republican leadership has fallen for the notion that Medicare can be fixed by raising deductibles and herding the elderly into cheaper HMOs. Their chief adviser on Medicare is HMO proponent Gail Wilensky, Ph.D., who ran Medicare during the Bush Administration and was Bush’s top adviser on health care during his campaign against Clinton. We all know what happened to George Bush. We hope that General Gingrich and Field Commander Kasich won’t be like those Roman generals who fought Hannibal and, although holding superior manpower, were defeated in battle because they fought on terrain chosen by Hannibal. The troops wiped out this time will be the freshman Republican Congressmen who follow the party line that the solution to Medicare is managed care and a public relations campaign.
Unfortunately, according to the Washington Times of May 30, the Gingrich strategy is to order the 231 House Republicans to use a pre-packaged 39-page media kit to sell the public on a Medicare austerity program of higher payments and lower benefits concealed under such soothing words as “protect,” “preserve,” and “improve,” which were gleaned from focus-group research. According to the Times, Democrats are eager to confront Republicans on this battleground; they know it’s a political game they can win. With middle-class workers losing their health insurance every time they are laid off, and with many workers resentful about employers forcing them into HMOs, Republicans have a short window of opportunity to slay the dragon of employer-based health insurance and set the wheels in motion to privatize Medicare. W ill Republicans use it?
Is Your Pension Just a Clinton Piggy-Bank?
The Clinton Administration thinks it has found a new source of revenue for its social spending — your pension fund. The Clinton Administration liberals are licking their chops at the thought of getting their mitts on some of the $4.7 trillion that is now sitting in private pension funds. The plan to raid private pension funds was first floated in 1993 as an invitation to private pension funds to “invest” their funds in politically chosen “infrastructure bonds” (i.e., for pet Democratic social projects), which would be backed by the Federal Government through bond issuance and loan guarantees. The plan didn’t get off the ground then, so now the Clinton Administration is using revised terminology. It is inviting pension managers to invest in Economically Targeted Investments (ETIs), a list of “socially important” projects that typically have a high rate of failure, including public housing, urban lending institutions, “job creation” schemes, “community development” projects, and minority-owned and politically favored businesses.
The pensions of 36 million Americans are directly at risk in this Clinton plan. Pension fund managers are supposed to conduct themselves like trustees, with a fiduciary responsibility to handle those large amounts of money prudently. The 1975 Employee Retirement Income Security Act (ERISA) is supposed to assure the safety of pension funds. It mandates that the investment of private pension funds be managed “solely” for the “exclusive” purpose of providing benefits to the beneficiaries. But Labor Secretary Robert Reich doesn’t think that “solely” and “exclusive” mean solely or exclusive. He has now “reinterpreted” ERISA to permit pension trustees to consider “secondary benefits” such as the alleged societal benefits generated by ETIs. Reich is encouraging this diversion of pension assets by setting up a million-dollar “ETI Clearinghouse” in the Labor Department in order to “help” pension managers select politically favored social spending projects. In the new Clinton Doublespeak, this is called “social investing.”
Make no mistake about what the Clinton Administration is prodding pension managers to do. They are being urged to transfer some of their assets from safe investments into projects and activities that a prudent trustee would not otherwise select because of the financial risk. Now here comes the part that makes this Clinton plan a threat to all Americans, not only the ones who have pensions. The pension managers will be told not to worry about the risk of “social investments” because they will be guaranteed by the taxpayers. As Yogi Berra would have said, that’s deja vu all over again! The savings and loan debacle resulted exactly from the taxpayer guarantees of risky loans that the S&Ls would not have made in the absence of those guarantees. There is even more to this story. The greedy-for-more-money liberals are not about to let their raid on pension funds be foiled by the reluctance of pension managers to make risky investments. Assistant Treasury Secretary Alicia Munnell (whom Clinton is trying to appoint to the Federal Reserve Board) is urging that pension funds be required to invest 15 percent of their portfolios in ETIs.
The sheer size of this pension raid is mind-boggling. A mere 15 percent requirement would divert $600 billion of pension assets into the pet liberal spending projects wanted by the Clinton Administration liberals to curry favor with their constituencies. Congressman James Saxton (R-NJ), who has introduced a bill to prevent this rip-off from happening, has a long list of horror stories of how state pension funds have lost millions of dollars in exactly this type of politically motivated investment. This raid on your pension piggy bank meshes perfectly with Clinton’s class warfare economics. After all, “the rich” (anybody with a pension) should be forced to make government-required “contributions” to “the poor” (voters Clinton is trying to woo). It’s a plan to steal our retirement savings in order to advance the cause of socialism in America.
Where do such arrogant ideas come from? The liberal elites really believe they have a divine mission to redistribute wealth according to their egalitarian social views, and they start from the premise that they know better how to spend our money than ordinary Americans. The American voters have become highly resistant to tax increases, and the 1994 election proved that they are disillusioned with the whole idea that government can solve our problems. So, the tax-and-spend liberals are forced to turn to new sources of revenue in order to pursue their goal of controlling more and more of the American Gross Domestic Product. The liberals have already reached the ceiling of what the American people will stand for in terms of regulations imposed on business. It is now estimated that these regulations impose costs on the average household that effectively double the average amount paid in taxes. But still the liberals yearn for more money that they can spend for purposes of their choosing rather than for purposes chosen by the workers who earn the money. That’s why they want to turn pension funds into a piggy- bank for social spending. We shouldn’t let them do it.