Stealth Conservatism Update

STEALTH CONSERVATISM UPDATE….One of the favorite tricks of the Bush administration is to enact policies that have moderate effects today but substantial effects in the future. These future effects develop at a barely noticable pace, but the long-term goal is to set the stage for the eventual emergence of movement conservative “solutions” like school vouchers, Social Security privatization, and “consumer directed” healthcare. Some examples are here.

In the New York Times’ account of President Bush’s new healthcare proposal this weekend, I noticed this sentence:

The cap would rise with some measure of overall inflation, but would not necessarily keep pace with the costs of medical care and health insurance.

The “cap” (actually a tax deduction) is $15,000 per family. Above that level, employees would have to declare the value of the insurance they receive from their employer as income and pay taxes on it. Today this has only a small effect since very few health plans are worth more than $15,000 per family. But medical costs are growing faster than overall costs, so eventually this will have a big impact. Brad DeLong explains:

The deduction would indeed worsen the finances of only 20% of those with employer-sponsored coverage in 2009. But it would worsen the finances of about 50% of those with employer-sponsored coverage in 2019. And 90% of those with employer-sponsored coverage by 2030.

In a sense, this doesn’t matter because congressional Democrats are unlikely to spend much time on Bush’s plan. It’s DOA. But it does give you some insight into what Bush is really after. If his goals were what he says they are, he’d propose indexing the cap to the rise in medical costs. It’s a healthcare plan, after all, and there’s no reason to index a healthcare plan to the overall CPI. The fact that he didn’t demonstrates that what he really wants to do is make it less and less attractive over time for employers to offer decent healthcare plans to their employees. It slowly but surely reinforces the already growing trend for employers to cut back or eliminate their healthcare plans and replace them with cheaper conservative nostrums like HSAs and high-deductability policies.

And you’ll hardly even notice it’s happening. Which is, of course, the whole idea.

UPDATE: Changes made to the fourth paragraph to (hopefully) make things clearer.