Why is the Club for Growth Attacking Senator Bennett?

Written by David Frum on Monday August 31, 2009

The Club for Growth has released a new ad attacking Utah Sen. Robert Bennett’s sponsorship of the Healthy Americans Act. But many of the ad's criticisms of the Bennett bill also apply to the Republican alternative to the president’s health plans: the Coburn-Ryan bill. Why then is one bill Republican orthodoxy while the other is beyond the pale?

The Club for Growth has released a new ad attacking Utah Sen. Robert Bennett’s sponsorship of the Healthy Americans Act. View it here.

Among the complaints the club lodges against Bennett’s plan: “job-killing tax increases on employers.” They’re referring of course to the Act’s termination of the present exclusion of health benefits from income tax.

But notice something: These same “job-killing tax increases on employers” are also imposed by the Republican alternative to the president’s health plans, the Coburn-Ryan bill.

The ad warns that Sen. Bennett is offering a plan that “pushes you out of your current plan.” Coburn-Ryan would have exactly the same effect and for the same reason – as the tax exclusion ended, employers would tend to drop health coverage and individuals would shift to buying it for themselves.

Both Coburn-Ryan and the Healthy Americans Act would substitute new tax advantages for the old exclusion: Coburn-Ryan would offer a refundable tax credit of more than $5700, Healthy Americans a tax deduction up to $19,000 plus direct subsidies to families earning up to 400% of the poverty level.

Like Bennett-Wyden, Coburn-Ryan would impose significant new regulations on health insurers, to put an end to some of their most complained-of practices.

So why is one bill Republican orthodoxy while the other is beyond the pale?

Here are three important differences between Coburn-Ryan and Bennett-Wyden.

1) While both plans would overthrow the existing system of health insurance, only Bennett-Wyden takes action to ensure that a new system is ready and waiting to fill the void. Bennett-Wyden would require individuals to buy health insurance, would organize state buying pools to ensure that this insurance is affordable, and would regulate insurance to ensure that coverage is adequate. Coburn-Ryan would trust to the market to provide. That’s normally a good impulse. The trouble is that today’s healthcare market has been so twisted and distorted by state governments that it does not in fact provide – and Coburn-Ryan offers precious few remedies to correct these state-imposed malfunctions.

2) While both plans offer government aid to replace the former tax exemption, Bennett-Wyden’s math adds up and Coburn-Ryan’s does not. A health insurance policy for a typical family costs north of $13,000 and rising. Under Coburn-Ryan, families would pay more in income tax – and recoup not even half the cost of a typical plan. Bennett-Wyden costs more, but that is because it is adequate to the job it sets itself.

3) Bennett-Wyden has won Democratic support and cosponsorship. It could conceivably become law. Coburn-Ryan cannot.

If your priority is to preserve a competitive private-sector health insurance system in the United States, while extending coverage and restraining costs, Bennett-Wyden is thus far literally the only game in town. That does not mean everybody must favor it, or approve all its details. Only that when a group like the Club for Growth dive-bombs Bennett-Wyden, and denounces Sen. Bennett, for helping to draft it, it opens the question: Do you guys have any solutions to offer at all to the practical problems facing Americans?