Ron Wyden Likes George W. Bush’s Healthcare Proposal
Senator Ron Wyden (Democrat from Oregon), a Senator with a creative healthcare plan of his own, wants to compromise and combine his proposal with President Bush’s healthcare proposal. Michael Barone of U.S. News and World Report has the details…
Bush’s proposal in a nutshell is to end the preferential tax treatment for employer-provided health insurance….This decision has saddled us with a system in which health insurance has been tied to employment, with many perverse results. Healthcare is perceived as a free good, and consumers have no incentive to take costs into account….For conservatives and libertarians who may be turned off by the “universal coverage” part of the compromise, keep in mind that reasonable universal coverage schemes can be devised, if the goal is truly to provide insurance against major illnesses. It’s attempts by liberals, technocrats, and all-around demagogues to engineer a massive redistribution of wealth through the insurance system that creates problems, like big middle class tax increases that do nothing to improve the quality of care that taxpayers receive.
The biggest beneficiaries of the current system are high earners with employer-provided insurance. The biggest losers in the current system are low earners without employer-provided insurance. Health insurance experts on the left, right, and center have long called for ending the tax code’s preference for employer-provided health insurance. But employers haven’t wanted to lose the deduction, and politicians have flinched at the prospect of taxing voters on something they have been getting tax free. Bush has found a way out, by equalizing the tax treatment of health insurance wherever it comes from….
[Senator Wyden] notes that we don’t have employer-provided auto insurance; we buy that out of after-tax earnings. He argues that people should be able to buy health insurance as members of Congress and federal employees do, from an array of choices offered by private insurers. He’s looking to make something of a political deal [with President Bush]. Republicans would get Bush’s standard deduction and a private insurance market in which consumers would have incentives to hold down costs. In return, Democrats would get universal coverage, with subsidies for low earners to pay for coverage. As John Goodman of the free market National Center for Policy Analysis points out, additional revenues from those with policies worth more than $15,000 could be used to subsidize low earners.
It’s not clear from Barone’s article exactly what universal coverage scheme that Senator Wyden envisions as part of a compromise, but if its based on his original plan, it will lean more towards a mandate that individuals buy some kinds of insurance from the existing system than it will towards a single payer, total government takeover of healthcare.
One other note: John Edwards, who is especially relevant to this debate for reasons I won’t expound upon, has positioned himself as the leading advocate for preserving the employer-based healthcare system.
Details on the Bush plan available here.
Details on the Wyden plan available here.
How would you mix and match?