Healthcare Pain Won't Be The Same

 

Thursday, Jul 09,2009, 10:44:05 AM   Click:

When the Congress decides how to pay for the signature of President Obama initiative of health care, some of his strongest political strongholds of May up a heavy bill.

And in a political irony that Obama's Republican rival, Senator from Arizona John McCain in 2008, are among those likely to benefit most from the health care policies democratic.

Some of the "blue" that propelled Obama to the White House are among the most likely to pay more taxes to fund expanded health insurance and make other changes to the system, analysts say. People in places like Illinois, New Hampshire, Massachusetts, Connecticut and New York have a greater share of the richest taxpayers and residents who receive generous health care plans work - and both sets of People May be used to raise funds for health care overhaul.

Moreover, those states have less to gain from a national effort to expand health insurance coverage because their residents already are more likely to have insurance than are Americans as a whole.


Those conclusions by a range of policy analysts may point to future tension in the healthcare debate: Though battle lines so far have been drawn largely in partisan terms, lurking regional divisions could fracture Congress even further.

"New York is going to be asked to pay a lot more taxes, and people in Iowa and Montana will not," said Robert Blendon, a professor of health policy at the Harvard School of Public Health.

Obama has proposed raising money for a healthcare overhaul by reducing the tax breaks available to high-wage earners, such as those for charitable giving and home mortgage interest. Another idea backed by some Democrats would tax the most generous health insurance policies provided by employers, which some have called Cadillac healthcare plans.

Regional differences may help explain why Senate leaders such as Max Baucus (D-Mont.) and Charles E. Grassley (R-Iowa), who are, respectively, the chairman and ranking minority member of the Finance Committee, are more enthusiastic about taxing employer-provided benefits, while House Ways and Means Chairman Charles B. Rangel (D-N.Y.) is cooler to the idea.

California ranks among the states whose residents would be most likely to pay higher taxes if Obama successfully limited tax breaks for high-wage earners. About 1.4% of taxpayers would face potential increases, according to a study cited by the group Citizens for Tax Justice. That places California among the top 15 most vulnerable states.

But employers in California as a whole do not offer particularly generous healthcare plans, according to data compiled by the Economic Policy Institute, so the state would not be among the hardest-hit if employer health plans were taxed.

When the policy institute assessed one proposal for taxing the most expensive health plans, which had been developed by a tax reform panel under President George W. Bush, it found that 36% of people with family plans in California would be taxed, compared with 41% for the nation overall.

In addition, California has a higher than average share of residents lacking health insurance, and so it might be among those to gain the most by expanding access to insurance. About 18.5% of state residents lack insurance, compared with 15.3% nationally, according to 2006 and 2007 data compiled by the Henry J. Kaiser Family Foundation, which studies health insurance trends.

To be sure, the precise effect of any healthcare bill is hard to assess before the details are known. And all states could benefit if the legislation succeeds in its goal of driving down healthcare costs.

Moreover, many people see improving access to health insurance as a broad national goal. "Everybody will benefit from universal coverage -- in red states and blue states," said Judith Feder, a professor of public policy at Georgetown University and senior fellow at the liberal Center for American Progress.

Still, the basic concepts Congress is considering could affect some regions more than others. So far, regional fault lines in Congress have been more pronounced in the debate over other issues, such as Obama's efforts to crack down on greenhouse gas emissions to slow climate change. But that may soon change as the debate gets more specific.


"Now the debate is mostly in the abstract," Blendon said. "But people soon will start saying: 'What will this mean for New York, L.A. and Philadelphia?' "

Critics of taxing higher-cost employer health plans say that it would hit many people who happen to live where costs are higher than average, not necessarily those whose packages are overly generous.