Making Sense

The Facts

Medicare proves the success of progressive health care policy. Before Medicare, approximately half of America’s seniors lacked health insurance; today, virtually everyone over age 65 is covered by Medicare. [Kaiser Family Foundation] Because Medicare is a health-care-for-all plan for the elderly, it allows the government to pool risk and lower costs. As a result, Medicare beneficiaries report a high level of satisfaction with the program. [Johns Hopkins Medicine]

Conservatives are wrong about the challenges facing Medicare. Conservatives argue that rising enrollment in Medicare is driving up costs. However, the Congressional Budget Office has reported that “the aging of the population…accounts for only a modest fraction of the growth” in Medicare costs. The main factor is the growth of health care costs—the extent to which the increase in health care costs has exceeded the growth of the economy. [CBO] In fact, health expenditures as a percent of GDP have more than doubled since 1970, growing from 7.0 percent to 14.8 percent in 2002. [CBO] So the solution is not to cut benefits or recipients but to hold down health care costs.

Conservative attempts to privatize Medicare have been disastrous. President Bush’s Medicare prescription drug plan forced seniors to deal with hundreds of private insurers and prohibited the government from negotiating lower drug prices. The plan’s “doughnut hole” saddled 3.4 million Medicare beneficiaries with high drug costs. [Kaiser Family Foundation] Its prohibition on drug-price negotiation costs the government an estimated $90 billion annually. [Center for Economic and Policy Research] In addition, costs in the Bush Administration’s privatized “Medicare Advantage” plans are rising twice as fast as costs in traditional Medicare, according to the Government Accountability Office, the Congressional Budget Office, and the Medicare Payment Advisory Commission. [Congressional Quarterly] Essentially, we are subsidizing insurance companies to help them compete against Medicare. Health care privatization simply doesn’t work.

Conservatives promise more attacks on Medicare. John McCain’s health care plan calls for almost $900 billion is cuts to Medicare over 10 years, an amount that roughly equals the program’s entire budget for nursing home care. [Center for American Progress] McCain’s cuts would require reductions in benefits, an increase in the Medicare eligibility age, or both, and would lead to higher costs for private insurance as well.

The Argument

Conservative health care “solutions” don’t solve anything. The Bush Administration’s efforts to privatize parts of Medicare have made the system sicker. Only progressive reforms will ensure quality, affordable health care for all.

To protect health care coverage for all Americans, we must protect Medicare. Because it accounts for 17 percent of America’s health care expenditures, changes to Medicare have widespread impact. [Congressional Budget Office] It’s time to strengthen the program, not privatize, outsource, or cut it.

To reduce the increase in health care costs, we need basic reform. Cut the money that insurance companies waste on avoiding insuring those who get sick. Focus on strategies that insurance companies ignore, such as preventive care, promoting exercise and healthy eating habits, and computerized records. Building a healthier America will reduce expenditures on treating illness.

Progressive Solutions

Guarantee quality affordable health care for all. Health coverage must be affordable, with premiums and out-of-pocket costs based on a family’s ability to pay. Progressive health care emphasizes consumer choice, affordability, and quality. Individuals could keep the coverage they have now, or could choose a public plan, or one of an array of private plans. Employers would be expected to cover their employees or pay into a fund for the public plan.

Join the fight. The Institute for America’s Future is a member of Health Care for America Now, the nationwide campaign for health care for all. IAF’s “op-ad” invites everyone to join the campaign. Help challenge the misguided power of the insurance and pharmaceutical industries. Help build a people’s movement to shape a health care system that works for all of us.

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How to Talk About the Issue

Americans accept the need for taxation, but they don’t like taxes. And they never have—remember the Boston Tea Party? That’s why Americans are susceptible to conservative assaults on the federal estate tax. Progressives need to understand the public mood and change the conversation. Supporting a continuation of the 90-year-old federal estate tax does not mean we favor higher taxes, it means we support tax fairness.

The Facts

Conservatives enacted a warped estate tax law in 2001. The federal estate tax—which has been in effect since 1916—applies only to the estates of extremely wealthy people. In 2001, the Bush Administration and some of the richest families in America pushed to enact a law that has lowered the tax and will eliminate it entirely in 2010. However, to get around Senate rules, the entire law sunsets in 2011 when the tax will theoretically return to 2001 levels. [Public Citizen] As a result, Congress will have to pass a new estate tax law, most likely next year.

The federal estate tax doesn’t affect the middle class—it applies only to the very wealthiest taxpayers. In 2009, any estate worth less than $3.5 million ($7 million per couple) will be passed on to heirs and heiresses estate-tax free. [Center on Budget and Policy Priorities] In fact, only one of every 300 estates is subject to the tax. [Center for Economic and Policy Research]

The idea that the estate tax hurts farmers and small businesses is a myth. The Congressional Budget Office found that the estate tax threatens almost no farmers or small businesspeople. [CBO] In fact, the American Farm Bureau Federation has never cited a single example of a farm having to be sold to pay estate taxes. [New York Times]

We can’t afford this enormous tax break for the rich. The total cost of permanently repealing the estate tax would average about $110 billion per year (including increased interest payments on the national debt). [Center on Budget and Policy Priorities] That’s more than twice as much as we pay for everyone’s Social Security benefits. [Social Security Administration]

America’s wealthiest families lobbied hard to abolish the estate tax. The campaign to repeal the federal estate tax was financed by 18 of the richest families in America—including 23 billionaires—who spent nearly $500 million to enact this special interest legislation. That’s because these families, which include the heirs of fortunes from Wal-Mart, Campbell’s soup, and Mars candy, stand to reap over $70 billion from the estate tax’s repeal. [Public Citizen]

The Argument

Repealing the estate tax is unfair to middle-income taxpayers. Eliminating the estate tax gives a tremendous tax break to the heirs of the very wealthiest Americans. None of us should be naïve enough to think that another tax won’t be passed to replace the missing revenue. Nor should we doubt that the weight of that new tax will fall, as usual, on the middle class.

Progressive Solutions

A new estate tax law will have to be passed in 2009. It should be written to ensure tax fairness—not to extend unfair tax cuts for the rich. Barack Obama proposes freezing the estate tax at 2009 levels: a 45 percent tax rate on estates valued at more than $3.5 million.

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