Reason Foundation

http://reason.org
http://reason.org/news/show/state-of-the-union-health-care

Reason Foundation

State of the Union -- Health Care

Shikha Dalmia
January 31, 2006, 10:39am

The pre-State-of-the-Union mill was rife with rumors that President Bush was going to make expanded Medical Savings Account the centerpiece of his domestic reform agenda. Alas, health care reform got barely two grafs in his hour-long address. In these, Bush lamented the sky-rocketing cost of entitlements – conveniently ignoring that he himself ushered in the biggest increase in entitlement spending in the past four decades by pushing for free prescription drug coverage for Medicare seniors. Be that as it may, Bush touted the wonders of MSAs because, like corporations, they would allow individuals to purchase health coverage from their pre-tax dollars, thereby leveling the playing field between individuals and companies. In addition, MSAs would attach coverage to individuals, not employers, making it more portable. But there is a better way – to use the words of Virginia's Governor Tim Kaine – to achieve these objectives: Abolish the health care tax breaks for employers and give them to employees or individuals instead. Arguably, competition between insurance companies will be even more intense if they have to compete for the business of individuals – as opposed to companies – simply because there are so many more of them. Also, individuals are likely to be more prudent shoppers than corporations that have too much money and too little purchasing accountability (anybody who has worked at a large corporation knows that $1,000 toilet seats and hammers are not just a Pentagon phenomenon). More savvy shoppers will bring down health insurance costs for all and control national health care spending. So how about it Rebel-in-Chief? A man who can plant democracy in a centuries-old dictatorship abroad can certainly fix ridiculous distortions in his own country's tax code? Why settle for half-measures like MSAs when you can conquer the whole messed-up health care system?

Shikha Dalmia is Senior Analyst


Print This