NCPA - National Center for Policy Analysis


February 12, 2007

The biggest beneficiaries of the current health care system are high earners with employer-provided insurance. The biggest losers 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.  President Bush, in his State of the Union speech, called for a way out, by equalizing the tax treatment of health insurance wherever it comes from, says columnist Michael Barone.

Bush's point was not lost on Oregon's Democratic Sen. Ron Wyden, who over a long congressional career has specialized in assembling bipartisan coalitions for various reforms:

  • He notes government single-payer health insurance -- the goal of some senior liberal Democrats in Congress -- was rejected by voters of his liberal state by a 4-to-1 margin.
  • He notes 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.

Wyden is looking to make a political deal:

  • 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.

Either President Bush's proposal or Sen. Wyden's version would give markets more room. This kind of major reform is a long shot in this Congress, but it does show a way forward, says Barone.

Source:  Michael Barone, "A Fair Health Fix," U.S. News and World Report, February 11, 2007.

For text: 


Browse more articles on Health Issues