David Sclar thinks we should eliminate the health insurance deduction and use it to subsidize health care for the poor. Nathan Newman thinks he's a cancer on progressivism.
Ezra Klein. I Report. You decide.
And then I tell you what I think.
If the only options are ditch the deduction and channel the cash towards the bottom income quintiles or retain the system as it is, you gotta go with Sklar. I'm not totally sure how Newman's doing his progressive math, but put it this way: we've got $130 billion being transferred here. It goes somewhere. Would you rather it go mostly to the middle class and the rich? Or mostly to the poor and lower class? I tend to worry first about those with the greatest needs, particularly considering the correlation between poverty and near-poverty living conditions with health problems, so I'll go with the most progressive outcome.
Zoom out a bit, though, and Newman has a point. Democrats shouldn't be too excited about ripping away a subsidy that helps much of the middle class. Gotta be careful about the conversation being had, though. A lot of progressives play a long game here. Kill the deduction and employer-based health care becomes inaffordable for both employers and employees. The current system collapses. What arises to take its place is, most likely, nationalized health care. Long term, that's a gain for all classes.
Problem is, there's a nasty interim period there with a dystopic health system. On one level, this is all mental masturbation, that deduction isn't going anywhere. On the other, there is a serious question here: should Democrats be fighting to strengthen the current health care system because it's better for folks in the short term? Or should they allow it to collapse, hastening the switch to a more equitable, affordable, and sustainable structure? The two are not necessarily mutually exclusive, but they may well be. So while the spectrum of options is larger than Newman and Sklar, there's a basic, legitimate point of contention here. Do you sacrifice long term gain to avoid short term hurt and allow the system to limp along indefinitely? Do you burn the village to save it? Or is there, in fact, a viable middle way?
Update: Just to be clear on this, I'm not talking about what progressives would like to happen. Clearly, we could design a policy with a relatively smooth transition period straight through to government care. The question is more about moments when the two strategies conflict. As a thought experiment, assume ridding the tax code of the deduction really were possible. There's something that most health policy wonks think would go a ways towards rationalizing and reincentivizing the market away from employer based care. Theoretically, that's something we want. But should we take it? Or, pace Newman, do we have to wait for a comprehensive solution that won't pain the middle class, even if it may not come?
