REFORMING THE U.S. HEALTH CARE SYSTEM
September 29, 2008
Of the proposed health care reforms, Sen. John McCain's (R-Ariz.) plan would completely replace the current system with a fairer, more efficient one, providing a much better chance of insuring the uninsured and controlling health costs, says John Goodman, President of the National Center of Policy Analysis.
Currently, private health insurance is subsidized -- to the tune of $200 billion a year -- by excluding employer-paid premiums from income and payroll taxes. McCain's plan would replace this system with a uniform subsidy applicable to all insurance, regardless of how it is purchased, says Goodman.
McCain's plan would level the playing field:
- Employers would no longer be able to buy insurance with pre-tax dollars, and their premium payments on behalf of workers would be taxable income to the employees, just like wages.
- However, every individual would get a $2,500 credit ($5,000 per family) to be applied dollar-for-dollar against taxes owed.
- People who must buy their own insurance would receive as much tax relief as those who obtain employer-sponsored insurance.
A national marketplace would be created, helping the middle class:
- People would be allowed to buy insurance across state lines and under more consumer-friendly regulatory regimes.
- Thus, creating a competitive, national market for health insurance.
- This would provide much more help to low- and average-income families, because they would receive just as much tax relief to purchase health insurance as the very rich.
Moreover, McCain's proposal would encourage cost control:
- It would subsidize the core insurance that everyone has, leaving them free to purchase additional coverage with after-tax dollars.
- Everyone would have an incentive to compare the value of extra health benefits to the value of other things money can buy.
Source: John C. Goodman, "Reforming the US Health Care System: McCain's plan shows more promise than Obama's," Fraser Forum, September 2008.
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