Andy Stern on Health Care

July 24, 2007

Andy Stern on Health Care

A reader points me to this interview with Andy Stern, head of the Service Employees union. He says that employer-provided health insurance is an anachronism. Coming from a union guy, that's refreshing. It would be even more refreshing coming from a private-sector union guy.

What he proposes is single-payer, with everyone having access to the government employee health options. The consumer gets a subsidy and can then choose from a variety of plans.

The thing is, government workers are able to pay for Cadillac plans using pre-tax dollars. That's great for them, especially the ones with high salaries and high marginal tax rates. But it's hard to create an equivalent subsidy for the rest of us.

I'd propose the following modifications to the Stern proposal:

1. No tax break for anyone who buys more than the lowest-cost health insurance.

2. Instead of giving everyone in the country a subsidy, give the full subsidy to poor families and phase the subsidy out as income increases.

The point of (2) is to reduce the amount of money being laundered through the government tax system. Why give someone making $100,000 a year a subsidy only to take it away with higher taxes to pay for the subsidy?

Under (1) and (2), government workers (Stern's union members UPDATE: wrong!!! I was thinking of AFSCME, not Stern's union. sheesh) would be net losers under the plan. They probably would be net losers even under Stern's version, because their taxes would have to go up considerably in order to help pay for other people's subsidies.