NCPA - National Center for Policy Analysis


February 18, 2009

Most families must deal with a difficult health condition of some sort, and while they would welcome any change that makes it easier to pay the bills, they don't want the government to stand in the way of promising breakthroughs.  Market-based care would control rising costs without imposing regulatory barriers to cutting-edge care.

The middle class would stand to gain the most from the tax changes that are central to a market-based reform strategy.  For example:

  • Excluding $15,000 in health insurance from income taxes is worth $1,500 to someone in the 10 percent marginal income tax bracket but $5,250 for someone in the 35 percent bracket.
  • Market-based reform plans would eliminate this imbalance by substituting a fixed tax credit for the open-ended deduction and shift control to individuals and families.
  • The Tax Policy Center estimated that McCain's proposed tax credit of $2,500 per individual and $5,000 per family would reduce taxes for the average middle-class family by nearly $1,300 a year in 2013.

Giving families financial control and ownership of their health insurance would also bring more security, as many of the uninsured lack coverage because they are in between jobs.  With ownership and control, families could keep the same insurance as they change jobs or leave the workforce for such purposes as further education.

Source:  James C. Capretta, "Twelve Ideas for the Middle Class: Reduce Health-Care Costs," National Review, February 9, 2009.


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