Good Thursday morning Fellow Seekers of Wisdom and Truth,
(This is the fifth and, for the moment final, installment of a D.J. Tice/Eric Black discussion of health care policy. If you’re joining us late and have the time and inclination, here are parts one, two, three and four. The next voice you hear will be that of Doug Tice:
Out with the Bush Plan, in with the Black Plan
It seems weÃ¢â‚¬â„¢re getting somewhere in our exchange that began with Pres. BushÃ¢â‚¬â„¢s State of the Union health care proposal.
LetÃ¢â‚¬â„¢s set aside the Bush Plan and commence negotiations immediately on the Black Plan.
Your idea — to replace todayÃ¢â‚¬â„¢s tax exclusion on employer provided health insurance premiums with tax credits, rather than BushÃ¢â‚¬â„¢s tax deductions — has real promise. And, as weÃ¢â‚¬â„¢ve discussed, it appears to have considerable conservative support from the likes of Stuart Butler at Heritage.
This approach (under which all taxpayers with health insurance would get the same subsidy) would do strongly what BushÃ¢â‚¬â„¢s plan would do mildly. It would help level the playing field compared with todayÃ¢â‚¬â„¢s subsidies, which are available only to those who get premiums paid by their employers and which are worth less to those with lower incomes and tax rates and less generous employer plans.
And a tax credit system would still, like BushÃ¢â‚¬â„¢s idea, have the power to make health care costs more visible and tangible to consumers, inspiring more price competition and more prudent use of health care.
You emphasize that the tax credits should be refundable – meaning that they would become a reverse income tax for those whose tax liability is less than the credit. That could be costly — but it is worthy of discussion and it would be useful to see some numbers on it.
The basic point is that, as you note, we have a very large health insurance subsidy system today whose design is the result of wartime conditions that have long since passed. It seems only sensible to think about whether that system still serves the nationÃ¢â‚¬â„¢s needs, or whether a redesign might better respond to todayÃ¢â‚¬â„¢s circumstances.
I canÃ¢â‚¬â„¢t help finding it a little ironic that liberals, in this context, are worried about changing a traditional economic and social arrangement for fear that, in some way they canÃ¢â‚¬â„¢t quite define, doing so might undermine an important social structure we donÃ¢â‚¬â„¢t know how to replace — in this case work-based health insurance.
This is a commendably conservative sentiment. I respect it and am instinctively drawn to it. But another irony is that, in this context, IÃ¢â‚¬â„¢m conscious of how such resistance to change can be an impediment to progress.
The inadequacies of the current individual insurance market (i.e., how do the sick get insured?) will certainly have to be dealt with, whatever happens down the road to the employment-based system.
But I donÃ¢â‚¬â„¢t see the reason to suppose that employers will suddenly stop offering group health plans. The ability to pool risk in a way attractive to insurers is a thing of value that employers, especially large employers, possess, and can use to compensate employees, who pay lower premiums as part of a group. Competitive forces seem likely to continue to inspire employers to offer that form of compensation.
All this said, I also endorse your identification of a basic difference between us, and maybe between conservatives and liberals generally, that this discussion has clarified.
Conservatives tend to think America has too much health insurance, while liberals think it has too little. That oversimplifies both positions, I know, but thereÃ¢â‚¬â„¢s truth in it.
Liberals want more insurance mainly in the sense that they want to see the uninsured covered. I propose to leave the Bush plan as such behind for now and return to the health care issue soon with some facts and thoughts on the problem of the uninsured.