A simple change in the antiquated tax code would create an avalanche of universal choice in health care, instead of current proposals that produce universal dependence on government. Namely, the U.S. should eliminate the deductibility discrimination between employers and employees for health insurance premiums.
The ideal solution would be to replace the tax code with the Fair Tax, which essentially replaces the income tax with a consumption tax. But since few politicians with a bully pulpit have shown the moral or political courage to lead the sizeable Fair Tax movement, let's start with the second best approach, universal deductibility.
Universal deductibility of health insurance premiums by employers, employees, the unemployed, individuals and business owners would connect the consumer to health care costs. When people spend their own money, they spend it more wisely. Most people will purchase health plans they can afford, instead of expecting more benefits from their employer or the government.
The flagrant flaw in most of the ideas proposed by the presidential candidates is that they are variations of socialized health care.
Hillary Clinton, Barack Obama and John Edwards have all offered health care plans that eliminate individual choice and increase government mandates on employers, individuals and health care providers.
RomneyCare in Massachusetts is already experiencing a cost explosion. The only Republican to propose a market-based solution is Newt Gingrich, who has not yet declared his candidacy.
The proponents of socialized health care do not believe individuals and doctors possess the ability to make their own health care decisions. They would rather take advantage of what Steve Forbes recently described as "the abysmal ignorance of so many – including boatloads of business executives and entrepreneurs – about what it takes to bring rationality, productivity and lower prices to the U.S. health care market."
The greatest flaw of Health Savings Accounts (HSAs) and President's Bush's new proposal is that they are tied to the disastrously flawed tax code in the form of yet another tax deduction. These plans are improvements on the current discriminatory system, but they further complicate an already incomprehensible tax code.
The president's proposal, which allows deductibility of health insurance premiums, has a hidden "sneak-a-tax." Under the Bush plan, if your employer pays more than $15,000 for your annual health insurance premium, you pay tax on the excess coverage. Below that amount for a typical family, the plan provides only small, non-game-changing savings. Worse, the plan is not indexed to inflation. When inflation eventually catches up to the $15,000 deduction, families will suffer the same tax penalties posed by the Alternative Minimum Tax.
HSAs are another concept that was supposed to "move us in the right direction" of more affordability and accessibility of health insurance. HSAs have worked for many, but way too slowly as health care costs and insurance premiums have increased at annual double digit percentages.
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