Sunday, December 16, 2007

Presidential health care, part 2: The strange proposals of Mr. Huckabee

Another installment in Unforeseen Contingencies' review of the health care programs proposed by the current band of presidential hopefuls.

Mike Huckabee is a puzzling figure. A Baptist minister who doesn't believe in biology but admits knowing nothing about the subject, a man who is adamant about the need to accelerate the "war on terror" but has never heard of a national intelligence estimate and has no idea of what one is, a man whose sole qualification for office seems to be that, that, um, unh... he does have a qualification or two, doesn't he?

OK, let's be fair. Ex-governor of Arkansas Mike Huckabee has made some very clear and interesting proposals. He calls for completely abolishing the income tax and replacing it with a national sales tax, the"Fair Tax." I'll not comment on this particular proposal; it is problematic in some ways, but ought not be dismissed out of hand. America's current income tax system is an impossibly complex maze of conflicting rules and laws that literally no one can fully understand. Simply calculating taxes costs literally billions of dollars each year, a senseless waste. Abolishing the current income tax system and replacing it with a simpler system would benefit everyone. (OK, admittedly tax preparers and tax attorneys would suffer in the short run as they'd have to find legitimate work, but in the long run they too would benefit from a stronger economy, as well as from the improved self-esteem that comes from actually being productive.)

This is just background for an analysis of the Huckabee Health plan. I realize that Mike Huckabee doesn't know anything about evolution or intelligence estimates, but after reading his plan, I wonder if he knows anything at all. In paragraph 3 he addresses the issue of improving affordability by proposing (i) increased portability of health insurance from job to job, (ii) expanding health savings accounts, and (iii) "making health insurance tax deductible for individuals and families as it now is for businesses."

Umm... tax deductible? Deductible from what? If the income tax is abolished, none of this makes any sense at all. Historically, the only reason businesses preferred to pay part of salaries with health insurance was that government treated it differently from cash; hence it was tax deductible for businesses, and untaxed salary from the standpoint of employees. If corporate taxes are abolished, as Huckabee proposes, the incentive for businesses to take on this increasingly expensive burden is reduced. Forget porting your insurance from job to job; health insurance wouldn’t be a job "benefit" under the Fair Tax. This isn't necessarily a bad thing in itself, but it does mean that the Huckabee proposal is meaningless.

Or consider the medical savings account (MSA). The attractiveness of the MSA is that it lets the citizen save before tax income to pay for health care. But once all income is untaxed, the MSA is meaningless. Or how about tax deductibility of insurance? Must "we" at UC point out this makes no sense at all?

Two paragraphs down, Huckabee points out that America spends $2 trillion per year on health care, or 17% of GDP. He next compares this to the European average of 10%, and then goes through the meaningless exercise of pointing out that if we reduced spending to 11% of GDP we’d save $700 billion. This calculation is done correctly, and indicates that simple algebra isn't beyond the Huckabee campaign. But in terms of policy it means nothing at all. Huckabee has no proposals that would actually cut spending by an enormous 35%. In fact, the only other actual proposal he has is to promote electronic record keeping in some undefined way. Hillary argues that this panacea might save us $35 billion per year; some estimates go considerably higher, but nothing vaguely like $700 billion.

And more importantly, do we really want to cut health care spending? The Europeans hold down spending by rationing and by being slow to invest in expensive technology. Economist David Cutler of Harvard has carefully analyzed American health care spending, and concluded that we get very substantial net benefits for every dollar we spend on health care. Cutler finds all sorts of problems in the current system, but he shows that the fundamental cause of the enormous increase in health care spending is that we now have technologies that save lives and reduce pain and suffering. Cutler’s conclusion: we should be spending even more! Health care is a great buy.

The Huckabee "plan" is just a lot of senseless verbiage cobbled together to give a pretense of having ideas. There's some praise of the free market, praise of the benefits of preventive medicine, hand-wringing over the burden insurance costs place on business, but the sum of all this is nothing. There’s no thought involved at all, it's just claptrap that doesn’t mean anything. It's the sort thing we'd expect from a fundamentalist minister preaching to his choir: much posturing, no substance. It will play well for people who find Genesis 1 to be the definitive work in astrophysics, geology, and biology, I'm sure.

But let's not be too harsh, for the Huckabee health plan does have one important thing to contribute: it demonstrates the complete hollowness of Mike Huckabee.

17 December followup: I tried posting on a comment on the official Huckabee blog pointing out that I'd reviewed the Huckabee health care plan. Unsurprisingly, the comment was disallowed. But presumably someone from "Team Huckabee" checked to see whether the review was favorable; it will be interesting to see if they change the obvious inconsistencies I point out here.

Of course, that would leave the ones I didn't mention. Perhaps I should offer my services to Team H.? (At my usual consulting fees, of course.)

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