Ryan health plan raises taxes and protects insurance and drug companies

On May 21, Congressman Paul Ryan released his “Roadmap for America’s Future”, which includes a health insurance reform proposal that is nearly identical to the one proposed by Senator John McCain.

The proposal has been widely praised by Republican commentators and has elevated Ryan's status among the party's elite. Local talk show radio hosts have used the proposal to promote Ryan's long shot vice presidential candidacy.

Ryan's health care proposal is neither new or courageous. If adopted, it would move the country further away from quality, affordable health care for everyone.

It starts by adopting McCain’s proposal to count the value of any employer-provided health insurance as taxable income. The average comprehensive family health insurance policies cost at least $10,000 a year. So families would have to pay taxes on this amount added to their regular wages.

What will they get in return? A tax credit or payment of $5000 for a family so they can buy their own insurance. What a deal! You pay more taxes and get a credit that buys at best half the cost of a good family health insurance policy. This is health care reform?

Ryan adds other measures as well: the virtual elimination of state standards for health insurance policies, promotion of Health Savings Accounts (which means high yearly deductibles with pre-tax income—if you have enough), and totally inadequate access for those with pre-existing conditions to get the health insurance they need in the private “market”.

Remarkably, Ryan has little to say about controlling spiraling health care costs which are at the root of the nation's health care crisis.

Ryan only real proposal aimed at controlling health care inflation is to provide the public with more information about doctor and hospital pricing. Economists call this increased transparency. And who could argue with that?

But this is not a new idea and it won't reduce rising health care costs because it does not address the primary cause-the market dominance of the for profit insurance and pharmaceutical companies and the profit maximizing behavior of non profit health care providers that raise costs and distort resource allocation.

Economist Robert Kuttner who studies the inefficient U.S. health care system has observed:

"The extreme failure of the United States to contain medical costs results primarily from our unique, pervasive commercialization... Profits, billing, marketing, and the gratuitous costs of private bureaucracies siphon off $400 billion to $500 billion of the $2.1 trillion spent, but the more serious and less appreciated syndrome is the set of perverse incentives produced by commercial dominance of the system."

Ryan's proposal leaves this entirely dysfunctional and inefficient structure that is dominated by insurance, pharmaceutical and large oligopolistic health care providers intact.

The Ryan-McCain approach to health care “reform” is topsy-turvy. It does not improve the current unfair, inefficient, and unsustainable health care system. Instead, it proposes to subject even more people to the tyranny and capriciousness of insurance industry dominated health care. It leaves families dependent on the mercy of insurance companies and their insatiable appetite for profit. It presumes that quality of health care will improve, but leaves that to the magical workings of the “market”. It shifts even more costs to health care consumers without a real mechanism for reducing health care costs.

"I suppose this is a good proposal if you want John McCain to choose you as his Vice Presidential running mate,” said David Newby, President of the Wisconsin State AFL-CIO. “But if you want health care reform which guarantees that everyone will have affordable access to the quality health care they need, you’d better look elsewhere. We don’t need Ryan/McCain tinkering with our broken health care system: we need broad reform which guarantees that everyone in America gets the health care they need, regardless of income or health status.”