NCPA - National Center for Policy Analysis


August 17, 2007

While Rudy Giuliani's health care plan goes in the right direction for consumer's choice, he could have taken it a step further, says the Wall Street Journal.

As mentioned in an earlier Wall Street Journal editorial, the Republican Presidential candidate got right at the crux of the issue: the tax code.

  • The health care market is distorted because companies can deduct the costs of insurance but individuals cannot, creating "third party" payer problems for the insured and pricing out everyone else.
  • Giuliani suggests a tax deduction of $15,000 for families that buy their own insurance, and half that for individuals, thus restoring tax parity for health dollars.
  • Giuliani's plan would also involve health savings accounts, medical malpractice reform and nationalizing the insurance market.

Giuliani's plan is sound, but could be enhanced, says the Journal:

  • Each family or individual should be given a health care deduction based on their tax return information.
  • In other words, the government should calculate an out-of-pocket amount per individual or family based on certain rules and formulas.
  • This amount, which is tax deductible, could be programmed on an annually renewed medical card that is swiped like a credit card for every health care purchase.
  • Once you have paid this amount and still need more medical care, the rest is paid by a government supplemental health care program similar to Medicaid.

Such a plan would address two main concerns of any universal health coverage:

  • It provides coverage for those who can't afford it, while asking for at least some contribution from the working poor.
  • And it minimizes potential for system abuse from both the patients and health-care providers, since market relationships are activated.

Source: Lev Sadovnik, "How to Improve Health Care: A Pitch for 'RudyCare' 2.0," Wall Street Journal, August 17, 2007; and Editorial, "RudyCare," Wall Street Journal, August 4, 2007.

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