NCPA - National Center for Policy Analysis

A Health-Care Plan That Empowers Consumers

February 13, 2002

Specialists in health-care policy are hailing President Bush's approach to the subject. He wants to reform Medicare, create a prescription drug benefit for the elderly and provide more than $89 billion in tax breaks to make private health insurance more affordable.

The overriding theme of his proposal is empowerment of the individual patient -- rather than large, impersonal bureaucracies. Experts say he clearly understands the problem with managed care is that bureaucrats collect all the health-care dollars and then make all the treatment decisions.

  • To redress this backward approach, Bush would first allocate $14 billion over 10 years to expand medical savings accounts -- tax-exempt accounts which individuals could use to pay for medical treatment short of catastrophic illnesses.
  • He would also grant tax relief to those who purchase their own health insurance -- under which all families up to a certain income level receive the same tax break.
  • Individually-purchased insurance would solve the portability problem that arises when insurance is paid for by employers.
  • The problem with employer-provided coverage is that people must switch health plans when they change jobs -- which, given the prevalence of managed care, often means they must also switch doctors.

Although not part of the president's proposal, a properly designed tax credit for health insurance need not cost the government extra money. Instead, it would assure that the money we are now spending is spent rationally.

A tax credit system would reward those who purchase their own insurance with a lower tax bill, and the credit could be funded by a reduction in spending on free care, since the ranks of the uninsured would be smaller.

Source: John C. Goodman (National Center for Policy Analysis), "Bush Wrests Health Care From Democrats," Wall Street Journal February 13, 2002.

 

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