RudyCare: The Update

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Well, evaluations of Rudy Giuliani's health care "plan" are trickling in, and so far, the response seems underwhelming. You'll recall that the heart of RudyCare is a $15,000 tax deduction -- not exemption -- for families that they can use to buy their own insurance policies. Eventually, the switch from employer-based insurance to individually purchased insurance will lower prices in the private insurance market, allowing the uninsured to then buy in. President Bush has touted a similar scheme.

Ezra Klein writes online for the American Prospect that Giuliani's proposal is less a considered policy than "pretext with which to attack the Democrats." Further, he notes that for a family of four making $40,000 or less, the tax deduction is worth nothing. (Citing the Center for Budget and Policy Priorities, he reports that 55 percent of the uninsured don't earn enough money to have any taxable income.)

If you make $50,000, Giuliani's exclusion will save you $1,220. And if you make $70,000, you'll get a whopping $2,250. And the higher up the income ladder you go, the more our hypothetical family unit will save. Meanwhile, here's the kicker: According to the Kaiser Family Foundation, in 2006, premiums for family coverage amounted to, on average, $11,480.

Slate columnist Daniel Gross takes a different tack. He astutely argues that the Giuliani and Bush plans, "which are championed by many who claim to have a natural sympathy for business, involve an understanding of business customer-supplier relationships that doesn't seem realistic."

Every dollar the insurer pays out is one less it gets to keep for profits. So, insurers have powerful motivations not to pay legitimate claims. But when they're providing insurance to a large group of employees at a corporation or institution, they also have powerful motivations to pay legitimate claims. If employees experience systemic problems with slow reimbursements and claims denied, insurers are likely to hear about it from the HR staff. Make life difficult for an influential employee, and an insurer can jeopardize the whole relationship'¦.[Bush and Giuliani] want to replace a bunch of giant, sophisticated consumers possessing limited bargaining power with a mass of unsophisticated consumers possessing no bargaining power. For some reason, they think you and I can do a better job negotiating with Oxford and Aetna than Wal-Mart and Coca-Cola can.

But of course, we can't. And our insurer's relationship with us is worth far less than its relationship with, say, Microsoft. Should our underwriter decide to wriggle out of a claim, or out of a policy, we have little recourse. "Fights between insurance companies and individuals are never fair," writes Gross. And "Michael Moore can only make so many phone calls."

It's hard to see how the Giuliani/Bush plan will have any real impact on small employers. Even if it somehow became law -- Congress has so far ignored the Bush version -- who would willingly surrender a more generous employer policy to enroll in this? And if your employees are foolish enough to fall for it, you might not want them working for you.