We Need a Free Market Health Care System

Many Democrats including presidential candidates Hillary Clinton and John Edwards are pushing for universal health care, which is simply another term for socialized medicine and would be a disaster for this country. John Edwards has already announced that he would have to raise taxes in order to fund this medical debacle. Eventually the cost of maintaining this program will exceed tax revenues as it does in every country with socialized medicine, so what will the US government do then? It will cut benefits, institute wait times for procedures as Britain and Canada have done, and find ways to not pay for the very sick who demand a lot of care. When these things eventually happen here in order to reduce costs of Edwards’ or Clinton’s or someone else’s massive government run health care system, the American people will have no where else to turn except to pay even more out of their pockets on top of their already high taxes in order to fly to other countries to get the procedures they require.

The only real solution is a market based solution to help others get the coverage they need and to drive down health care costs, and President Bush offered a proposal that is a good start in this direction in his State of the Union address last month. Although the president’s plan is not a panacea for everyone, it should be viewed as one solution along side others and should not be automatically dismissed as many Democrats are doing.

Here’s how it would work. Every person would get a standard deduction of $7,500 for health care costs ($15,000 per couple) right off the top just like they do if they have dependents. This gives those who purchase their own insurance, like my husband and me, an even playing field with those who get to deduct their employer-provided insurance. Unfortunately that means that those who get very high value insurance plans from their employers would be taxed on the balance after the $7,500 per person or $15,000 per couple deductions. However, by getting market forces involved in heath care, we can drive down the costs.

And if you get a High Deductible Health Plan with a Health Savings Account (HSA) you get a double benefit. Not only do you get the standard health care deduction, but also the money you deposit in your Health Savings Account to cover your deductible is 100% tax deductible and can be withdrawn to pay for medical expenses, tax-free. If you don’t use your deductible for the year, it rolls over to the next year. Also, the funds in your HSA are always yours and grow tax-deferred like an IRA. At age 65 you can withdraw the money for any reason penalty free.

In his article yesterday, Michael Barone writes that the president’s plan got the attention of a Democratic senator from Oregon who is looking for a solution to the health care problem that doesn’t include a universal or single payer system, which his constituents in Oregon rejected soundly:

Bush’s point was not lost on Oregon’s Democratic Sen. Ron Wyden, who over a long congressional career has specialized in assembling bipartisan coalitions for various reforms. He notes that government single-payer health insurance — the goal of some senior liberal Democrats in Congress — was rejected by the voters of his liberal state by a four-to-one margin. He also notes that we don’t have employer-provided auto insurance — we buy that out of after-tax earnings. He argues that people should be able to buy health insurance as members of Congress and federal employees do, from an array of choices offered by private insurers.

He’s looking to make something of a political deal. Republicans would get Bush’s standard deduction and a private insurance market in which consumers would have incentives to hold down costs. In return, Democrats would get universal coverage, with subsidies for low earners to pay for coverage. As John Goodman of the free market National Center for Policy Analysis points out, additional revenues from those with policies worth more than $15,000 could be used to subsidize low-earners.

Wyden has been talking with Republican senators, especially fellow members of the Finance Committee, and says he has been getting positive reactions. As for Democrats, those who seek more government provision of healthcare will probably be uninterested. But some may be affected by the apparent success of the Medicare Part D prescription drug benefit. Many Democrats believed that seniors would have a hard time choosing policies from an array of choices and that they would end up being gouged by private insurers. But polls indicate that the vast majority of seniors are pleased with the results, and the cost of premiums — and costs to the government — have come in lower than experts predicted.

The president’s health care proposal could dramatically remake the health care system in this country but in a way that utilizes the free market to bring down health care costs and provide coverage to many more people. It is a much better solution for the American people than any government run system because it gives the American people complete control of their medical plan.

Tornadoes Ravage New Orleans - Again
A time for war, a time for peace