I benefit enormously from the current health insurance system. But I know that it has caused all sorts of massive problems, including contributing to the astronomical cost of health care (when, like those of us fortunate enough to have employer plans, you aren’t intensely aware of the cost of medical care well, you aren’t aware of the costs and don’t make decisions based on the cost – we assume that medicine is an area of our lives that should not be subject to economics).
As much as I love the system in place, something’s got to give. Michael Barone has a good piece explaining the Bush proposals:
“Bush’s proposal in a nutshell is to end the preferential tax treatment for employer-provided health insurance. In 1943, in the midst of World War II, when wage and price controls were in effect, the government decided that employers could deduct the cost of health insurance for their employees and that employees would not be taxed on the value of the policies. This decision has saddled us with a system in which health insurance has been tied to employment, with many perverse results. Healthcare is perceived as a free good, and consumers have no incentive to take costs into account.
“Bush proposes to change this by giving every couple paying taxes a standard $15,000 deduction ($7,500 for individuals) for the cost of health insurance. Those with employer-provided insurance worth more than $15,000 (about 20 percent of the total) would be taxed on the additional amount; this would very likely discourage expensive policies.”
Barone notes that the changes proposed by the president are progressive: “The biggest beneficiaries of the current system are high earners with employer-provided insurance. The biggest losers in the current system are low earners without employer-provided insurance.”
Senator Ron Wyden, Democrat from Oregon, has been impressed with the Bush plan:
“Wyden has been talking with Republican senators, especially fellow members of the Finance Committee, and says he has been getting positive reactions. As for Democrats, those who seek more government provision of healthcare will probably be uninterested. But some may be affected by the apparent success of the Medicare Part D prescription drug benefit. Many Democrats believed that seniors would have a hard time choosing policies from an array of choices and that they would end up being gouged by private insurers. But polls indicate that the vast majority of seniors are pleased with the results, and the cost of premiums-and costs to the government-have come in lower than experts predicted. One of the prime lessons of the last third of the 20th century has been proved once again: Markets work.”
My guess is that Dems won’t go along with anything Bush proposes. If Hillary, whom Dick Morris recently described as a European-style socialist, becomes president, she is most unlikely to embrace this or similar proposals.