THE GOP'S PRESCRIPTION FOR HEALTH CARE
January 29, 2008
The leading Republican candidates all have announced plans that would give more power and control to individuals over their health care and health insurance, breaking the employment-based coverage lock, says Grace-Marie Turner, president of the Galen Institute.
While there are differences in implementation, Giuliani, Huckabee, McCain and Romney all start with proposals to reform the generous but invisible tax provision that ties health insurance to the workplace:
- The United States offers a generous tax break worth more than $200 billion a year to those who get health insurance through the workplace.
- Any amount of income that workers receive in the form of health insurance is excluded from federal and state income and payroll taxes.
- This provision, which dates back to World War II, has cascaded through the economy for 65 years to create a system in which more than 160 million people get health insurance through the workplace.
But today, when four in 10 workers change jobs every year, tying health insurance to the workplace isn't working for tens of millions of Americans. Further, because the full cost of job-based health insurance is invisible to most workers, they have incentives to over-consume health services and to demand more expensive health insurance, driving up costs for those trying to buy coverage on their own, says Turner.
While the Republican presidential candidates don't want to blow up the employment-based system, they all want to give people the same tax benefit when they purchase a policy on their own as when they get it at work, says Turner.
Source: Grace-Marie Turner, "The GOP's Prescription for Health Care," Wall Street Journal, January 29, 2008.
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