The president's health care proposal deserves one cheer for the following reason: It potentially de-couples health care from employment.
Under his proposal, everyone would be eligible for a tax deduction for health insurance up to $15,000 per family, $7,500 for a single person -- regardless of whether the insurance is provided by the employer or purchased elsewhere. And there would no longer be any advantage to getting it at work because employer-paid premiums would be included in taxable income. Get it? With this plan, you can just about kiss employer-provided health insurance goodbye.
And good riddance. It's the biggest tax break in the whole federal tax system, costing the Treasury some $130 billion a year. But you're not eligible for it when you and your family are most likely to need it -- when you lose your job, for example. And the biggest beneficiaries are upper-income employees. The lower your pay, the less likely you are to get any employer coverage at all. The current employer-based system doesn't cover the self-employed -- the largest and fastest-growing category of worker. And it creates perverse incentives. It encourages employers to seek out young, healthy employees who are unlikely to have health problems; reject older ones; and push married employees onto their spouse's employer's plans.
The president's plan to de-couple health insurance from employment merits only one cheer, though, because it's only the first step. Two cheers for the president or any politician who comes up with a way to get health insurance to lower-income people who can't afford it on their own even with a tax deduction: It's called universal health care. Every advanced nation has it except the United States.
The president punts on universal health care -- putting the responsibility for America's 47 million uninsured on the states. But state government budgets are already sagging under the weight of paying half the costs of Medicaid. The only way lower-income families will get the preventive care they need is through federally-subsidized health insurance. It's a good investment over the long term. Preventive care will lower the nation's overall health care tab because it will mean fewer expensive trips to emergency rooms by people with health crises that could have been caught and averted earlier.
Finally, three cheers for the politician who bypasses America's inefficient private insurance market and establishes a single payer that provides all Americans with health insurance just as good as the health insurance their representatives in Congress receive free of charge. Note I said single payer, not single provider. Americans want to keep their choice of doctor and hospital. But a single payer -- either through Medicare or the federal employee's health insurance program -- would avoid the current insanity by which private insurers spend hundreds of millions of dollars a year advertising and marketing to younger and healthier beneficiaries, and seeking to discourage older and riskier ones or people with pre-existing medical conditions. America now has the only health-insurance system in the world designed to avoid sick people. President Bush isn't running again but the one cheer he deserves marks the start of the 2008 presidential race. Affordable health care will be the biggest domestic issue in the upcoming election.
The candidate who gets three cheers on this will be our next president.
Robert Reich is a Prospect co-founder. This column is adapted from Professor Reich's weekly commentary on American Public Radio's Marketplace. His website can be found here and his blog can be found here.
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