A press release from the National Center for Public Policy Research sees the President’s SOTU health care reform proposals as positive:
“That is the best idea for health insurance since the enactment of health savings accounts,” said NCPPR senior policy analyst David Hogberg. “This really helps level the playing field for the tax treatment of health insurance.”
Presently the tax code favors employees receiving their health insurance through their employer. “That really puts individuals at a disadvantage,” said Hogberg. “This change will help lower the cost for those people who purchase insurance on the individual market.”
The proposal to limit the tax deduction also deserves praise. With the current unlimited tax deduction, employees have more incentive to demand higher cost insurance policies that cover every little health expense. This leads to higher demand for health care, which leads to higher health care costs. That, in turn, boosts costs for health insurance. “The limit on the tax deduction will reduce the incentive to buy expensive, wasteful policies,” said Hogberg. “That will result in lower health insurance costs for everyone.”
There’s no question that government intervention increases the cost of health care, both through direct subsidy and taxation policy, but what really caught my attention were these comments from Congresscritters Charles Rangel (D-NY) and Pete Stark (D-CA):
Rangel: “This is a dangerous policy that ultimately shifts cost and risk from employers to employees and could result in a higher number of uninsured.”
Stark: “Under the guise of tax breaks, the president is pursuing a policy designed to destroy the employer-based health care system through which 160 million people receive coverage.”
The “employer-based health care system” is itself a result of government interference. Because the Feds imposed wage and price controls during WWII, employers competed for employees by offering benefits through loopholes in those controls – paying for employee health care, for example. “Employer-based health care” originated from doubly inept government intervention. Fifty years later, General Motors, and Michigan, are suffering from that government intervention.
So is everyone else. ALL health care costs are higher because the government fiddles with it. Bush proposes to allow health insurance tax deductions for the self-employed and the “progressives” freak. How reactionary.
That Rangel and Stark think employers owe employees health care is unsurprising, that they act as if it appears in the Bill of Rights is populist paternalism, that they have no interest in affordable health care is obvious. They would prefer a government run health care system; and unless employers are kept shackled to the responsibility, and employees to the dependency, true socialist health care is less likely to happen. Employers currently function as proxies.
I recommend reading Arnold Kling’s articles Insulation vs. Insurance, and The President’s Plan at Cato Unbound for further perspective.
Serendipitous Update: 8:12PM
Thanks to Bizzy Blog for this link
America’s biggest motor manufacturers are negotiating a revolutionary plan to rid themselves of tens of billions of dollars of healthcare liabilities by transferring the responsibility to employees’ unions.
General Motors and Ford have opened talks with the United Auto Workers (UAW) union about a scheme that would see the union run a massive fund to pay the healthcare bills for tens of thousands of retired car plant employees. In return for a one-off payment into the new UAW fund, the car makers could, with one bound, be free of liabilities they say are crippling them.
Technically, this would be an employEE sponsored health plan, would it not? Though, if I were a UAW member, I’d much rather run my personal plan myself. Second choice is – leave it with GM until SarBox applies to Unions. Thanks anyway.