President Bush recently proposed eliminating the tax codes bias toward employer-provided health insurance. His plan provides a standard deduction of $15,000 for families who purchase health insurance, $7,500 for individuals. The more you think about it, the more sense it makes. Why shouldn't you get the same tax break your boss gets for purchasing health insurance?
The White House estimates this would result in 3 to 4 million additional insured, and some analysts believe that number is conservative. Around one-third of the 42 million uninsured Americans have family incomes above $50,000. The opportunity to buy a bare-bones policy for as little as $5,000 and deduct $15,000 from taxable income would be very attractive. Low-income families paying 15 percent federal income tax would get a $4,545 subsidy for buying health insurance.
Some worry that Bush's plan would spell the end for employer-provided insurance. What would be so bad about disconnecting health insurance from the job? Workers would simply get more of their compensation in cash rather than benefits. And we could make career decisions without worrying about losing or changing health insurance.
The plans main defect is probably its sponsor. To partisan politicians, it seems unthinkable the president could have a sound idea. For those with a more pragmatic bent, the plan is worth a look.
Tom Patterson is Chairman of the Goldwater Institute and a retired emergency room physician and state legislator. A longer version of this article originally ran in the East Valley Tribune.