What’s Wrong with this Picture?
When employment rises, so do government tax subsidies for employer-provided health insurance. When employment falls, the subsidies fall as well. But except for the stimulus package, there is no corresponding countercyclical change in government funding for free clinics and community health centers.
In Patient Power, Gerry Musgrave and I argued that federal money should follow the people. First, commit a sum of money, say, $5,000 per family. If the family obtains private insurance, they get a $5,000 refundable tax credit. If they are uninsured, the $5,000 is sent to the safety net institutions in the community where they live.
If private insurance rises and falls with the business cycle, there will be countercyclical swings in the money made available for uncompensated care.
Great idea and the only place I ever see it discussed is in NCPA publications. I wish you could convince others — at least the conservative think tanks.
Agree with Greg. This is the missing item in the McCain health plan, the Coburn bill and many other conservative health proposals.
Your proposal is too rational, John. Remember, the field we are in is health policy — where (as you have pointed out before) most people have not mastered the syllogism.
I’ve long been in favor of reforming the tax treatment of health insurance, but have more recently become concerned about a fallacy of equivocation often see regarding different meanings for the term “health insurance”. Unfair discrimination between employee-sponsored and individually-purchased coverage is often used to argue in favor of equal tax treatment between group and non-group insurance, glossing over the fundamental differences in the actual product being purchased.
Joe S.: I’m not sure I follow you. The McCain tax reform was exactly this – to the penny. Most “conservative” reforms are versions of this. What “conservative” reforms do you see that don’t encompass tax reform like this?
I borrowed the argument a couple of years ago, when I essayed to debunk the idea that the uninsured were a burden health care, due to overcrowding emergency rooms (http://tinyurl.com/5h4yvc). As a class, the uninsured pay extra income taxes that are voluntary (although they would likely not define them as such). I figured that the extra federal income tax was about $60 billion (but I’d use a more sophisticated model if I did it again). I proposed that the government should use that estimate as a basis for deciding saftey-net funding. If Government enacted the tax reform as recommended by Drs. Goodman & Musgrave we wouldn’t have to rely on an estimate but have the exact figure.