×
I've gotten a lot of e-mails on Ruth Marcus's column today, so let's spend some time on it. Here's Marcus:
Overall, Barack Obama's health-care plan is preferable to John McCain's...But McCain's plan is not the ill-intentioned monstrosity of Obama's ominous portrayal. In important ways, it would be an improvement over current law, making a health insurance system that is now tilted in favor of the rich significantly more progressive.The central aspect of McCain's approach is to eliminate the existing tax preference for employer-sponsored health care...The existing arrangement is an irrational artifact of World War II wage controls, when companies competing for scarce workers dangled health insurance to lure them. The result is a tax subsidy that has ballooned to $200 billion a year. No one designing a health-care system from scratch would set things up this way. Tying insurance to employment makes little sense in a world where workers hop from job to job. Excluding the value of insurance from taxable income leads to overconsumption of health care, driving up costs. It favors better-off employees who, because they pay higher marginal rates, derive a greater benefit from not being taxed on their health insurance.This is, in a sense, true. The employer-based system is a historical quirk. It has become an ongoing burden. It should be reformed. But Marcus does something very weird in her column: She elides the question of "how."An analogy: Imagine that the US government built a lot of affordable housing. A lot of people relied on this housing stock. But, at the same time, it had a lot of problems. The infrastructure was dilapidated, repairs were long behind schedule, costs had ballooned, and surrounding housing markets were seeing their values pushed down. Housing advocates on both sides of the divide were clamoring for some alternative arrangement. And so the government came up with one: They would demolish this housing stock, give the current residents a small tax credit, and send them into the subprime loan market.Would this be a good solution? Maybe in part. Everyone agrees you need to get rid of the bad housing stock. But the point is to build something better in its place. Not replace it with something worse. Which is, basically, what McCain is doing here. There are three health care markets in this country. There's the government market, which exhibits the lowest cost growth and highest satisfaction. There's the employer market, which experiences higher cost growth and moderate satisfaction. And then there's the individual market, which most agree is an unregulated, cruel, inefficient, dystopic affair. John McCain is blowing up the employer market and moving people to the individual market. And in case you think the subprime analogy unfair, it's not really my analogy. It's John McCain's analogy. McCain wrote earlier this year that "Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation."
