A Decent Idea from President Bush on Health Care
Reducing The Tax System's Mis-Incentives
By blackhedd Posted in Breaking News — Comments (91) / Email this page » / Leave a comment »
I'm intrigued by this Bloomberg piece about a proposal that President Bush is expected to make in his SOTU address. The idea is to mitigate one of the most important ways that tax policy distorts the distribution of healthcare coverage.
Update: Additional reporting from CNN. Based on this, it looks like the proposal is to extend the deductibility of insurance purchases to individuals (which is new) but to cap the deductibility for both individuals and employers (the latter is also new). It's not as good as Medisave accounts, but I like it so far. Let's get the details next week. And then let's see how the Democrats react.
The proposal is to modify the deductibility of spending on health-care insurance by employers. Now fully deductible, such expenditures would be capped at a fixed amount under the new plan. Mr. Bush hinted at the proposal in his weekly radio address this morning, but declined to give further details, teasing us to watch the SOTU for more info.
I'm inclined to interpret the remarks as a suggestion that individuals who do not receive employer-provided health insurance will be able to get a tax deduction for buying it themselves.
If it all comes to pass, these proposals will be a start on something we badly need: to unlink health coverage from employment. As things stand now, it's nothing but an artifact of the tax code that makes employer-provided insurance reasonable to buy, and non-employer insurance prohibitively expensive. It's a very encouraging and very hopeful idea.
It would also probably be a big, overnight success in expanding the number of Americans who have basic health coverage, perhaps comparable to the glittering success of welfare reform. And for that reason, it will be a huge blow against the growing perception that only a national, government-sponsored program can solve the healthcare dilemma.
That's why I predict the Democrats will oppose this tooth and nail, with every bit of disinformation at their disposal.