Fixing Health Care

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I thought more about health care reform after the debate last night.  It is troubling to see Obama so against meaningful change when it comes to health care.  We’ve already have big government health care programs and they are no more efficient than the rest of the system.  You can deliver health care that way and make it work if you’re willing to ration care, which is what happens in the UK, Canada and the rest.

Our current health care system is so regressive.  Why don’t they see it.  The only people who get health care tax free are people who work for an employer that provides health care coverage, with the exception of the self employed or very small business who don’t get the deduction.  So who pays taxes on health care insurance(if they can get it or afford the bloat the state mandates require),  the unemployed, the self employed and anyone who works for a company that doesn’t provide health care.

The other big problem is the impact on US corporate competitiveness.

In countries with state provided care, the cost of care is spread across everyone.  In the US, it is borne by the company.  It’s a major reason GM and Ford are dying.  They can’t afford keep paying for the cost of health care for former employees.

Something has to change.  Moving to a system where everybody was eligible for a fair level of tax relief and the ability to buy policies they want,  not those mandated by the state is a much better way to move forward than more big government health care IMO.

Democrats should be pushing for something more progressive that enables everyone choice and a level/fair approach to taxation on health care costs.  I don’t understand why Obama doesn’t stand for change in health care.  It’s change we desperately need.

He just needs to talk to his own senior economic policy advisor Jason Furman.  Who says:

…Replacing the current tax preference for insurance with an income-related, refundable tax credit has the potential to expand coverage and reduce inefficient spending at no net federal cost.  But such an approach by itself would entail substantial risks, so complementary reforms to the insurance market are essential to ensure success

…The fourth category of health tax reform is proposals to reform, replace, or even repeal the existing tax benefits for health insurance. These proposals range from making employer contributions to health insurance taxable above some cap (and potentially using the savings to finance other health reforms) to making employer contributions entirely taxable and giving a separate tax benefit to encourage people to purchase insurance through either the individual market or their employers.This approach has the potential to remedy many of the downsides of the other three types of tax reforms. Unlike all three categories of reform described above,reforming or replacing the existing employer exclusion need not cost any additional money and could even be designed to save money. As a result, proposals along these lines have the potential to have effectively infinite bang for the buck by reducing the number of uninsured people at no budgetary cost. Another upside is that this approach is likely to reduce health spending and thus premiums for those who already have insurance, although a well-designed policy would have the deliberate effect of raising health spending by the newly insured…

…A more radical approach would be to make existing contributions to employer coverage entirely taxable and instead give everyone who purchased insurance either a standard deduction (as proposed by President George W. Bush in his FY 2008 budget), a uniform refundable tax credit (as proposed by Sen. John McCain [R-AZ] in his 2008 presidential campaign), or a sliding-scale credit that falls as income rises (the de facto approach of theWyden-Bennett bill).29 There are several advantages to all of these approaches over capping the deductability of health insurance premiums. First, they target assistance at those who probably need it most and thus would have a larger effect on coverage for any given amount of funds available for subsidies. Second, such proposals use all of those dollars to subsidize people going from no insurance to minimally acceptable insurance and none of those dollars to subsidize people going from minimally acceptable insurance to anything more. As a result, it provides more incentive to purchase insurance than the current system or even a capped exclusion and less incentive to purchase more generous, expensive insurance.

Source: Health Reform Through Tax Reform: A Primer by Jason Furman  (highlights are mine)