I know this topic is not as exciting as what is going on the Democratic side, but what do you think?


http://www.nytimes.com/2008/05/01/us...tml?ref=health

I find it amazing that the NYT would have the misleading "higher tax" in their headline, when the article actually explains the tax benefits ot the consumer who does not get the current financial benefit of employer covered health insurance. These consumers are the folks that make up the majority of the currently uninsured.

"Mr. McCain proposes to eliminate the exclusion of health benefits from taxable income. In exchange, he would provide refundable tax credits of $2,500 to single people and of $5,000 to families, with the goal of stoking competition in the individual insurance market. The elimination of the exclusion would generate $3.6 trillion over 10 years, according to the McCain campaign, and that money would pay for the tax credits."


Who would not rather have a tax CREDIT versus a deduction?


McCain's Progress - WSJ.com

A less biased evaluation than the NYT

"To review: Today's tax code permits businesses to deduct the cost of providing insurance to their employees, but it doesn't do the same for individuals. This creates third-party payment problems; workers aren't aware of the full, true costs of many treatment decisions, part of the reason the U.S. has double-digit health-care inflation. And it makes insurance less affordable for everyone outside the employer-based system, who must pay with after-tax dollars besides. Mr. McCain would correct this imbalance with a refundable tax credit, restoring the parity of health dollars."

The devil is in the details . I am always in favor of moving toward market solutions and I agree that competition would probably bring down costs
. My concern is that without the tax deduction ,employers would be less willing to contribute to the employees plan. There is no guarantee that the insurance rates will drop under his plan and the employers who do pay into the employees plan usually pays the majority of the premium. Also since he would now add Federal money for those currently without an insurance plan that means that more Federal money would be going into an individuals health insurance . Some could argue that is just some more creeping socialism. If you believe as he says he does that part of the increase in health care costs is government subsidies distorting the price then why would you propose more ?

Indeed this is very complex and there are always unintended consequences.

That being said,
I believe McCain is putting more of the healthcare financial decision on the consumer, not a third party, whether that be private insurance or the government.

When the consumer knows that the money being spent is coming directly from their pocket, on a wide scale, this will help restrain or drive down costs.

For example if the copay for going to the ER is $10 for someone on medicaid, they might not hesitate to go to the ER the moment their nose starts running. If on the otherhand, the co-pay for goping to the ER is $100, they may wait a day or 2 or try some over the counter remedy. This reduces unnecessary ER visits and costs - a form of self triage.

Consumers do this with every purchase - generic medicine or brand name, gas costs more, drive less etc...

I believe the distortion is the third party paying.

Thanks for yourreply Tom