Hide and Seek

As we’ve pointed out many times here at IB, one of the major challenges we face in the debate about health care and how we pay for it is defining the problem. That is, so many folks conflate health care with health insurance. As we’ve discussed, they are not the same.

But there’s another problem, wrapped up inside the first one: our present system actually hides the true costs of both health care and health insurance. The former is beginning to be addressed by the transparency movement, but what of the latter? About two thirds of us get our health insurance courtesy of our employers’ plans, and there are tax advantages to this for both the employer and the employee. Those of us who buy insurance in the individual market generally don’t have that kind of tax advantage, nor is it readily available.

One proposed solution to this conundrum is to do away with the employer tax break. I’ve always maintained that it would make more sense to enlarge it, making premiums deductible for folks in who buy their own.

But President Bush has proposed a third way (and you thought that was just a Clinton thing):

Robert Samuelson, writing in Newsweek (on-line edition), points out that “by modifying [the current code] with specific deductions for insurance ($15,000 for families, $7,500 for singles), [Bush’s plan] would force most workers to see the costs.”

Intriguing, yes, but pretty darn clever, as well. Other plans, notably Senator Wyden’s, rely on complex and failure-prone mechanisms like Community Rating. The Governator’s plan would increase the tax load, but not address the underlying cost factors. And the list goes on.

As a bonus, Mr Samuelson snopefies [ed: you just made that up!] a favorite myth about the uninsured: Turns out they “don't really use emergency rooms heavily. A study in the journal Health Affairs finds that their use is similar to that of people with private insurance — and half that of people with Medicaid.”

Who knew?