It looks like Pres. Bush is going to announce a major new health plan initiative during his State of the Union address, one that actually may make some sense. The pre-views indicate the plan will be individually-focused (not employer-focused), say very little about cost control, underwriting, or health care providers, and concentrate instead on tax policy.
I don’t like to disagree with people whom I highly respect, but I don’t see how Bush’s plan will work (defined as increase coverage and control expenditures).
The plan is based on a tax deduction – everyone gets a flat rate tax deduction of $15,000 for a family/$7500 for an individual. No matter how much you spend. So, if you have insurance, you get to deduct the premiums plus, up to that cap. Nice. But first you have to qualify for insurance, and next you have to be able to afford the premiums. And a lot of folks can’t get coverage due to pre-existing conditions and others don’t make enough money to afford the average family premium of $13,000, deduction or no.
There’s some help here, at least for those who can’t afford premiums. Folks lucky enough to have insurance that costs more than the cap will lose the deduction for the amount over the cap, and this will be used to subsidize insurance for lower-income folks. I don’t know if the “overage” will provide enough tax revenue to fund the poor folks…
Next, as colleague Bob Laszewski points out, the individual health insurance market is a mess.
The hole in the US health care insurance and delivery systems is way bigger than the patch provided by Bush’s plan.
Bush’s plan will not help those with pre-existing conditions, nor does it address medical underwriting or risk selection, nor will it ensure universal coverage.
Joe— there is no ‘quick fix’ to all of the issues you have (and me and many others) with the healthcare system. Certainly, government regulation and new laws are not the solution…
Nearly everyone agrees that tax policy around health insurance is flawed. Individuals are subsidizing employee sponsored plans, and, quite possibly the tax exclusion has had an inflationary effect on rates.
Though the President’s plan is likely DOA, and 7 years too late, in Congress, it is a step in the right direction.
Didn’t Reagan propose something very similar in the 1980s? And it got shot down.
Frankly, while I would love to take a $15,000 deduction for my family, this strikes me as only a half-measure. The goal seems to be to encourage people to buy individual plans. Great idea, but even if the individual market didn’t suck lemons, why not go all the way and take away the deduction from corporations?
Oh, wait a minute. That’s because they finance campaigns.